Money Management

Opening a joint bank account with a partner can help you get on the same page about shared money goals. Here are the questions you need to ask before moving forward. 

My husband and I were married for many years before we finally opened a joint checking account together. It was just more convenient for us to maintain our separate accounts and divide up the bills.

Eventually, though, we had more shared financial goals and more things we were working toward together. So we opted to move all of our money into a joint account. This has been the right decision for us, but it’s not necessarily the best choice for everyone.

Before you open a joint bank account with your partner, here are three questions to ask to make sure the decision doesn’t lead to financial or relationship disasters.

1. Will we put all of our money into the joint account?

The first thing to think about is whether you will put all of your money into your joint account, or whether you will each deposit some and keep some of your own. Both options can work, but there are pros and cons for each.

Putting all your money into the joint account means you won’t have to make tough decisions about how much each person should contribute to your shared one — especially if you make different amounts of money. You can help keep each other accountable for spending goals, and more quickly amass funds in your joint account to pay for shared expenses. It can also make your money relationship more equal if there’s a major earning disparity or if one spouse stays at home.

Of course, it also means you’ll lose a lot of autonomy. You’ll no longer have your own account to do things with, like spend without asking questions or even buy each other holiday gifts.

My husband and I opted to put all of our money into our joint account just for convenience, especially since we each run our own businesses and the companies have accounts we have to maintain. But have a detailed discussion with your partner about which option is right for you before moving forward. You don’t want to deposit your entire paycheck into the joint account only to find your spouse is only putting 25% of theirs in.

2. What bills and expenses will be paid out of it?

The next big question to ask is which bills and expenses will be paid out of your joint account. If you are putting all your money into it, then obviously all your bills would be paid out of it. But, if you’re only putting part of your money in, this can raise some additional questions.

For example, say one of you had a pet you brought into the relationship. Would you pay for the vet bills out of your joint account, or just out of the separate account of the person who bought the pet? Or if one of you owned a house before getting together but you both live in it now, would you pay the mortgage, utility bills, and maintenance costs out of your joint account?

Addressing these issues before you move forward can help you avoid conflict and ensure you don’t end up overdrafting your account when your partner’s mortgage payment unexpectedly comes out of it.

3. Can we each take out money freely?

Since you’ll have a shared account, you’ll both be legally entitled to take money out of it. But you need to ask your partner when and how this will work.

If you’re both taking out money without being on the same page, this could leave you with too little in the bank to cover what you need. It could also create resentment and lead to fights if you don’t agree with each other’s spending habits.

On the other hand, if you can’t both freely withdraw funds, this could lead to resentment or to feeling too constrained. According to research from The Ascent, as many as 48% of married couples admit to making purchases they hide from their partners, while 52.3% of people in marriages believe that lying about money or spending is a form of infidelity. When you have a joint account together, conflicts or dishonesty about spending could become a much bigger issue than if you both have your own money to spend.

If you discuss in advance what the “ground rules” will be, such as perhaps each being allowed to spend a set amount each month without questions, you’ll avoid damaging your relationship with your joint account.

Since your relationship is important and money is a leading cause of conflict among couples, it is well worth taking the time to discuss the answers to these questions before even considering moving forward with a joint account. My husband and I had these talks and I think that’s a big reason why combining our finances has worked out so well for us.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Whittling down a credit card balance can be great for your credit score. Read on to learn more. 

Some people never come close to maxing out their credit cards. Others commonly max theirs out. And many consumers fall somewhere in the middle.

It’s okay to charge expenses on your credit cards because that’s what they’re there for. And if you pay your balances in full every month, then using those cards works to your benefit. That way, you’re not racking up interest on your purchases, and you get to enjoy perks like cash back and rewards.

On the other hand, maxing out your credit cards puts you in a bad spot. It means you’re likely to rack up a lot of interest on your balances, and it also puts you in a position where you have no leeway to charge additional expenses as they arise.

But what if you’re somewhere in the middle? Let’s say your total credit limit across your various cards is $10,000, and you’re carrying a $5,000 balance.

That’s not ideal, because you’re losing money to interest charges. But you’re also nowhere close to having your cards maxed out.

But what you may not realize is that your $5,000 balance could be having a negative impact on your credit score. And so if you’re in a position to pay down some of your existing credit card balance, it could help your credit score improve.

Your credit utilization matters

There are different factors that go into calculating your credit score, like your payment history and the average length of time you’ve had your loan and credit card accounts open. Another important factor is your credit utilization ratio, which measures how much of your available credit you’re using at once. In the above example, you’d be looking at a ratio of 50% for owing $5,000 on a $10,000 credit limit.

Once your credit utilization ratio surpasses the 30% mark, it has the potential to cause damage to your credit score. And as you might imagine, the higher that ratio, the more damage that might ensue.

FICO reports that maxing out your credit cards could cause up to a 95-point hit to your credit score if you’re starting out with a score of 710. That’s because your credit utilization ratio would be at 100% at that point.

A ratio that’s above 30% but not as extreme as 100% might result in a smaller drop — but a drop nonetheless. So if you’re able to pay off some of your credit card debt, your score might improve rather quickly as a result.

In fact, FICO says that for someone with a credit score of 710, paying off 25% of their credit card balance could result in a 20-point increase. So if you owe $5,000 on your cards, getting that total down to $3,750 could give your score a nice boost.

Of course, in this example, a balance of $3,750 is still beyond that ideal utilization ratio of 30% or less. But it’s an improvement over $5,000.

Paying down your balance could help your finances on a whole

The higher your credit score, the more borrowing options you tend to have — and the more likely you are to snag a competitive interest rate when you do seek to borrow. So for that reason alone, paying off some of your existing credit card debt makes sense.

But also, the less of a balance you continue to carry, the less interest you’ll have to pay. So even if your credit score is in decent shape despite your existing balance and you’re not so concerned about getting a modest boost, whittling down your debt by 25% could still help a lot from a financial standpoint.

Of course, finding the money to pay down debt is easier said than done. There may be some expenses you can cut back on, but those may be minimal if you’re already living pretty frugally.

But one reasonable option may be to turn to the gig economy. There are so many side hustles you can do at your own pace these days, and taking one on could make it possible to chip away at your debt nicely.

If you manage to find a lucrative gig that you’re efficient at, sticking with it might eventually help you get your credit card balance down to $0. That could not only work wonders for your credit score, but your financial picture on a whole.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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If you’re buying a home, it really pays to shop around with mortgage lenders. Read on for one writer’s experience with rate shopping. 

I am buying a new home very soon. Before I moved forward with the purchase, I got quotes from multiple mortgage lenders. I’m very glad I did, as the rates were dramatically different from one lender to the next.

Here’s how much the rates differed and the steps you should take if you’re shopping around for mortgage loans.

This was the difference in mortgage loans offered to me

Although I obtained all of my rate quotes over a one-week period, there was a huge amount of variation in the rates that were offered to me. In fact:

The lowest rate I was offered was 6.25%. This was a great rate from a bank I have a pre-existing relationship and a lot of assets with.The highest rate I was offered was 7.86%.

That is a difference of 1.61%. And it makes a very dramatic impact on both monthly payment and total interest paid over time. How big of a difference? The table below shows the difference in monthly payment and total interest cost per $100,000 borrowed with a loan at these two rates for a 30-year fixed rate mortgage.

As you can see, shopping around really paid off for me. If I had not gotten multiple mortgage quotes, I could have ended up paying a lot more per month and over time for my home loan — especially since, like many home buyers, I’m borrowing well over $100,000 to buy my property.

How to shop around for mortgage quotes

Fortunately, I knew I had to shop around and compare my options because I write about mortgages every day. But if you aren’t experienced in buying a house or in home loans, it can seem daunting to get a bunch of rate quotes.

The good news is, the process is pretty easy. Here’s what you need to do:

Decide which lenders to compare rates from. You can start with your current bank, but should also look at credit unions and online lenders, as they sometimes offer more affordable loan options.Visit the lender websites to apply for a rate quote. You’ll ideally want to look for a lender that allows you to get a rate quote without a hard credit check. This isn’t always possible, though. The good news is, if you’re shopping around for a home loan and get multiple credit inquiries, this usually won’t damage your credit score too much because lenders and credit reporting agencies assume you’re just comparing options.Compare apples to apples. When lenders give you a quote, make sure that it’s always for the same type of loan. For example, if you want a 30-year fixed rate mortgage, be sure you’re getting a quote for that from each lender rather than a 15-year loan or an adjustable rate mortgage. You’ll also want to be sure you aren’t being charged “points” by any of the lenders giving you a quote. Points allow you to buy down your interest rate by paying a percentage of your loan amount. They’re sometimes worth paying but you don’t want them included in your original rate quote, as it makes it harder to compare loan offers.Look at the APR. You’ll likely be quoted both the interest rate and the APR, which is the annual percentage rate. This is a common financial term that reflects actual costs of borrowing after taking fees into account. The APR can help you get a clearer picture of total borrowing costs.

You should aim to get quotes from at least three different mortgage lenders, and ideally a few more, so you can see which lender truly offers you the best deal. This is going to take some time, but as my experience shows, it’s well worth it.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.

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Some artificial intelligence side hustles could help you earn good money each month. Here are some popular ways to make money with AI. 

As someone who writes words for a living, I’ll admit I’m more than a little nervous about artificial intelligence. I’ve read (too many) opinions for and against the technology, and everyone seems to be making many early promises that it will improve work or destroy jobs.

Of course, it could do both. Research from Goldman Sachs shows AI could expose 300 million jobs to automation, but also noted that some of those jobs will be complemented by the tech.

We’re clearly in a transition period right now. It’s a time when many people are dabbling in AI, trying to figure out creative ways to use it — and how to make money with it. So while we’re all assessing how AI will make us obsolete, er, I mean improve our lives, here are three ways AI is already helping people improve their personal finances by earning them thousands of dollars.

1. Book publishing

It’s pretty easy to find stories online of people who have already used AI to publish books. Ammaar Reshi, a design manager for a tech startup, used OpenAI’s chatbot ChatGPT to create a children’s book in a weekend. Reshi said on X, formerly Twitter, that he used ChatGPT to write the story and Midjourney — an AI image generator — to illustrate the book.

It cost him just $30 for the monthly Midjourney subscription. He then posted the book on Amazon, Walmart, and Barnes & Noble, and sales of the book quickly jumped to $2,600, according to Business Insider.

There are some caveats with using AI to create and publish books. First, while this one example generated a good amount of money for a weekend’s worth of work, there’s no guarantee that other people will be as successful with their AI book project.

Second, online platforms take a significant percentage of book sale revenue, which will eat into anyone’s profits if they publish their AI work on those platforms. Still, Reshi’s side project showed the possibility of making thousands of dollars from an AI project that took less than a weekend.

2. Creating pitch decks

Pitch decks are presentations given to investors by startups in need of money. If your company is looking to raise capital, you create a pitch deck — or have someone make it for you — and go through the presentation to convince people to invest in your company.

Some people have already started using AI to help create pitch decks and are making good money doing so. Larry Lundtrom, a pastor in Alabama, makes a few pitch decks each week with the help of Tome, an AI pitch deck app, earning between $500 to $1,000 per project. The Wall Street Journal recently reported that by using AI, Lundstrom was able to cut parts of his creative process down from two weeks to just two and a half days.

And to add an extra layer of AI oddity to all of this, TechCrunch recently wrote about a company called DeckMatch, that uses AI to evaluate pitch decks submitted to venture capitalist firms. So, AI can help create the pitch decks, and then AI can also evaluate them. What a world.

3. Freelance writing

This one hits a little too close to home, but of course, there are lots of people out there already using ChatGPT and other AI writing tools like Jasper to create blog posts, articles, web content, and more.

And while the content that AI tools churn out isn’t always the best quality, writers who spend time finessing the AI-generated text can boost their writing productivity. The Wall Street Journal noted that a Boston marketing company was able to take on 10 additional clients — and make $25,000 from them — by using AI to speed up their writing process.

Upwork, a popular platform for freelance workers, says the average freelance writer makes $42,000. If a writer uses AI to help speed up their process of writing, then that could translate into helping them earn a few thousand dollars each month.

AI is a rapidly evolving side hustle

While the above AI side hustles may be able to make you some money right now, keep in mind that this space is rapidly evolving. There are still a lot of unknowns about the benefits of using AI in the workplace.

This means that what makes a few thousand dollars a month may not generate a steady income into your savings account. But tapping into AI right now to boost productivity and help you earn extra income even in the short term could be a good way to help pay off debt or save for a vacation. Just maybe don’t jump all-in on AI article writing — I’m not ready for retirement just yet.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com, Goldman Sachs Group, and Walmart. The Motley Fool has a disclosure policy.

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