Believe it or not, for some borrowers marriage can have a big impact on their student loans.

In some cases making certain decisions on how you repay your student loans during marriage can cost you thousands or even tens of thousands of dollars.

Conversely, in some situations you can save tens of thousands of dollars by getting strategic about how you repay your student loan debt.

Later I’ll walk you through an example where this is the case, but first let’s establish exactly why this is the case.

When Being Married Impacts your Student Loans

 
Some student loan borrowers are not impacted by getting married. A good example is if you and/or your spouse both are on the standard ten-year repayment plan. Getting married doesn’t impact your payment – you will continue to make your standard payment, just like you did before getting married.

The same is true of private student loans. See our private student loan repayment guide for tips on how to save money.

If you or your spouse are on an income-driven repayment plan it’s a different story: being married impacts your payment calculation.

Income-driven repayment plans calculate a payment based on your discretionary income. Discretionary income is calculated as Adjusted Gross Income, AGI, less additional deductions related to family size and the federal poverty level.

AGI is a number on your tax return. The way it is calculated is Gross Income less certain allowed deductions. These deductions include, among other things, contributions to a tax-deferred retirement account like a 401k, 403b, or standard IRA. Contributions to a Health Savings Account, or HSA, is another good example.

Income-Driven Loan Repayment Example

 
Below is an example from our student loan spreadsheet, which you can download for free and plug in the numbers relevant to your situation.

In this example we are using an individual – let’s call him Ted – with a household size of 1 who lives in Delaware. His AGI is $40k, and she has $85k of federal student loans at a 5.0% interest rate.

By switching to an income-driven repayment plan, his minimum monthly required payment drops dramatically from what it was under a standard ten-year repayment plan:

 
Clearly being on an income-driven repayment plan can be helpful for borrowers with a significant amount of student loan debt relative to their income.

If Ted was eligible for Public Service Loan Forgiveness (PSLF), where he would get his eligible loans forgiven tax-free after 120 eligible monthly payments, he would have a huge incentive to minimize how much he pays towards his student loans. It’s time for Ted to switch plans.

But what if Ted was ineligible for PSLF based on his employer being a for-profit? In that case as long as he expected his income to stay relatively close to what it is and not see a huge spike in the future, it likely makes sense for him to start working down the path of income-driven loan forgiveness. This loan forgiveness only happens after 20- to 25-years, and the forgiven amount is treated as taxable income, but it could still result in Ted saving tens of thousands of dollars that he otherwise would have put towards his student loans.

Student Loans and Marriage

 
In our example Ted was single. But marriage impacts the calculation, and the impact can be traced back to how you pay your taxes. Two general guidelines to keep in mind:

• When you file a joint federal income tax return, your student loan payment will be based on your joint income. In this situation, one thing that potentially helps ease the burden of having two incomes factored in is that student loans from both individuals are also factored into income-driven repayment calculations.

• In general, when you file your federal income tax return as “married, filing separately,” your student loan payment will be based on your individual income. Two notable exceptions: when you are on the REPAYE income-driven repayment plan or when you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin).

Here is another way of looking at how your tax filing impacts your income-driven repayment calculation:

 
If you live in a community property state, we’ll go over the implications of that in a minute. But first let’s take a look at the impact on non-community property states.

When you look at the list above, you may wonder why people wouldn’t just switch out of REPAYE and file taxes separate? Well, for a couple reasons:

• You are only eligible for PAYE if you are a new borrower as of October 1, 2007, and you need to have borrowed a Direct Loan or a Direct Consolidation Loan after October 1, 2011.

• IBR considers 15% of your discretionary income instead of 10% like REPAYE, unless you were a new borrower on or after July 1, 2014, in which case you would get the “new” borrower rate of 10% of your discretionary income.

Not everyone is eligible for PAYE, or they likely would switch if filing taxes separately would benefit them. That means IBR is the default second choice, but many borrowers who switch to IBR from REPAYE will be paying 15% of their discretionary income.

Nevertheless, some borrowers will benefit in a huge way by having their income-driven repayment calculated solely on their income and not on their spouses. In these situations a borrower needs to seriously consider switching out of REPAYE.

Let’s look at an example.

In our earlier example Ted was benefiting greatly from being on an income-driven repayment plan. if Ted was pursuing PSLF he would likely end up having tens of thousands of dollars of student loans forgiven tax free, potentially cutting a year or more of work out of his life before he reached financial independence.

But what if Ted is married?

Let’s assume Ted’s wife, Angela, has an AGI of $100k. Let’s also assume she has no student loans.

Ted was previously on REPAYE, paying $174 a month towards his student loans.

Ted and his wife filed their taxes jointly, as most married couples do. For simplicity, let’s assumed their combined AGI is $140k.

Unfortunately Ted’s student loan costs go up significantly in this scenario.

 
In this scenario Ted is paying $777 more a month – or over $9,000 a year – than when he was single.

Ted is being penalized for being married.

Assuming Ted would get student loan forgiveness if his wife’s income wasn’t factored in, that’s a lot of cash flow to give up each year that could otherwise be going towards paying down debt, investing, or for a house down payment.

Especially if Ted is eligible for Public Service Loan Forgiveness, it makes sense for him to look for a better repayment strategy.

Remember, with REPAYE, it doesn’t matter if you file your federal taxes as “married filing separately,” both you and your spouse’s income is considered.

Let’s assume he’s one of those individuals – like my wife and I, and millions others – who is ineligible for PAYE. His next best option is IBR. Since he isn’t a “new” borrower, he has to pay 15% of his discretionary income.

If Ted files his taxes as married, filing separately, and switches to IBR, his required minimum student loan payment would $261 a month.

 
In this scenario, Ted would still save nearly $700 a month or over $8,000 a year on his student loans by making the switch.

There are some implications to married, filing separately. There is a tax hit that most people take when they go this approach.

Unfortunately the odds are that the average accountant doing tax returns has no idea how your tax filing impacts your student loans. You should still ask an accountant for advice, but take it with a grain of salt.

One way to see how much of a tax hit you would take is going through a tax software like TurboTax and running both married filing jointly and married, filing separately. Then compare the tax difference between the two.

For Ted and his wife, if the tax difference is less than $8,000 then it makes sense to file as married, filing separately.

But we haven’t yet hit on the fact that there are strategies for saving even more money on Ted’s student loan payments.

For example, is Ted putting away as much as possible in his standard IRA and 403b/401k? If not, increasing that contribution will lower his AGI, which in turn lowers his discretionary income, and ultimately his required monthly student loan payment. Read more about strategies for maximizing Public Service Loan Forgiveness (these strategies will be relevant for those pursuing income-driven loan forgiveness as well).

Community Property States and Student Loan Repayment

 
As if student loan repayment strategy wasn’t complex enough, community property states add another layer of complexity.

Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

In these states, even if you file your income tax return as married, filing separately, each individual must report 50% of their spouses income.

Going back to the example of Ted, he and his wife would end up reporting the same income. I’m oversimplifying it, but essentially his AGI would be $70k and his wife’s would be $70k, instead of $40k and $100k, respectively.

This obviously makes it more difficult for Ted to maximize student loan forgiveness: it doesn’t matter who makes the income, they both need to report it.

There are some scenarios where this could create a unique opportunity, though.

Let’s use another example, Rachel and her husband Jeff. Rachel works at a nonprofit that is an eligible employer for Public Service Loan Forgiveness and her AGI comes to about $100k. She has $220k in student loan debt, all eligible loans for PSLF. They live in California, a community property state.

One key piece of information: Jeff doesn’t work. He stays home raising their two daughters.

Here’s what her payment would look like if they file as married, filing jointly:

 
In this scenario, Rachel would be paying approximately $6k a year in student loan payments. Since she is going for PSLF, it makes sense to minimize what she is paying. If she files married, filing separately. She could report $50k AGI instead of $100k, since her income would be split between her and her husband, and her husband doesn’t make an income.

She would now pay approximately $2.4k a year instead of $6k, a savings of approximately $3.6k.

Note that I am not a tax expert and I set her dependents at 2 in this example, assuming her and one daughter would be claimed on her tax return and the other daughter on her husband’s. I could be wrong about this – always discuss taxes with a qualified tax accountant.

But the point remains the same that in some situations a community property state could help people pay thousands less in student loans and maximize student loan forgiveness.

Student Loan Resources
 
Here are a few student loan resources to check out:

Student Loan Solution: 5 Steps to Take Control of your Student Loans and Financial Life

Free Student Loan Spreadsheet

Private Student Loan Refinancing Guide

The week after I got engaged I opened my first shared bank account with my fiancé.

We had a wedding to save for and a shared savings account seemed like a good way for us to work toward that goal together.

Having all of your money flowing into one shared place can simplify everything from day to day expense management, like paying the rent, to planning for the future, like saving for a honeymoon.

But my fiancé and I were 32 years old when we got engaged. We’d already spent well over a decade earning, saving, spending and managing our own money.

I didn’t want to give up my fancy workout classes that my fiancé may have considered overpriced any more than he wanted to stop buying UFC pay per view fights that I had no interest in watching.

So while financial cooperation was important to us as we entered into this new life stage, so was our financial independence and autonomy.

Rather than trying to choose between two extremes – combining all of our finances or keeping our money totally separate, we decided to develop our own system for merging our money. One that didn’t dictate exactly how many bank accounts we could or couldn’t have, but rather, one that provided us with a framework to start managing our money as a team. A framework created around three central tenets…

• expectations
• rules
• and goals.

Setting Shared Financial Expectations

 
Our first step was to define our expectations. We started by opening a shared savings account and defining how much we expected one another to contribute.

We also defined our expectations around how the funds in the account would be used – in this case, to pay for our wedding and honeymoon expenses.

After that initial discussion, we started thinking about managing our money more broadly – not just in the context of saving up for our wedding, but also in the context of laying a financial foundation for the rest of our lives.

To better define our expectations we had to zoom out from the goal that was right in front of us (our wedding), and take a look at our full financial picture.

It was an opportunity for us to take a financial inventory of our own lives and share with one another.

How had each of us been saving (or not saving) for retirement? What new expectations did we need to create? Ex. We each commit to saving 20% of our annual income in tax advantaged retirement accounts.

We also had to assess our savings for other short-term goals and emergency savings – defining how and where we would save for each.

We also had to revisit our living expenses and talk about our expectations for managing our shared costs now that we were getting married.

We decided to open up a shared checking account and set the expectation that we’d each contribute $2,000 per month to the account to cover our household costs, leaving plenty of buffer room to cover miscellaneous expenses and transfer the overflow into savings if and when possible.

Setting expectations around each piece of our financial life helped us get on the same page financially, even if our money wasn’t all in the same accounts.

As long as we continue to meet the expectations we set together – like our respective retirement fund contributions, savings contributions and monthly checking account deposit, we’re free to spend the rest of our money however we like.

I can splurge on Classpass and barre workouts and he can pay for pay per view UFC fights without judgment or guilt. In other words by getting clear and specific around the expectations we have around our finances, it allows us to spend and save freely otherwise.

Setting Shared Money Rules

 
Our next step was to identify our money rules. Similar to financial expectations, financial rules are about getting on the same page with your partner about how you will or won’t manage your money.

For example, you might set a rule around debt. Maybe you and your partner agree that you will not open up a credit card or apply for any other line of credit without talking about it first.

Or maybe you come up with a dollar amount at which you and your partner agree that you will stop to check in with one another before buying something (even if the money is coming from your individual accounts).

One essential rule is deciding how frequently you’ll review and discuss your money plan. I like setting aside a fixed time every month to go over what’s working and what isn’t, to see how and where we can make adjustments ins our financial plans.

These ‘money dates’ give us an opportunity to talk about where we both stand financially, what we both want to achieve financially, and what steps we’re both taking, both individually and as a team, to make those things happen. It also gives us the chance to address unexpected expenses or circumstances – adjusting our plan as needed.

We realize that our goals will inevitably change over time and that we’ll need to continually re-prioritize and readjust our financial plans together to stay on the same page. So our money talks are as regular a relationship practice as anything else.

Setting Our Money Goals

 
Setting money goals is the third critical ingredient of our shared financial framework.

Once we committed to being our relationship for the long haul we needed to make sure we were managing our money for the long-term as well. In other words, we had to address more than the day-to-day financial questions like who pays for what, and start mapping out our goals for the next five, ten, twenty plus years.

So we started sharing all our financial priorities with each other – from financing epic travel to being covering basic emergency savings needs.

We talked about what existing plans and savings we already had in place to achieve those goals and what steps we were still taking. Once we identified the top goals we each wanted to achieve, we created rules and expectations around what we needed to do financially to support those goals, so we could commit to achieving them together.

By using goals, rules and expectations as the foundation for our shared financial strategy, we’ve been able to avoid common money conflicts – like judging one another for our financial choices or telling each other what we can and can’t spend money on.

Instead of saying something to the effect of, ‘you spend too much money on video games,’ I can say something like ‘I think we need to save more money each week if we still want to go to Hawaii for our honeymoon. Can we talk about how we can do that?’

By steering the conversation back to our shared plan and goals (rather than his choices or my behaviors), we’re able to side step situations that lead to a communication breakdown. Maintaining our financial independence and autonomy while staying committed to our newly shared future.

I’m not naïve enough to believe that our system of managing money together is totally perfect and that it will continue to work exactly as it does right now for the rest of our lives.

I expect my partner and I will disagree at times and get discouraged and struggle to find compromise in our financial life, much like we do in the other facets of our life. I expect that circumstances like job loss or illness will force us to adjust our shared rules, expectations and goals.

But by maintaining the practice of a regular money dialogue and grounding whatever financial strategy we use in the framework of expectations, rules and goals, I’m confident that we’ll continue to be able to manage our money as a team, even if we use our own unique system for doing it.

Stefanie O’Connell Rodriguez is a nationally recognized millennial money expert and author of the book, “The Broke and Beautiful Life.” She is also the founder of Statement Cards, a greeting card company that celebrates financial wins — from getting a raise to paying off your student loans.
 
 

Many millennials, who either incurred a lot of student loan debt or know someone who did, are now having children. Not surprisingly these parents are concerned about their children potentially incurring a mountain of student loan debt down the road.

One of the (few) positives of the student debt crisis is that it’s on the top of parents’ minds. When it comes to college, parents being involved and (positively) influencing their children is a good thing because:

College choices are being made by teenagers, and they simply can’t be expected to run an ROI analysis on college when their top concern is who their prom date is going to be.

Without parents, guidance counselors, and others stepping in to help them make a decision that considers the financial implications of their college choice and career path, college choice will ultimately be an emotional choice for a student.

The good news is you are reading this post, which means you are interested in helping your current (or if you’re like me, future) children minimize student loan debt.

Before we dive into the specifics, I want to talk first about solutions for those who already are in student loan debt, as well as why a career path shouldn’t always be 100% about the money.

 
Already have student loan debt? There are a ton of resources for you.

I wrote an entire book for those who already have student loan debt, Student Loan Solution: 5 Steps to Take Control of your Student Loans and Financial Life. The biggest takeaway is that while student loans are a pain, there are a lot of strategies you can take to minimize their impact, especially if we are talking about federal student loans.

Besides my book here are some useful student loan articles you can check out:

• A great place to start: The Ultimate Student Loan Spreadsheet to Track Your Student Loans

• When You Should and Shouldn’t Refinance Student Loans (Highly recommend reading this one if you have private student loans)

• Student Loan Income-Driven Repayment Explained

• How Public Service Loan Forgiveness (PSLF) Works

• How to Maximize Public Service Loan Forgiveness

• Why Fears about Student Loan Forgiveness are Overblown

• Options for Dealing With Parent PLUS Student Loans

 
Is It All About the Money?

One suggestion some experts have is to make sure that the amount of loans you take out does not exceed the amount of money you will make in the first year of your career. For example, if you are projected to make $50,000 you wouldn’t take out more than $50,000.

If this guidance was followed, we’d have a severe and dangerous shortage in doctors, therapists, dentists, veterinarians, and more careers that are vital to our economy.

As I highlight in the above articles, there is currently student loan forgiveness in place, either income-driven loan forgiveness or Public Service Loan Forgiveness. While these programs may eventually be changed, they will be changed going forward; meaning if you’ve already taken out student loan debt you will have access to the program as is.

This article is focused on those who haven’t started college yet (and perhaps aren’t even born yet!) so I don’t want to overly focus on the programs today, but I highly doubt we will reach the spot where there is no student loan forgiveness options. For example, the Trump administration proposed in 2020 (and in previous years) switching to one income-driven repayment plan with (taxed) loan forgiveness after 15 years for those with only undergraduate debt and 30 years for those with any graduate school debt. This proposal was dead on arrival, which just shows the appetite for changing student loan forgiveness, especially if the change is less favorable than the current program.

My point is this: if your children show an interest in jobs that potentially require a lot of student loan debt such as a dentist or therapist, don’t push them away. Don’t sugarcoat student loan debt, but make sure you don’t leave out things like student loan forgiveness in discussions around pursuing a career with a high amount of debt.

1) Community College

 
I started my career at a large company and know a number of other employees who graduated and started full-time around the same time. One of my colleagues graduated from the University of Minnesota, and I graduated from a private university. Both the U of M and my college were widely viewed as the top two business schools in the State. Besides the clear difference that I went to a private school and he went to a public one, the other difference was that he went to community college his first couple of years. What that meant was drastically cheaper tuition.

At the end of the day we both interned and got job offers at the same large company, and had comparable educations (on paper). We started at the same salary. But he had far less student loans than I did.

Community college isn’t the end-all be-all for saving money on college. It also may be a worse experience from an education, social, and lifestyle perspective. But one thing that can’t be denied is that community college is far more affordable than going to a four-year college.

Since we are on the topic of community college, another way to save money on student loan debt is by taking PSEO courses while in high school. I took a couple of these, and while it does save money your children have to weigh the pros and cons of being away from the high school during the day. Some student really enjoy high school and love being around the building and the people, but for others it may not be that enjoyable. For those students PSEO could be an outlet for them to pour their energy into getting ahead on college credits. There are also more and more high schools offering these college courses on-site. The high school I graduated from now offers 40+ college credits within their four walls.

2) 529 Plans

 
529 plans can be a great way to save money for your children’s college expenses – for some people. For others it simply doesn’t make sense.

But first you may be wondering what a 529 plan is. Many states offer 529 plans that can be used to save for future education expenses. Withdrawals are tax free and used for qualified education expenses such as tuition and textbooks. Unlike a 401k retirement account or standard IRA, though, money goes into a 529 after taxes, not pre-tax. There is still a benefit to 529 plans, and if you contribute when your children are young there are many years where investments can gain value, and those gains are not taxed when you withdraw for qualified education expense.

One thing I do worry about, though, is that people who are contributing to 529 plans are not saving enough for retirement or health care costs. I wrote an entire post about this, and I recommend reading if you are currently contributing to a 529 plan or are considering putting money in one.

Before contributing to a 529 plan I think it’s really important to be contributing a sizable percentage of your income to retirement accounts, as well as to Health Savings Accounts (HSA) if you have a High Deductible Health Plan (HDHP). The reason why is simple: people are living longer and retirement can be more expensive than we expect. The best senior living facilities can be as much as $3,000 to $5,000 a month, and health care costs can be steep later in life (as if they aren’t already high enough before then!). These things probably aren’t on the top of your mind when you have children, especially young children, but they are important to consider.

Every parent would love to contribute towards their children’s college education, but you are doing them and yourself a big disservice if saving for their college expenses is to the detriment of your retirement. Your children will be able to take out loans for their education; the same can’t be said about retirement. When your children reach college age if your financial situation allows you to contribute, that’s great. If not, you can help them make the best financial and life decisions around their college choice.

3) Scholarships

 
I went to a private school for undergrad, where it’s common practice to get some sort of academic scholarship that brings down the high price of tuition. Beyond that, though, I didn’t receive any scholarships. This was nearly 15 years ago so things have changed, but the few scholarships I found and applied to via a Google search felt like a waste of time.

Fast forward to today and the amount of content on the internet has changed things. There are now a number of bloggers who focus solely on helping students find, apply for, and win scholarships. This scholarship book is consistently ranked higher than my book under “Best Sellers in College & University Financial Aid” on Amazon, and it’s no surprise: scholarships can make a big difference in the amount of student loans that students need to take out.

My primary focus is on people who already have incurred student loan debt, so I haven’t spent a ton of time digging into scholarship strategy. With that being said, what I’ve heard some experts say is that you should encourage your children to treat the applications like a part-time job. Scholarships take time. As a parent you can help by identifying the best scholarships for your children to apply to, but ultimately they need to set aside the hours to actually do the work of applying.

This can be a challenge because we all know that high school students are pressed for time. There are so many demands for time and attention of teenagers today that it can be difficult to identify a handful of hours each week for them to fill out applications. At the same time, the time spent on applications does seem to pay off much better than if they spend the time working a part-time job. Do you pay your children for time spent filling out scholarships? Only you can answer that.

4) Trade Careers

 
Let’s talk trade careers, which offer a different path than the traditional four-year college program. I constantly hear experts and politicians talk about the benefits of trade careers. There are clearly benefits including less student loan debt, less school, and seemingly endless demand. There’s projected shortages in virtually every trade from electricians to elevator mechanics, which creates opportunities for even higher pay.

This all begs the question: why wouldn’t a teenager decide to pursue this route?

Let’s unpack that a bit. Baby boomers see millennials as extremely tech savvy. For example when I started my career in 2010/2011 my manager was in his early 60s. I was an accountant and spent a majority of my day dealing with data in an Excel spreadsheet. If I didn’t know how to do something, I could usually figure it out relatively quickly through Google and trial and error. The ability to access and find this information is something Baby Boomers lack; it simply wasn’t a part of their working lives in their 20s, 30s, and even into their 40s. This is just one example, but there are countless others where Boomers and Gen Y are impressed at what millennials can do with technology.

Now let’s switch to generation Z, who were born between 1995 and 2015 and are between the ages of 4 and 24. Forget about millennials being tech-savvy, Gen Z is growing up with unprecedented access to technology. They are natural content creators and adapt to changing technology quickly. They are most comfortable working on a screen.

If millennials as a generation largely rejected trade careers so they could work on a computer, what makes you think an even more tech-savvy generation will want to spend their working days on a job site? Call me cynical, but Gen Z would much prefer to make their income from a laptop, ideally in a remote work setup where they can live wherever they want.

Supply and demand will naturally draw in some in Gen Z, because trade careers will continue to pay more and more. It could be many decades before we automate something like electrical wiring. Trade careers are certainly a good path to go, I just think everyone who keeps talking about what a great career path it is and how you’d be dumb not to pursue it today should reflect a bit, because oftentimes these same people have never worked in a trade career.

Jobs in the medical industry have some overlap with trade careers, and this is an industry that also is projected to see shortages in certain areas over the next couple of decades. Nurse Practitioners, for example, have a 1% unemployment rate and there is fierce competition for companies to hire them. It has similarities to traditional “trade careers” and can be a good option for future college students.

What I’m getting at with all of this is this: it’s absolutely worth talking about the benefits of a trade career with your children, but go into it with empathy and understanding. There is a good chance they won’t want to pursue a trade career, and that’s okay. And if they are interested, great.

5) Help them Look at Career and College Cost Data

 
This brings us to my fifth way you can help your children minimize student loan debt: help them understand what they can expect from a given career choice, as well as what sort of debt they will leave a specific college with. This is something college financial aid offices should be doing, but have largely failed at. They have become more of a sales office than one that guides students through what to expect from a job placement, salary, and debt standpoint.

This is where savvy parents step in. They are up-front about what they can and can’t contribute towards their students education. They help them decipher cryptic offer letters from colleges and universities. And they help them understand all the costs involved in college from tuition to textbooks to living expenses. They also help them understand the projected financial picture of what a career choice looks like.

That’s already a big task, but I like to take it a step further. I, for one, don’t want to push my children away from lower-paying careers if they are passionate about said career. For example if my child tells me one day that they want to be a therapist or social worker, two professions that are extremely important to our society but also grossly underpaid, I don’t want to push them away from it. Instead I want to guide them through what the financial picture looks like, including the very real likelihood of finishing school with a high amount of student loan debt. I will walk them through their options of how to navigate federal student loan repayment, and how they can use student loan forgiveness to their advantage (if needed). We need to start showing our children they don’t need to abandon lower-paying careers if they are able to take advantage of income-driven repayment and student loan forgiveness.

 
If you’ve made it this far it’s okay to feel a bit exhausted and overwhelmed. College and career choices are difficult, not to mention the overly complex student loan system we have to deal with. We’d all love to think that every student operates on a level playing field, but the reality is that the parents who are helping their teenagers navigate all of this have a huge benefit that a majority of teenagers simply don’t have.

Bonus: Teach them about Personal Finance Topics

 
A big topic in the personal finance space the past few years has been the complete lack of financial literacy being taught in schools today. I am naturally sympathetic to this cause, but I also think that high school students have so many demands on them that a course on personal finance may result in very little being retained a year or two later. Like picking a college, this puts a big burden on parents to help their children understand and navigate personal finances.

I became interested in personal finance not because of my parents sitting me down and teaching me about it, but to be honest because despite being raised in a middle-class family it always felt like finances were a stressor and there was “never enough” money. Not only was I interested in personal finance, but also how to make money and build wealth. It’s not a stretch to say this is what led me to pursuing a business degree in college, specifically in finance.

I truly believe parents who talk about personal finance with their children can have a huge impact on how their children manage their money. The earlier you can peak their interest, and the more thoughtful conversations you can have, the better chance of success.

A few topics you could discuss with your children are:

• Credit Cards & Credit Card Debt
• Credit Score
• Interest Rate
• Compound Interest
• Student Loan Repayment Options
• Tracking Income and Expenses

As a parent there is no one else who can have as big an impact on your children’s future than you. While there’s a lot you can do, please try not to put too much pressure on yourself. If you even take away one thing from this post and implement it you are way ahead of most parents.
 
 

By being open and honest about the get go, money no longer seems like a taboo topic. From the initial dating stage, moving in together, or starting to think about raising a family, these money conversations are absolutely crucial.

And while talking about money might seem awkward at first, the more you talk about it, the less peculiar it becomes. The important thing is to be open and honest with one another. Still unsure of where to start? Here are 5 money questions to ask your partner.

1) What’s Our Current Financial Situation?

 
Of course, in order to make any progress, you need to know where each of you stands financially. This is probably the hardest question to ask, because you may not like the answer. But transparency is absolutely key. A healthy couple can work through any type of financial situation as long as they respect and support one another.

This is the time to share exactly where you are financially. Share about money in the bank, debt, car loans, investments, spending habits, and anything else you think is important. Your partner has just as much of a right to know as you do, so make it a point to be honest with one another and to refrain from any judgment.

2) Could We Improve How We Handle Our Money?

 
This is somewhat of a trick question, because no one handles their money perfectly. So the answer here should always be “Yes!”

Then why is this question necessary? It opens up the door for conversations about how to manage your finances together. One person can’t make all of the changes, even if your finances aren’t joined together. You both have to be mindful of your money in order to be happy.

Tools and Resources:

• Automated Budget Spreadsheet

• Student Loan Spreadsheet

• The Personal Finance Tools I Use Every Month

3) How Did Your Parents Handle Money?

 
For better or worse, we all learned our money habits from somewhere – usually from our parents.

The choices your parents made when you were younger affected the lifestyle you had growing up. Plus, you probably learned most of your money habits from your parents. So if your parents lived a simple, frugal life and taught you to put money in the bank, hopefully this habit spilled over to you. But if your parents were living in a chronic state of debt and consumerism, you may have found yourself adopting this lifestyle as well.

Everyone parents differently, so you and your partner are likely to find your parents had vastly different ways of handling money. Talking about this will help you understand how your partner views money.

4) What Are Your Career Goals?

 
Your income depends partially on what you do for a career. Asking your partner about his or her career goals can give you a good idea as to what your long-term financial situation might look like if you two stay together.

Secondly, this allows your partner to share any career dreams that may require a big emotional and financial investment from you. For instance, if your partner dreams of becoming a lawyer, entrepreneur, or scientist, you will want to know ahead of time. That way, you two can be on board with one another’s hopes and dreams from the very beginning.

5) How Can We Both Contribute to Our Relationship?

 
No matter where you are in your relationship, this is a great question. Chances are, you two don’t make the exact same salary or have the same monthly expenses. In this case, splitting every expense 50/50 might be challenging, since it ultimately would require more out of whoever earns less. That’s not to say splitting everything down the middle couldn’t be a good option – but it might not be for everyone.

Instead, have an open conversation about what contribution looks like. Decide how you will split shared expenses, such as date nights, rent, groceries, or other shared costs. By talking about this up front, you can both feel comfortable with how you’re spending as a couple. Further, by talking about it early on in the relationship, you prevent any resentment sneaking into your relationship.

Honesty is Key

 
Remember, you’ll never regret being honest. Talking with your partner about money might feel awkward at first, but the more you talk about money, the more comfortable of a topic it will become. So keep asking questions, and you’re on your way to a healthy relationship, both with your partner and with your finances.

Whether you’re dating or married, as a couple, it is likely you have quite a few shared expenses. For both of your sake, you will want to ensure you have a joint budget, so you know how you will pay for each bill or expenses as it comes up. This way, no one feels any unnecessary pressure or resentment.

There are a number of ways you can budget money with your significant other. You just have to figure out the method that works best for the both of you. In the meantime, here are four common budgeting techniques for couples.

1) Split Expenses 50/50

 
One of the most straightforward budgeting techniques is to split every cost 50/50 with your significant other. This way, you each pay an equal amount towards every shared expense, so no one feels cheated.

This works well for individuals that have similar incomes and for those who feel strongly about paying equal. However, it may be difficult for couples if one person makes significant more than the other.

To easily split expenses, or just to keep track of your spending, you can use Tiller. Tiller (daily) pulls in your spend data from your credit cards and bank accounts and puts it in a uniform format.

2) Create a Shared Account

 
If you desire to share every expense, then a shared account might be the best move for you.

With a shared bank account, you can both transfer income and expenses in and out of your account. Since it’s technically both of your money, you don’t have to spend time figuring out who pays for what.

Joining finances is one of the easiest ways to manage your finances together. However, if you’re not married, this could pose dangerous in the event that you aren’t together in the long-term, since you aren’t legally bound to one another. While this doesn’t bother some couples, it may be an issue for someone who is more protective over their personal finances.

To open a shared account, consider switching to a high-yield online savings account to receive some of the best interest rates available.

3) Split Expenses Based on Income

 
If you each want to be responsible for a portion of the bills, but each earn a significantly different income, then you may want to consider splitting expenses based on income.

With this method of budgeting, you each decide what portion of the bills each of you is comfortable with paying based on your income.

For example, take a couple who pays $1,000 in rent every month. One person makes $70,000 a year, while the other person makes $30,000 a year. If this couple chose to split expenses evenly at 50/50, so $500 each per month, then the person with the lower salary will be paying a much larger portion of their income towards such expenses. In fact, for the person who makes $30,000 a year, about 20 percent of their income will go towards rent every year. On the other hand, the person who earns the higher salary of $70,000 would only be paying about 9 percent of their salary towards rent.

This budget method ensures that both parties are living within their means so no one feels slighted. You can base your budgets on percentages instead of splitting everything evenly, so you each have the opportunity to meet your other financial goals, such as saving or debt repayment.

4) Take Ownership Over Different Bills

 
Not so keen on splitting every bill? Then you can each take ownership over bills that equal out to about the same amount.

For instance, instead of splitting the electric bill 50/50, one of you could cover the electric bill while the other covers the water and trash bill.

This works especially well for couples who want to keep their finances separate, but want to be even and keep their finances relatively simple.

 
Related:

• How These Couples Combined Their Finances (real life case studies)

• 25 Fun Date Ideas that Aren’t Expensive

 
How do you and your partner handle your finances? What tools have worked well? What hasn’t worked?
 

Yes, finances aren’t the most fun thing to talk about with your partner, but money is a major factor in most relationships. Just like you need to have compatible personalities; you also need to speak the same financial language.

Whether you’re relatively new together or have been committed for quite some time, your financial situations will affect one another, for better or worse. It’s always a good idea to have regular, open discussions regarding money.

To get the conversation started, sit down with your partner and ask him or her these 6 money-related questions.

1) What are your financial goals?

 
While it’s a relatively broad question, your financial goals can tell you a lot about your compatibility. By having a conversation regarding goals, it can also help you figure out how to best support your partner, no matter what stage he or she is in.

See if you can learn what drives your partner to earn money. Does he want to earn just enough to live a simple lifestyle? Or does he want to be a multi-millionaire? What are his short-term financial goals? Long-term goals?

This is a great starter question, because it should help gear your conversation in a natural way, so long as your partner is willing to share.

Related:

• 15 Personal Finance Goals to Consider

• How to Create Financial Goals You Can Stick To

2) Do you have debt? What’s your debt repayment plan?

 
Everyone has different opinions on whether dating someone with debt is a good or bad idea, but the truth is, it’s a personal choice. Debt might be a deal breaker to some, while others aren’t as bothered by it.

Regardless of your view on relationships, it is vital to know whether your partner has debt. And if he or she does, you need to know what actions are being taken to pay off that debt.

For instance, it’s probably not the best idea to seriously date someone with $100k of debt and no plans to pay it off anytime soon. Or, if your partner has several maxed out credit cards, then realistically, the chances are that you will end up paying for most things. Being with someone who is ignoring their debt could end up putting you in a tough place financially down the road.

On the other hand, someone who has a detailed plan to pay off their debt shows that they are serious about rectifying their past financial mistakes. It may not be ideal to date someone with debt, but if they have control over it, then it might not have to be a complete deal breaker.

Again, how you view debt is a personal choice. But it’s dangerous to enter a serious relationship without knowing about your partner’s debt, because in the future, their financial struggles (or successes) will affect you.

3) How did your parents handle money?

 
No one is born knowing how to handle money, so our parents were likely the first example we really had. And their financial choices directly affected us as children. Even if your parents poorly handled their finances, it probably affects how you chose to handle your cash now that you’re an adult.

So talk about how you grew up. Was one parent the breadwinner? Did one parent manage the finances? Were the parents flashy spenders? Or did they hate to spend a dime?

While your partner probably doesn’t handle their finances exactly like their parents, knowing their background can help you understand how your partner views money.

4) What are your career goals?

 
How much money you make in a lifetime is largely dependent on your career plan.

There are two big benefits of asking this question. One, you will have a better understanding of what your earning potential is as a couple. And secondly, it will give your partner the opportunity to share any career goals that might require a major investment, such as becoming a doctor, entrepreneur, or college professor.

If you’ve been dating for any length of time, you probably have an idea of what your partner’s career goals are. But goals often change, so continue to keep an open discussion about where you see your career going.

5) What are your spending priorities?

 
Everyone chooses to spend their extra money differently. But it’s easy to judge how someone else spends their money if it doesn’t match your own spending priority. What’s why you need to be honest with one another about what’s important to each of you.

For instance, I love fashion. Though I never stray from my budget, I love to purchase new clothes to add to my wardrobe.

My husband, on the other hand, rarely buys anything new. His shoes could literally be falling apart and he will continue to wear them (on the plus side, I always know what to get him for Christmas!). Though we prioritize clothes very differently, he has never disapproved when I come home from shopping. He understands that fashion is a priority for me, but not for him.

Another note abut spending priorities: priorities can always shift. Though I love clothes, I definitely prioritize my debt above being able to go shopping. Once my debt is gone, I’ll probably put a higher emphasis on saving money. The key is to have regular, open conversations with your partner and to establish your shared financial priorities as well.

6) How do you think we can manage our money together?

 
No matter what stage of relationship you are in, you are managing your money together. Even if you’re casually dating, it’s important to discuss how you plan to manage money, since you’ll have many shared expenses.

For instance, who will pay for dates? If you’re considering moving in together, how will you split rent and other expenses? What should your savings goals be as a couple? How can you support each other in your individual financial endeavors? Who is responsible for paying the bills?

Of course, you don’t have to ask all of these questions right away. But a couple, you never want one of you to feel like you’re pulling more financial weight then the other, which can lead to resentment. By asking about money management, you can ensure you two are happy, healthy, and financially sound together.

 
Related:

• 25 Fun Date Ideas that Aren’t Expensive

• How These Couples Combined Their Finances

• What to do if You and Your Partner Aren’t Financially Compatible

 
 
How do you keep the financial discussion going with your partner? What other questions do you think you should ask your partner?
 
 

The average wedding cost in the U.S. in 2017 was $25,764 according to www.costofwedding.com and with the billion-dollar industry showing no signs of slowing down, many wonder how they can have the wedding of their dreams on a budget.

If you haven’t already, grab our Free Wedding Budget Spreadsheet to get organized and make the best use of your money.

If eloping is not the answer for you and burning a hole in your pocket isn’t desired either, then try these ways to make the wedding of your dreams a reality while staying within your budget.

1) Use digital invites

 
The novelty of receiving a beautifully crafted invitation in the mail for a wedding is always a wonderful way to inform your guests of your upcoming joyous event. However, the costs for invitations can add up quickly.

Wedding invitations, save the dates, and rsvp/menu cards average $700 for 100. With beautiful, personalized digital invites that also offer a wedding website for your guests to use, this is a great and budget-friendly alternative to paper and print invites.

2) Use faux flowers

 
Flowers definitely add pops of color and a unique display of your personality on your big day, but real flowers can come with a hefty price.

$2,100 is noted as the average cost of wedding flowers however fake flowers last longer, can be used in other ways later and cost a lot less. Not to mention you can sell them or lend them to friends for their wedding.

Be sure to look out for clearance or sale flowers. You can also go to craft supply stores such as Michaels and work one-on-one with their dedicated florist. You will only be charged for the supplies and their fee which is half of the supply cost.

If you must have fresh flowers, go for ones that are in season or local.

3) Purchase from a wholesaler

 
Rather than purchasing your needed wedding decor items at traditional stores, why not look into wholesalers who can offer you a great price for bulk amounts?

Many wholesalers will work with you no matter the size of your wedding. If you pay by cash and all at once you may be able to get a deeper discount so be sure to ask.

4) Don’t have your wedding on a Saturday

 
Saturdays have always been the popular day of the week to have a wedding, which also means premium pricing for your venue and services.

Flexibility in what day of the week you host your wedding will open the savings floodgate for your big day. Friday, Sunday and even Monday are becoming more mainstream as they come with hefty price cuts.

5) Be open about your wedding ring selections

 
The wedding rings can cost a pretty penny to express your love and devotion in this traditional manner.

To help you keep this price in line with your budget, try websites such as Overstock.com, be open about the metal and/or gemstones that are being used and try making a cash offer to see if there is flexibility on the price.

6) Offer a buffet rather than sit down dinner

 
Sit down dinners are synonymous with weddings. To mark the formal affair and to ensure that their guests have the best food, couples spend on average $80 per plate. This can of course increase with each addition and modification you make.

To keep your budget numbers in this category as low as possible, opt for the buffet option. By having your guests serve themselves this will cut down on the cost of manpower dedicated to each table and save you lots of money.

7) Have a daytime reception

 
Who says night time is the only time for wedding receptions? The daytime has just as much charm and can make your day even more unique, special and just as importantly, within budget.

Many venues offer a lunch or brunch style reception where you can entertain your guests with lighter meal options that are also lighter on your budget.

8) Go for cupcakes instead of a full wedding cake

 
Many millennial couples are opting out of the heavy wedding cake that can eat up a portion of your budget. Instead the fun and individualized cupcake route is becoming the new standard.

Cakes are charged by the slice and the starting rate averages $7.50/slice. Cupcakes can start around $2.50 a cupcake, significantly reducing your cost. As most of your guests will not even eat the cake, individual cupcakes are a smarter budget choice.

9) Have your wedding in the off-season

 
In America, June to October are when weddings are in full swing and when venues can be the costliest. While most couples tend to want a specific date during the prime weather months, being open to off-season months can bring on large savings.

Decide on several dates you would like in both the on and off wedding season, compare costs, weigh your pros and cons and consult your budget to decide on the date.

10) Create your own centerpieces

 
The floral and decorative centerpiece option can be a stunning addition to any table however it can also take a large chunk of your budget.

Making your own centerpieces allows you to show your true creativity. Utilizing the supplies from craft stores, online discount websites, wholesalers and even your local dollar store, you can make centerpieces that are true to your love story.

11) Modify your guest list

 
This can be one of the most difficult things to do during your entire wedding planning process however if you are on a tight budget, being mindful of who you truly need to have join in on your big day will also help your budget.

Create an ideal number for your guest list and try to stick to it as best as possible. Remember that this day is about sharing it with those most important to you.

12) Make your own favors

 
Turning on your creative skills and gathering the bridal party troop to help with assembly of D-I-Y wedding favors is a great money-saving alternative.

As the average amount spent on wedding favors ranges from $2-$3, the factors that should affect how much you spend on favors are your budget and your guest list size.

Some easy, cost-effective and great make it yourself options for favours are S’mores kit, hot cocoa in mason jars kits and bath salt sachets.

13) Be your own DJ

 
If you plan to have dancing going all night long, musical entertainment will be a priority in your budget.

To avoid this added cost, use services such as Spotify and download your own playlist. By using your laptop and rented speakers you will save a lot of money on a DJ. However, if you do go the route of having professional music entertainment a DJ will cost you 60% less than a live band.

14) Purchase your wedding dress online

 
The wedding dress is a top priority for most brides and with incredibly expensive dresses constantly being showcased in the media, it can certainly seem like a substantial portion of your budget must be dedicated to dress of your dreams.

Online websites such as Alibaba offer custom dressmaking for your needs at a fraction of the cost. Although the average wedding dress costs around $1,500 you can find a gorgeous gown for even less.

If you still feel that purchasing the dress after the big day is not an effective way to spend your budget, renting your entire wedding party’s clothing is a great option that is certainly cost-effective.

15) Use Fiverr to find your photographer and videographer

 
The freelance economy is at its height and certainly provides a competitive market for wedding day services. When looking for a photographer and videographer checking out sites such as Craigslist, Fiverr and Upwork are great options.

Be sure to ask for references and compare the different packages you enquire about to make your best decision.

16) Use students for your entertainment

 
Hiring professional entertainment for your wedding day festivities is a fantastic way to keep the fun going all day and all-night long. Adding this to your lineup however can be a strain that pushes your budget beyond its limit.

Try contacting local schools for the type of entertainment you are seeking to see if they have students who could lend their services for free or a fraction of the price.

17) Take a look at alternative wedding venue options

 
Banquet halls and golf country clubs are commonly used for weddings and generally you pay the price for these places as they offer décor, ambiance and services that you would be looking for on your big day.

If you are open to seeing what else could work for you and your budget, be sure to check out wonderful alternative venues such as museums, art galleries and planetariums.

18) Look for alternative catering options

 
The food selections at weddings are one of the biggest and most important expenses for couples. When you select your venue, seeing if they offer outside catering would be a terrific way to help your budget.

If you can use an outside source you can negotiate the cost especially if you selected the buffet option.

Remember that your special day is about the memories created and no matter your budget, your money should be allocated to the areas that are most important to you and your significant other.

 
Related:

• Wedding Budget Spreadsheet
• 12 Frugal Wedding Hacks
• 15 Wedding Expenses to Budget For

 
 
What do you think is the best way to save money on a wedding? If you are already married, what were your biggest costs?