Personal Finance Roundup

4 tax moves NOT to make in 2007 [Bankrate] “Here are four instances that could provide better tax results for some taxpayers who wait until 2008.”

Do What You Love and Starve [Kiplinger] “Forget the inspirational mumbo jumbo. In reality, following your passion can be a risky career move.”

New his-and-her banking [MSN Money] “More couples are ditching the share-everything approach and keeping some money separate. Personal-finance experts say it’s a good idea, but marriage counselors aren’t so sure.”

Make the Most of Your Charitable Donations [Smart Money] “Here are nine steps to ensure your donation makes the biggest difference.”

When a Luxury Vacation Cultivates Philanthropy [NY Times] “A new kind of philanthropic travel lets wealthy vacationers do good works while still enjoying plush hotel suites and fine restaurants.”

FREE MONEY FINANCE
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  1. B says:

    My parents have had separate checking accounts, and they’ve been happily married for 30+ years. They do share certain expenses like the mortgage and food, but dad takes care of his car payment and mom takes care of hers. I suppose it helps that they’re both in the finance industry.

  2. Caswell says:

    Like anything, it’s a decision that needs to be made on a couple-by-couple basis.

    My wife and I (married for six years) have always had joint accounts. It works extremely well for us. I think it helps ease some tension that otherwise might be there due to a large disparity in income, since we’re both throwing our earnings into the family pot.

    I know folks with seperate accounts, and it seems to work for them.

  3. anatak says:

    “Nearly half of married households have two or more checking accounts, up from 39% in 2001, according to the Raddon Financial Group. That suggests a rise in his-and-her bank accounts.”
    Thats a terrible assumption. Multiple checking accounts =/= his and hers. I would argue that increase in accounts would correlate with more people working from home, working freelance, and/or needing a separate account for business expenses as more and more companies are putting that responsibility on the employee.

    Also, since a couple is declared ‘husband and wife’ and not ‘limited liability partnership’, I’ll take my advice from the relationship experts and not financiers.

  4. Munsoned says:

    My wife and I have individual checking accounts, but we have linked those accounts so that we can transfer funds in/out at will. When we log in to view our own account we can see the others account as well, and all of the transactions they make.

    This works for us becuase we both want to be responsible for our own spending, and not have to worry about bouncing checks or overdrawing our accounts because we didn’t know what the other was doing. For example, I take care of all of our bills out of my account, so I don’t want to worry about bouncing a check to our mortgage holder because I didn’t know she spent $100 on diapers/food/baby clothes/whatever. She’s in charge of day-to-day spending on diapers/food/baby clothes/whatever, and again does not want to bounce a check because she forgot that the car payment hasn’t cleared the account yet, etc.

    We just switched banks, and still decided to open up two accounts again since it seems to work for us pretty well.

  5. @anatak: I agree that the article starts off from an extremely flawed assumption. If it’s “his and hers” checking then why do some married couples have more than two banking accounts? Are there 3rd and 4th genders I just don’t know about? Polygamy? What?

    I find it interesting that they don’t bother to say whether or not the multiple accounts are at the same financial institution. They don’t even say whether or not any of the checking accounts are joint accounts. If both checking accounts are joint accounts that can’t imply a his/hers situation can it?

  6. Canadian Impostor says:

    What about the three account system, ie. his, hers, and ours?

    Private accounts for whatever, and a joint account to pay bills out of that each party contributes to based on whatever agreement is reached.

  7. route52 says:

    I’m not married, but when I do get married, my husband and I will contribute an equitable proportion of our income to a joint account to cover our joint expenses (groceries, mortgage, dinners out, whatever – equitable proportion means that if I make more than he does I contribute more). There will be a budget for that joint account so we’ll know exactly how much money needs to go into it. Then whatever is left over from both of our incomes will be our own money. I like to buy shoes. My boyfriend likes to buy comic books. We both like to not have to ask the other one permission to buy stuff. I see zero reason why that should change if we get married someday.

    I just don’t understand how having MY money, that *I* earn, in MY checking account would lead to mistrust between me and my partner. This whole “if you have separate accounts it means you don’t trust each other” thing is not only 100% bullshit and illogical but it’s also unbelievably dangerous financial advice, especially for someone who might be a stay at home parent. It has nothing to do with “trust” and everything to do with responsible money management. In fact, I see it as the other way around – if I DON’T trust my partner I’m going to want to watch every single penny he spends, but since I DO trust him, I have no problem with him spending his money however he sees fit. I’m disappointed that that ridiculous advice comes from a psychologist. I would never, ever, ever under any circumstances place responsibility for care of my mental health in the hands of a person who has such clearly deranged ideas about what constitutes true trust in a relationship. If a premarital counselor ever suggests to me that I give up all control of MY MONEY, I’ll walk out and never return.

  8. B says:

    This reminds me of the Episode of Mad Men where the ad firm did a campaign for a bank offering “executive” checking accounts that were for married men who wanted to keep some of their spending secret from their wives.

  9. Anitra says:

    @route52: How should a stay-at-home spouse react to the “separate accounts” idea? Does that mean they don’t have any money of their own to spend?

    You can do the separate “fun money” idea without having separate checking accounts. My husband and I pool all our money into one checking account, and we each have a designated “fun money” amount each month to spend as we see fit (same amount for each of us). If there’s any left over (rarely), it goes into a personal savings account – which are the only accounts we have that aren’t joint ownership.

    My father did the “separate accounts” thing and kept the majority of his raises over the years secret from my mother. She was shocked when they divorced and he had tens (maybe hundreds) of thousands of dollars that she never knew about.

  10. johnva says:

    @route52: It’s also more risky to have all of your money in joint accounts, for reasons other than the possibility of divorce. A big reason is liability. In the event that one of you is sued and/or otherwise owes someone a lot of money, joint accounts make it much easier for all of your money to get seized automatically. Basically, the courts can just assume it all belongs to either spouse if their name is on that account. They can’t do that with individual accounts; instead, they have to go through a process of determining what belongs to whom.

    Also, although this isn’t specific to just joint accounts, it’s more risky to have all your money in a single account for reasons of fraud. If someone cleans out the account, you’re in a worse position if both of your spending cash is in there and both of your paychecks get direct deposited to it.

  11. johnva says:

    @AnitraSmith: A stay-at-home spouse would probably work out some sort of arrangement with the working spouse about getting some spending cash to use for their own purposes, in their own account. No one is saying that you should only get to keep what you personally earn to yourself.

    This brings me to the other point: communication. It sounds like in your parents’ case, the problem was lack of communication about money, not the separate accounts. You can have separate accounts and still be completely open about showing each other how much you have in it, transactions, etc. If you’re being very secretive about it then that is a relationship problem, not a money problem.

  12. route52 says:

    @AnitraSmith: That’s a good question, and I see your point. If my husband wanted to be a stay at home parent, I would pay him a stipend. The way I see it, he would be performing labor for our family and home and he would deserve compensation. That would be his money, going into his account, and he’d be free to spend it however he wished. I would pay for the joint expenses. This, of course, is assuming that I ever make enough money to support a family/household/husband on one income. My husband could make a brazkillion dollars a year some day and I would still never be a stay at home mom, so that isn’t an issue for me. (I have nothing against stay at home parents, I just have a host of family-history and psychological issues that would make me the worst stay at home mom ever – it would be the wrong decision for me personally but I don’t think it’s wrong for other people. Just to forestall any flames).

    I see your point about the danger of separate accounts if one partner is inclined to hide stuff from the other, and I think that the solution you have found with your husband is certainly a good one. I can see that problem alternately being easily solved by both partners having knowledge about and access to the total financial situation. Separate money does not have to equal secrecy (except around Christmas where presents are concerned!) The problem in your household, as I see it, was not the separate accounts, it’s that your father didn’t trust your mother, and he would have found a way to hide that money regardless. I grant you that it probably made financial transparency more difficult, but ultimately, a joint account isn’t going to prevent someone from sneaking or hiding or cheating. It didn’t prevent my mom from racking up thousands and thousands of dollars and credit card debt and hiding it from my dad! So my perspective on joint vs separate accounts is fueled by family drama as well.

    JOHNVA: thanks, I hadn’t thought of the fraud thing – that makes a lot of sense. The possibility of divorce isn’t even my number one concern with joint accounts – it’s just the idea that I have to answer to someone else in order to spend my money. Nope. Not gonna happen.

  13. Caswell says:

    @route52:

    Joint accounts don’t have to mean you “have to answer to someone else in order to spend your money”. I certainly don’t care about my wife’s day-to-day expenditures and she doesn’t care about mine. We have enough trust in each other’s judgement and we have a common goal for ourselves financially. Joint account or not, that’s the key part, especially considering one spouse is eventually liable for any financial trouble the other gets into.

    The only things we “clear” with each other prior to purchase are big-ticket items that would probably have to come out of a joint account anyway.

    Obviously you’ve got personal experience shaping you, but I’d caution you against preconceived ideas of how any future marriage will be. It truly is dependent on the relationship. For example, a close friend of mine would have done well to have seperate accounts during her first marriage, and in her current marriage they’d be better off as a couple if they had joint accounts.

  14. ceejeemcbeegee is not here says:

    @Canadian Impostor: This has worked for my parents 44-year marriage. “Ours” paid for cars, education, vacations, homes. They agreed to each put in 50% of each pay check into the “ours” account.

  15. holden0 says:

    The SmartMoney article is peddling the same old story about “minimizing administrative expenses” in charity, which just makes no sense. They quote me saying it’s like rating a charity by how much of its budget goes to actors, but then they make it sound like I’m endorsing wussy little adjustments instead of what I’m really saying, which is that trying to minimize “overhead” is BACKWARDS when you’re evaluating a complex organization working on a difficult task.

    None of the resources given there look in depth at whether charities are getting *results* – except the one they link to right at the top, GiveWell.net .

  16. nardo218 says:

    The “Do what you love” article is just a rant of personal opinions, with imaginary social science attempting to back it up.