Money Management

Disagreements about money are one of the leading reasons couples split. But savers and spenders aren’t necessarily doomed. Here’s what to do. 

A lot of personal finance experts will tell you there are two types of people: savers and spenders. Savers are, as you’d guess, good at saving money. They’re less prone to impulse buys or splurges, and they keep careful track of their finances.

Spenders, on the other hand, usually adopt a laissez-faire attitude about their finances. They tend to buy what they want, when they want it — savings be darned.

Arguments about money are a common reason for divorce. And some of the biggest blow-ups about money you’ll ever witness occur in relationships between savers and spenders. Which makes perfect sense; the two mentalities are diametrically opposed.

But arguments about your finances aren’t inevitable, even if you choose to marry your economic opposite. In other words, savers and spenders can coexist in matrimonial harmony — so long as they set the ground rules first.

Communicate expectations — and do it early

Well before you hit the aisle, you need to clearly communicate about both of your current financial situations, as well as how you’ll manage your money as a couple. Here are a few questions to discuss to get you started:

Will you have joint bank accounts or individual accounts? Every couple has their own take on bank accounts. Some couples like to have everything in joint accounts. Others may have a joint checking account for shared expenses, and individual accounts for everything else (this may work best for a saver/spender couple). The actual setup matters less than being on the same page about how you’ll handle it.

How will you split shared expenses? It’s rare for everyone in a relationship to have the same exact income. So, who pays for what? Have a plan for everything from splitting housing costs to meals out. It’s absolutely vital that you can agree on a fair answer to this question.

What are your short-term and long-term financial goals? If one partner wants to buy a house in five years, but the other would rather take extra vacations each summer — well, that’s a red flag. Make sure your financial goals align before you say “I do.”

Do you currently have debt? If so, what is your repayment plan? One big difference you’ll often see between savers and spenders is debt. Savers tend to be debt-averse, while spenders don’t mind some high-interest debt in the name of improving their lifestyle. While you don’t automatically become responsible for your spouse’s existing debt once you marry, it may still become your problem. Make sure you’re both upfront about where you stand.

What are your plans for retirement? Ideally, your marriage will last well into your golden years. So it’s important to be on the same page about how you’ll save for retirement, as well as how you plan to spend it.

There’s an old saying, “Good fences make for good neighbors.” When it comes to relationships, I like to paraphrase it into, “Good boundaries make for good spouses.” Clearly communicated financial boundaries can go a long way toward a happy, healthy relationship, no matter how disparate your financial mindsets may be.

I now pronounce you financially compatible

So long as you can agree on a clear set of rules, you can absolutely make a saver-spender marriage work. Indeed, the opposites-attract dynamic could even be beneficial to you both. Savers can help spenders limit their impulse buys, while spenders can help savers, well, live a little.

However, if you can’t come to a common consensus on your financial goals — and how you’ll reach them — you may need to accept that you simply aren’t compatible. While this can be painful to face, it’s always better to recognize it earlier than later.

Love may conquer a lot, but financial incompatibility is rarely one of those things.

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Hiring an accountant for tax help? Read on to see why you really need to pay attention to red flags. 

At this point, many people are scrambling to get their taxes filed. And you may have just hired yourself an accountant to take that task off your plate.

Hiring a professional for tax help is by no means a silly move or waste of money. Often, using an accountant means lowering your chances of making a mistake on your taxes and winding up on the IRS audit list.

Plus, an accountant might alert you to credits and deductions you otherwise wouldn’t have known to claim. The result? A higher tax refund or a lower IRS bill.

But your goal shouldn’t be to hire an accountant. Your goal should be to hire the right one. Choosing the wrong person to do your taxes could end up hurting you big time.

Be careful with who you hire

One of the biggest tax myths you might fall victim to is assuming that your accountant is on the hook for mistakes made on your return. That’s just plain wrong, says financial guru Ramit Sethi.

In fact, on his blog, it says, “It should come as no surprise that accountants get things wrong sometimes. When they do, it could result in an audit for you.”

Now there are steps you can take to help ensure that you’ve hired the right person to do your taxes. One is to ask for their Preparer Tax Identification Number, or PTIN. You can also ask questions about your accountant’s experience. If you own a small business, for example, you’ll want to work with someone who’s filed small business taxes before.

But even if your accountant seems to check off the right boxes, you might still end up with a problem on your hands. So it’s important to know what red flags to look out for.

Signs you’ve chosen the wrong person for the job

If your accountant doesn’t get you as large a tax refund as you’ve been eligible for in the past, that doesn’t automatically mean they’ve done their job poorly. It may be that your income rose or other circumstances changed, resulting in a smaller refund from the IRS.

Rather, a sign that your accountant isn’t doing their job correctly is if they push you to claim deductions that aren’t legitimate. If you bought a TV for personal use, you shouldn’t try to claim it as a tax write-off — even if you have a receipt for that purchase on your credit card statement. So if your accountant tells you to take that deduction, you may want to terminate your working relationship immediately.

Another big red flag is if your accountant refuses to sign your tax return. Any professional with a PTIN who’s paid to prepare a tax return has to sign off on it by law. If yours says they won’t, run the other way.

Finally, no matter what type of experience you have with your accountant, Sethi advises to check their work before having your tax return submitted. Just because you’re paying someone to crunch the numbers doesn’t mean they won’t make a mistake. And so it never hurts to review your return thoroughly yourself to make sure everything looks right.

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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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Interest rates are higher than they used to be. Read on to find out how much you can expect to pay. 

As you probably know, interest rates have risen rapidly and it now costs more to finance major purchases. However, while auto loan interest rates are much higher than they were a year or two ago, having good credit still makes a tremendous difference in your cost of borrowing money. Here’s a look at the average auto loan interest rates by credit score as of April 2023, and some steps you can take to get the lowest interest rate you can.

Average new car loan interest rates

Consumer interest rates on everything from mortgages to credit cards have risen significantly over the past year or so, and auto loans are no exception. The days of 3%-4% APRs on auto loans are gone, at least for now. According to myFICO, which is operated by the same company behind the widely used FICO credit scoring methodology, these are the average APRs consumers are getting on 60-month new auto loans today:

As you can see, your credit score can make a significant difference in the amount you’re paying for a car. And keep in mind that it isn’t just the difference in monthly payment — it can add up to more than you think over the term of a loan. As an example, a consumer with a 670 FICO® Score can expect to pay $1,680 in additional interest over a five-year loan.

Average used car loan interest rates

One thing buyers often find surprising is that used car loans typically have higher interest rates than new car loans, all other factors being equal. There are a few good reasons for this — most importantly, a used car represents a higher risk to a lender because the vehicle’s condition is less predictable at the time of purchase, relative to a new car. Plus, you can typically find longer loan terms on new cars, due to their longer expected life span.

With that in mind, here are the average interest rates on a 48-month used car loan as of April 4, 2023:

How to save money on your next auto loan

When interest rates were low, figuring out how to save on an auto loan was low on many buyers’ list of concerns, but now it can be far more important. For one thing, many manufacturers are still offering promotional financing deals. It isn’t quite as common to find 0% APR financing, but it’s still out there for many models.

It’s also more important to shop around for an auto loan these days. It’s a fairly quick process to fill out a pre-approval application with most lenders, and you might be surprised at the difference in interest rates that the same borrower can get from two different lenders. Plus, you can apply to as many lenders as you’d like without an adverse impact to your credit score — as long as all of the applications take place during a two-week shopping period, it will count as a single credit inquiry.

Finally, if you don’t need to buy a car immediately, it could be worthwhile to try and boost your credit score. Truly great credit takes years to build, but you might be surprised at how much of an impact you can have with a few months of smart strategizing. And the difference in moving up just one credit tier can save you thousands of dollars.

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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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Looking into getting an executive membership at Costco? Read on for some must-know facts about how the program works. 

For many people, the decision to get a Costco membership is an easy one. What you spend on a membership each year, you might more than make up for in the form of massive savings on groceries, household essentials, and other purchases.

If you currently have a basic Costco membership, you may be thinking of upgrading to an executive one. That way, you can enjoy even more perks. Here are some things you should know about the executive membership program.

1. You’ll pay twice as much as you will for a basic membership

A basic Costco membership costs $60 a year, while an executive membership costs $120. Clearly, that’s a big difference in price. But in exchange, you’ll be eligible for 2% back on every Costco purchase you make, whether it’s at a store or online. It’s similar to how you might get 2% cash back from your credit card for making purchases — only while your credit card might only give you 2% back in certain categories, at Costco, you’ll get 2% back on everything.

2. You’ll break even on that extra cost if you spend $3,000 a year

The idea of snagging 2% cash back on your Costco purchases might sound appealing. But you’ll want to make sure it’s worth shelling out an extra $60 a year for an executive membership. The decision becomes a lot easier, however, when you realize that $3,000 in annual Costco spending is your break-even point.

When you spend $3,000 in the course of a year, you get $60 back — the same extra $60 it costs to upgrade your membership. So if you look at your credit card bills from the past year and see that you’ve spent at least $3,000 at Costco, then it’s a sign that an executive membership may be right for you.

3. You can upgrade at any time during the year

Your Costco membership might renew every year during a specific month. But you don’t have to wait until your membership is up for renewal to upgrade to an executive membership. Rather, you can upgrade at any time. However, purchases made prior to that upgrade won’t count toward your annual reward.

4. Your annual reward is capped at $1,000

While Costco will let you snag 2% back on any purchase you make with an executive membership, whether it’s groceries, furniture, or travel, there is a limit as to how much of a reward you can receive each year, and it’s $1,000. But to be eligible for a reward beyond $1,000, it means you’re spending more than $50,000 a year at Costco. And so chances are, this cap isn’t really going to be a deal-breaker for you.

Upgrading to an executive membership at Costco could be a move that really saves you money, so it’s worth running the numbers to see if it’s worth it. And you may find that once you upgrade, you’ll never want to go back to a basic membership again.

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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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