Money Management

If you’re saving your cash for a dream wedding, it pays to find the best bank account for it. Find out why a money market account could fit the bill. 

Wedding planning can be stressful. You’ve got to pick a date, hire vendors, and book a venue — it’s a lot to think about. And if you’re putting aside the cash to pay for it, you’ve also got to worry about where to keep that money as you’re saving, and how best to access it once you’ve reached your savings goal. The good news is that a money market account could be a perfect fit.

What’s a money market account? MMAs are less discussed than their more common siblings, the savings account and the checking account. They are, in fact, a sort of hybrid between the two. And they’re offered by many award-winning banks, to boot. Let’s take a closer look at some specific features of MMAs, and how they can make this type of account a great place for your wedding fund.

You’ll earn interest

Money market accounts earn interest, which is their biggest point of commonality with a savings account. But unlike a savings account (which typically has no minimum deposit requirement), you may need to have a certain amount of money to open a money market account. In return, you’ll be granted the highest APY offered by the bank where you’re opening the account. And the best MMA rates right now are well over 4% APY. That means you get the opportunity to earn even more money on the money you have stored in one. And in these days of high inflation, it’s especially crucial that you protect your money from losing value.

Another thing MMAs have in common with savings accounts? The best rates are usually found at online-only banks, which can pass their savings on overhead costs onto customers in the form of higher APYs.

You’ll get easy access to your money

Now we’ve come to what MMAs share with checking accounts. One drawback of a savings account is often a lack of easy access to withdraw money. You won’t have to worry about how to tap an MMA account once it’s time to start paying those deposits to your vendors and wedding venue, though. Many MMAs come with a free debit card or checks. This means you won’t have to transfer money into a different account (like a checking account) to be able to access it. This will save you time and having to remember to move money before you need it.

Do note, however, that some MMAs may still have limits on the number of convenient transactions you can make in a given month. The Federal Reserve lifted the Regulation D rule (which formerly limited savings and money market accounts to six or fewer convenient transactions per month) in spring 2020, but it’s up to individual banks to determine their own rules. So check with your bank to see how often you can write checks or use a debit card with your MMA.

Your cash is protected

After several big-name bank failures so far in 2023, some people are understandably concerned about how safe their money is in a bank account. Thankfully, money market accounts fall under FDIC protection, as they are deposit accounts. This means that if your bank fails, up to $250,000 of your money kept in an MMA will be returned to you ($500,000 for joint accounts). It is crucial to check whether the bank you’re considering is insured. Hop on over to the FDIC’s BankFind Suite to look your bank up, or check the bank’s website (or give it a call to ask).

Getting to earn interest on your wedding cash, having easy access to it with checks or a debit card, and having the peace of mind that comes with FDIC insurance? For these reasons, a money market account is worth considering if you need a safe place to stash your wedding fund as you plan for the big day.

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Should fears of an economic downturn prompt you to stop investing? Read on to see. 

Will a recession hit in 2023? It’s really hard to say.

Many financial experts seem convinced that we’re headed for a period of economic decline. The Federal Reserve even says a near-term recession is likely.

Now, a recession can mean different things. In many cases, recessions lead to an uptick in job loss. They can also impact the stock market as well as the housing market.

Given the potential for a 2023 recession, you may be wondering whether now’s a good time to stop investing in your brokerage account or IRA. And the answer is, if you can afford to keep investing, it definitely pays to do so — despite the recession warnings that keep sounding.

It pays to put your money to work

It’s possible that stock values will drop during a recession. But that shouldn’t lead you to stop investing today.

Your best bet as an investor is to hold stocks for the long term. So if you invest in stocks this month and their value tumbles later on in 2023, you won’t necessarily be out any money. If you don’t sell them and wait for their value to recover and grow, you can easily come out ahead.

To give you an example of how important it is to keep investing even in the face of recession warnings, over the past 50 years, the stock market, as measured by the S&P 500’s performance, has delivered an average annual return of 10% before inflation. Now, keep in mind that that 10% accounts for both strong years on the part of the index and bad years.

Meanwhile, if you were to invest $1,000 in an S&P 500 ETF this year, sit back, and do nothing, in 30 years, your investment could be worth over $17,400, assuming that same 10% average yearly return. It may be that if you were to invest that $1,000 today, in six months, it might only be worth $900 if a recession were to strike and impact the stock market. But in time, you might end up with well more than your initial investment.

Make sure you’re prepared for emergencies

If you’re worried about a near-term recession, the only reason to stop investing now is if you’re not confident in your emergency fund. You should aim to have enough money in the bank to cover a full three months of essential bills at a minimum. If you’re not there yet, stop investing and start pumping more money into your savings account.

But as long as you have a solid emergency fund and are confident in your ability to be able to pay a few months of bills in the absence of a paycheck, there’s no reason to stop investing just because recession warnings keep popping up.

We don’t even know for sure that a recession will strike in 2023. But even if that happens, there’s no guarantee that it will impact the stock market significantly. And even in that scenario, there’s still a good chance you’ll benefit financially in the long run by putting your money to work today.

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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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Finance expert Ramit Sethi says your choice of partner has a major impact on your finances. Here’s why he’s right. 

There are many money decisions you will make during the course of your life, from what credit card to sign up for to how much to spend when you buy your house.

But, while decisions about investing or your mortgage loan payment can have an impact on your net worth, there’s one decision that finance expert Ramit Sethi says is most important of all.

Sethi says this decision makes the biggest financial impact

According to Sethi, there’s one choice that will make the biggest impact of all when it comes to your financial stability. And that choice doesn’t relate to a purchase or investment choice. Instead, it’s a choice you make in your personal life.

“The biggest financial decision you will ever make is the partner you choose,” Sethi explained on Twitter.

Sethi said there’s nothing wrong with thinking about how you and your partner manage money, and how you are similar and different in your financial philosophies — and this is something that should be discussed.

Is Sethi right?

Sethi is absolutely correct that your choice of partner is going to make a bigger impact on your financial life than almost any other choice you make. And that’s true even if you try to keep your finances separate by maintaining different bank accounts.

The reality is, when you combine your life with someone else’s, their money habits are going to affect your ability to build a shared life together in dozens of ways, big and small. For example:

If your partner has poor credit, you will have a hard time borrowing to buy a house or vehicle.If your partner has a ton of debt, some of your combined household income is going to have to go to paying that back.If your partner has a spending problem, there’s going to be less money available to do things together as a couple, including big purchases or even smaller expenses like date nights. If your partner doesn’t want to invest and save, that’s going to affect your ability to share a joint retirement. If your partner is a big spender, they may encourage you to overspend — or feel resentful when you try not to do so.

These are just a few of many, many examples of the ways in which your partner’s financial habits can affect yours. The reality is, it’s impossible to have a shared life without sharing at least some aspect of your finances. After all, even if you have separate bank accounts, if you save diligently to retire at 55 and your spouse doesn’t have a penny in the bank, you aren’t going to easily be able to travel together as retirees.

Small money problems can lead to big fights

If you’re not on the same page about big financial issues, you’re also setting yourself up for years of money fights and stress. And this can affect your marriage as a whole. In fact, a study conducted by Ramsey Solutions found money is the second most common reason for divorce, behind infidelity.

You don’t want to set yourself up to struggle with your partner for decades. If you can, talk about money early in the relationship to make sure you’re compatible. This could save you a lot of heartache down the line.

Of course, if you’re already married, it may be too late for that — but if you find yourself fighting about money often, it’s worth taking the time to really sit down and try to get on the same page about your financial philosophy. Like it or not, you’re in it together and there’s no way your partner’s personal finances won’t impact your own.

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It’s best to have strong credit when you put in a mortgage application. Read on to see what happens when your credit isn’t so great and you’re looking to borrow for a home. 

Many people who want to buy a home can’t just purchase one outright with cash. And so it’s common for home buyers to take out a mortgage loan.

But the lower your credit score, the more you might struggle to get approved for a mortgage. And even if you do get approved, you might end up getting stuck with an unfavorable rate on one. So if your credit score could use work, it’s best to try to boost it before putting in your mortgage application.

What’s the minimum credit score for a mortgage?

It generally takes a minimum credit score of 620 to qualify for a conventional mortgage. But there are other loan types where you can commonly get approved with a lower score.

With an FHA loan, for example, you can qualify for a mortgage with a credit score as low as 580 if you’re making a 3.5% down payment — an option that’s available with this specific loan type. (With a conventional mortgage, you’ll usually need to put down a higher percentage of your home’s purchase price at closing.) But you can take out an FHA loan with a credit score that’s lower than 580 if you’re able to make a 10% down payment or more.

The problem with applying for a mortgage with poor credit

When you apply for a mortgage with really poor credit, you risk getting denied outright. But let’s say your score is high enough to qualify for a mortgage, but far from great. In that case, you might end up getting approved to borrow for a home. But you might also get stuck with a higher mortgage rate on your loan.

The reason? When mortgage lenders loan out money, they take on the risk of not getting repaid. A lower credit score sends the message that you’re a riskier borrower than an applicant with a higher credit score. As such, your lender might stick you with a higher interest rate to make up for the added risk it feels it’s taking on.

How to boost your credit score before applying for a mortgage

If you want to not only increase your chances of getting approved for a mortgage, but snag a more affordable interest rate on one, then it’s important to do what you can to boost your credit score before applying. One way to do that is to pay all incoming bills on time.

Your payment history carries more weight than any other factor when calculating your credit score. Being timely with bills and avoiding late payments or delinquencies is key when you want your credit score to rise.

You can also raise your credit score by paying off a chunk of existing credit card debt. That could help shrink your credit utilization ratio, which is another big factor in calculating your credit score.

It could also help to check your credit report for errors. There may be a mistake on your credit history that’s dragging your score down, like a debt that’s listed as delinquent that you actually paid on time and in full. Getting an error like that corrected could result in a quick credit score boost.

All told, it’s possible to qualify for a mortgage with poor credit. Qualifying for an affordable mortgage with poor credit is another story. So if your credit score could use some work, do what you can to raise it before you put in an application to borrow money to buy a home.

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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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