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How to Have Hard Money Conversations

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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When it comes to money, 61% of women would rather talk about their own death, according to a report by Merrill Lynch and Age Wave. Meanwhile, 43% of people in a Fidelity study failed to correctly identify how much their partner makes.

If money is something we all deal with, why is it so hard to discuss? “It’s a really delicate issue because we all have different needs and priorities when it comes to finances, and what one person may value to save and protect might not be the same with someone else,” said Lizzie Post, great-great-granddaughter of etiquette guru Emily Post and co-president of The Emily Post Institute. “Plus, even if we’re comfortable sharing, we’re aware that other people might not be.”

Of course, not talking about money isn’t really a viable option, especially when it comes to the important people in our lives, and having those hard money conversations can actually lead to a better understanding of how to manage financial issues with other people. No matter who you’re talking with, Tammy Butts, regional executive vice president and branch manager for AXA Advisors, suggested following three rules:

  1. Start early. Whether it’s a spouse or partner, your children or a roommate, the sooner you can start having money conversations, the better — “you want to ultimately have them before you’re at the crossroads.”
  2. Develop a plan. When you develop a strategy, it allows you to make solid financial decisions. A good strategy to start with is determining the important financial information you’ll need before moving forward with a conversation. Depending on whom you’re talking to and what you’re discussing, you may need to share specific details about assets, where that money is kept and what you plan to do with it.
  3. Keep communicating. One conversation is a good start, but in some cases you’ll need to talk more frequently about a particular topic. Communicating frequently about and updating your plan as necessary will allow you to make decisions and stay on track.

Besides following those three rules, understanding the etiquette and psychology behind money conversations with different types of people in your life will help you ace those particular talks the next time you need to have them.

How to talk about money with your partner

Why it can be difficult: When it comes to your partner, you could be discussing pivotal issues that greatly impact you both, like how to handle debt, how you’ll split shared financial responsibilities and whether or not you’ll be combining your finances. “When we think about equality in relationships, this is one of those places where people can feel a big divide depending on how they’re willing to contribute and see their differences,” Post said.

From an etiquette perspective: As far as etiquette goes, Post suggested coming at any conversation with your partner from a place of understanding. “Take a minute to say, ‘I know this person, but I may not know how they feel about financial matters,’” she said. “That often puts you in a place of being willing to ask questions, rather than just make statements.”

Post suggested asking your partner when a good time would be to discuss a certain financial topic, rather than demand it happen in the moment. For instance, asking if they’d be willing to sit down and have a conversation about managing joint expenses, rather than declaring that it’s time to open a joint checking account. It’s important to also ask your partner to be willing to talk about what their ideas might be and what their expectations are: “You’re trying to create a space where you’ll gather all the information about each other, rather than just come up with a solution right off the bat.” As Post noted, it should be about creating a safe space to first put forth ideas, even if you don’t come up with a solution right away.

From a financial perspective: According to Nathan Astle, student board member of the Financial Therapy Association, it’s important to remember that because money is driven by so much emotion, you should go into the conversation with a certain amount of preparation for emotional responses, for both you and your partner. Remember to speak for yourself with phrases like, “I feel,” instead of “you are,” validate their point of view (even when you disagree) and take a break if the discussion gets too heated (with the expectation that you’ll come back to the topic once you’ve cooled down). Keep the end goal that you’ll talk about what you want to get from the relationship and how you believe money can help you get there, he added.

Using a budgeting app can also help keep everything in one place so conversations are easier moving forward — here are 11 good ones that are totally free.

How to talk about money with your kids

Why it can be difficult: The types of conversations you have with your children will depend on their age, but talking about subjects like saving, credit and debt can make a big impact in your kids’ lives. In fact, while two-thirds of Americans say their family or parents influenced their saving and spending habits, only 56% of American parents said they have actually talked with their kids about money, according to a Chase survey.

From an etiquette perspective: As with your partner, Post advised to always invite your child to have a financial conversation before actually having it. Say something like, “I’d like to talk with you about your allowance, and your mom and I have some ideas and wanted to talk with you about what we’re thinking.” Depending on your plan of action, you can also let your kid know if you’re open to suggestions (as in, “Mom and I have some ideas about your allowance and wanted to get your opinion”).

From a financial perspective: Remember to always keep your kid’s maturity level in mind before bringing up emotional financial topics. “When children are involved in adult financial matters too soon, serious problems can occur,” said Sarah Swantner, a certified financial planner and financial therapist in Rapid City, South Dakota. Instead, “have age-appropriate conversations around money and involve kids in money activities that are rooted in real life, like saving for a much-wanted toy or doing chores to earn money,” said Swantner. “But keep them out of the family financial stress.”

Butts also reminded parents that talking to their kids about money shouldn’t end as they age. “Talk to them about saving when they’re in grade school and college and as young adults, as well,” she said. “I see my clients with their kids, and I have the same discussions with my own adult children about credit. It’s so important we keep educating these young people.”

How to talk about money with your parents

Why it can be difficult: At a certain point, the parent-kid conversation flips and it becomes the adult child’s responsibility to potentially talk about some uncomfortable money topics with their parents — these could include anything from legacy planning, taking over finances or overspending in retirement. It can be especially difficult if there is a history with your parents of not talking about money, Swantner said.

From an etiquette perspective: Much like the conversations before, Post suggested that any financial conversation with your parents should start with a request. “Ask permission to have the conversation, and when you get it, ask to what degree they are comfortable talking about it with you — let them know you don’t want to overstep your bounds,” she said. Always thank your parents for sharing whatever they’re willing to, and ask if you can revisit the topic again in the future to touch base and make sure things are staying the same, or to address them if they’ve changed.

From a financial perspective: The sooner you can start talking about some of these important topics and getting the infrastructure in place, the better. Still, Butts admitted that this is the topic where she tends to see the most difficulty and friction. “You don’t want any surprises, and the more you can make some of these decisions in advance so you don’t have any, you can hopefully have more harmonious outcomes,” she said. “This is where getting an advisor as a neutral third party can help facilitate those conversations.”

Without the help of a third party, however, Swantner suggested sticking to the facts. “Avoid judgments and evaluations,” she said. “Focus your conversation on yourself and not the other person, making your concerns and requests for information clear. If your parents realize they will be helping you by sharing the information, they may be more likely to open up.”

How to talk about money with your friends

Why it can be difficult: Talking to people our own age about money can bring up feelings of inadequacy if the scales seem tilted in one direction. In fact, 44% of people in a Bank of American survey said that money was a major cause of stress in a friendship.

From an etiquette perspective: You can make your life a whole lot easier by being direct with your friends about certain financial situations. “I find there are less assumptions made about me if I open up just a little bit about whether budget is or isn’t a concern,” said Post. She suggested trying something like: “Johnny, I would so love to celebrate your birthday. Financially, I’m trying to stick to my budget, but I would love to have you over for a cup of coffee for some one-on-one time.”

From a financial perspective: Keep in mind that taking some initiative can prevent most difficult money conversations with friends from happening in the first place. “Before everyone starts ordering, make sure that you are okay just splitting the bill so everyone pays for what they bought,” Astle said. There are plenty of apps available to help make splitting the bill less painful. If lending money is the issue at hand, Astle noted it’s always best to treat those situations as you would any other legal transaction. “That takes some of the hard emotional stuff out of the conversation since it keeps you, your money and the relationship safe.”

How to talk about money with your roommates

Why it can be difficult: Chatting with roommates about financial topics can be tricky, since the areas you’ll likely be covering — rent and other shared financial responsibilities — impact all parties on a daily basis. Plus, living with someone you’ve had an uncomfortable money conversation with can be downright unbearable.

From an etiquette perspective: Talking early and often is key to keeping problems at bay, but if a problem does arise — like someone missing rent, for example — it’s best to address the issue from a standpoint of “how are we going to solve this,” rather than from a place of anger, said Post. Again, you’ll want to ask for permission before having any conversation, and setting up a roommate talk on a monthly basis can help assure everyone stays on the same page.

From a financial perspective: If you have several roommates, Astle suggested treating any conversation like a family situation where everyone has equal say and everyone spends time trying to understand each individual. “It works wonders when people feel understood,” he said. Butts also recommended communicating up front that any money conversations between roommates should be about business versus personal. “If you can start by saying, ‘Let’s make this a business transaction,’ now it’s nobody pointing fingers — instead it’s about here’s what’s needed, here’s what everybody shares and here’s when it’s due.” Butts also suggested setting consequences ahead of time so there are no surprises, and potentially even putting it in writing and having everybody sign. “That way, if someone violates it, they knew, and now you aren’t just picking on them,” she said.

The bottom line

Whether you love ‘em or hate ‘em, at the end of the day, certain financial conversations become inevitable. Taking some time to understand the best approach in each scenario will help everyone come out of a money talk unscathed, and with the relationship still in tact.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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Election 2020: What’s a Wealth Tax?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

With the 2020 presidential race well underway, Democratic candidates and policymakers have begun present their ideas on how to remedy what they perceive is a tax code that favors America’s wealthiest citizens. Taxing the uber-rich has long been an initiative supported by progressives, and it was amplified in the wake of last year’s sweeping tax reform, which cut taxes for the wealthy and corporations alike.

Some plans have come in the form of structured formal policy proposals (see Elizabeth Warren’s Ultra-Millionaire Tax) drafted with the help of economics professors, while others have made headlines based on comments in nationally-televised interviews (a la Alexandria Ocasio-Cortez’s 70% income tax idea). If Democrats can pull off a win in 2020, these early proposals could offer insight into what might be in store for the tax code.

All of the jargon and acronyms surrounding the subject of new taxes can obscure exactly what presidential hopefuls and pundits are proposing. Check out the table below to understand the basics of what’s currently being discussed, as well as ideas that were under consideration in the not-too-distant past.

Ultra-Millionaire Tax70% Income TaxFor the 99.8% ActPaying a Fair Share Act of 2012
Championed by: Sen. Elizabeth WarrenChampioned by: Rep. Alexandria Ocasio-CortezChampioned by: Sen. Bernie SandersChampioned by: Sen. Sheldon Whitehouse, Warren Buffett and President Barack Obama
Details: This would tax a household's net-worth between $50 million and $1 billion at 2% every year, and any net worth over $1 billion at an additional 1%.Details: Any income earned over $10 million would be taxed as much as 70%.Details: This bill introduces a progressive taxation structure to the estate tax, starting with estates valued at $3.5 million — much lower than the current $11.4 million.Details: A piece of legislation inspired by the so-called “Buffett Rule” and supported by President Obama, this act would ensure anyone earning more than $1 million would have to pay a minimum tax rate of 30%.
Status: This is only a policy proposal by the Warren campaign and hasn't been taken up by the Senate.Status: There's been no official policy proposal from Rep. Ocasio-Cortez.Status: No vote has been taken on this piece of legislation.Status: The bill was introduced in the Senate in March 2012, but failed to proceed. It has been reintroduced several times, as recently as 2017, but has not been enacted.

It’s clear that while there are many ways of skinning a cat, the basic differences between the proposals lie in what exactly is being taxed. Most Americans probably understand the basic definition of an income tax, but things get more complex when discussing taxation of net worth and wealth.

How to tax the rich: Net worth, estates or income?

When experts and politicians discuss a wealth tax, they almost always mean a tax on net worth. If you own a business and private assets worth a total of $100 million, but you also carry $75 million in liabilities (such as debt), then your net worth — aka your wealth — is $25 million.

What makes a potential wealth tax, like the one Sen. Warren has proposed, so unusual is that it targets the passive wealth of an individual. Most taxes levied in America involve some sort of transaction — whether it’s a tax on the income you earn from a job, a sales tax you pay at a point of sale, a capital gains tax on a stock sold, or even an inheritance tax you pay when you take possession of an estate. With a wealth tax, no transaction need happen for the tax to be levied. There’s no hiding from the IRS — they’ll be coming for that collection of Van Goghs, whether you sell them or not.

Simply put, wealth is any asset an individual possesses that has monetary value. Some examples include:

  • Property, like a house or land
  • Bank accounts
  • Any businesses owned
  • Stocks and bonds
  • Private assets, such as art, a Lamborghini collection, diamonds, etc.

Bernie Sanders’ proposal would tax the wealthy on their estates. Estates worth between $3.5 million and $10 million would be taxed at 45% of the estate’s value, with the tax climbing as the value of the estate grows, reaching a peak of 77% of any estate worth $1 billion or more.

To demonstrate how much money his bill would raise, Sanders assumes the net worth of Jeff Bezos at $131.9 billion and claims the Amazon CEO would have a maximum tax liability of $101.3 billion on his estate under his legislation — almost $49 billion more than Bezos would owe under the current law.

Who would have to pay a new wealth tax?

It’s impossible to predict what a hypothetical wealth tax would actually look like after surviving the legislative process needed to make the new tax law.

“In terms of what’s taxed, it’s whatever Congress wants,” said Howard Gleckman, senior fellow at the Tax Policy Center, a nonpartisan think tank based in Washington, D.C.

Even with the candidate proposals out now, there’s no certainty that their campaign proposals would actual survive a battle in Congress. Hypothetically, however, the wealth tax championed by Sen. Warren would apply to individuals with a net worth of $50 million (with an additional tax for those with a net worth of $1 billion and more). If her “Ultra-Millionaire Tax” passed as currently proposed, the results would be:

  • a 2% annual tax on household net wealth between $50 million and $1 billion
  • an additional 1% annual tax on household net wealth greater than $1 billion

An analysis of Sen. Warren’s wealth tax by Emmanuel Saez and Gabriel Zucman, both economics professors at the University of California, Berkeley, estimates it would directly affect only 75,000 households and raise $2.75 trillion over the course of 10 years.

What are the arguments for a wealth tax?

With Democratic leaders advancing ambitious and expensive new policy programs, from the New Green Deal to a national single-payer healthcare system, a wealth tax on America’s richest citizens is seen by some as necessary to raise the revenue needed to fund these sweeping initiatives.

Sen. Warren, for instance, recently unveiled a plan to help provide child care and early education for every American family. The Universal Child Care and Early Learning Act would guarantee “that every family, regardless of their income or employment, can access high-quality, affordable child care options for their children from birth to school entry” and would cost the federal government $70 billion every year, according to an analysis by Moody’s Analytics. The senator’s document states the revenue raised by her proposed wealth tax would more than cover the cost of universal child care.

Rep. Ocasio-Cortez also swings for the fences with the New Green Deal resolution she introduced to Congress, which tasks the federal government with “eliminating pollution and greenhouse gas emissions as much as technologically feasible” and “meeting 100 percent of the power demand in the United States through clean, renewable and zero-emission energy sources,” among other things. When asked about the practicalities of meeting these goals in an interview on 60 Minutes, the freshman congresswoman stated that “people are going to have to start paying their fair share in taxes.”

What are the arguments against a wealth tax?

Assessment and enforcement. One of the biggest concerns critics have of a possible wealth tax is how it can be assessed and enforced. Determining the wealth of the individual isn’t as easy as asking Alexa “How rich is Jeff Bezos?” and then sending him a bill. The IRS will have to dedicate significant resources to evaluating the value of a taxpayer’s private assets and businesses owned, a challenge Sen. Warren’s online explanation of her wealth tax proposes solving with the tightening of loopholes in the current tax code and increasing the IRS’s enforcement budget. The proposed tax also includes a one-time 40% tax on wealth above $50 million of any citizen renouncing their citizenship to flee to more tax-friendly countries.

But that kind of bureaucratic expansion runs counter to how policymakers have traditionally viewed the role of the IRS. According to Gleckman, for decades, “all of the pressure has been on reducing IRS staff and limiting its ability to do audits.”

“What’s striking about it,” he continued, “is it doesn’t seem to matter whether the Democrats are in charge or the Republicans — there’s very few politicians who are ever interested in giving more resources to the IRS.”

A drain on the job creators. Another argument that some wealth tax advance skeptics have is that wildly successful entrepreneurs won’t want to invest in their businesses (which would be considered as part of their wealth) and the economy would lose out on the new jobs that investment would create.

“The job creator argument is not entirely specious,” said Gleckman. “You have created, at least on the margin, a modest disincentive for very wealthy Americans to invest [in their businesses] and maybe created an incentive for them to invest outside of the United States.”

The bottom line on the wealth tax

The wealth tax’s current 15 minutes of fame may provide plenty of red meat for politicians and pundits to chew over as the 2020 election season ramps up, but none of the proposed ideas would affect the taxes for the vast majority of Americans. Even if you do have more than $50 million in wealth or are earning more than $10 million in income each year, it’s extremely unlikely any proposed tax under discussion would be passed by Congress and signed into law without significant additions and changes, so there’s no sense worrying about what currently amounts to a campaign talking point.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

James Ellis
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James Ellis is a writer at MagnifyMoney. You can email James here

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How to Recognize a Financially Abusive Relationship — And How to Get Out of It

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Domestic violence shatters a victim’s sense of physical and emotional safety, and financial abuse makes it even harder for victims to break free from the grip of their abuser.

Financial abuse is “using money and financial tools to exert control,” according to the National Network to End Domestic Violence. Abusers may give victims an allowance, harass them at work or ruin their credit by opening credit cards or borrowing money and refusing to pay it off.

An abusive partner limiting a victim’s ability to save money, find housing or develop financial independence makes financial abuse one of the main reasons victims decide to stay in or go back to abusive relationships, said Kimberlina Kavern, senior director of the Crime Victim Assistance Program at Safe Horizon, a New York-based nonprofit victim assistance organization.

And it is frighteningly common. According to the Centers for Disease Control and Prevention, one in four women and one in nine men have been the victim of intimate partner violence, which includes sexual and physical violence and stalking. In a 2008 study published in the journal Violence Against Women that included accounts from 103 survivors of domestic violence, 99% reported they had experienced financial abuse.

Here’s how to identify financial abuse in a relationship, and the steps to take to find safety.

How to recognize financial abuse

Financial abuse can happen alongside physical and other types of emotional abuse, including intimidation, isolation and coercion. “What’s backing that behavior up is the constant threat of actual physical or sexual violence,” said Kim Pentico, director of economic justice at the National Network to End Domestic Violence.

An abusive partner may engage in financial abuse in the following ways, according to Kavern, Pentico and Rosemary Estrada-Rade, director of digital services at the National Domestic Violence Hotline:

  • Stealing credit cards or cash
  • Taking out debt in the victim’s name, or forcing the victim to cosign on a loan
  • Hiding money
  • Forcing the victim to file fraudulent tax returns
  • Giving the victim an allowance
  • Demanding the victim hand over receipts for purchases
  • Limiting how much a victim can work or preventing them from working
  • Requiring the victim’s paycheck be deposited into the abuser’s account
  • Using the victim’s credit cards without permission
  • Harassing a victim at work or forcing them to be late, putting their job at risk
  • Refusing to work and forcing the victim to be the sole breadwinner
  • Withholding food, clothing, medication or other necessities
  • Buying items for themselves but not providing for the victim or children

“Financial abuse, like other abusive tactics, starts very subtly,” said Kavern. For instance, an abuser may offer to take care of the family’s finances to reduce the victim’s duties at home. “Over time, you see that the abuser is giving them less control, and it’s serving as a way to isolate the victim,” she said.

How to get out of a financially abusive relationship

Safely ending an abusive relationship requires making careful preparations that will protect you from the abuser.

“When you are leaving an abusive relationship, that’s when victims are in the most danger,” Kavern said. “You should have a good safety plan in place.”

That can include identifying where the abuser will be when you leave and how he or she might respond, as well as whether you’ll pursue an order of protection against them. You may also consider saving money in ways the abuser is unlikely to discover.

For instance, Pentico says survivors have brought coupons with them to the store, but instead of using them at the register, they asked the customer service desk for a refund on the difference between the regular and sale prices. It appeared on the receipt that all items were purchased at full price, but the victims put the cash refund in their own savings accounts. Here are other actions to take:

  • Pull your credit report for free from www.annualcreditreport.com and note whether the abuser has opened any accounts in your name. If he or she has, you may have been a victim of identity theft. You can report it and receive a free, personalized recovery plan through the Federal Trade Commission’s IdentityTheft.gov website.
  • Also, if the abuser ran up unpaid debt on these accounts, which affected your credit score, you can consider disputing any negative marks on your credit report. Do so at each of the three major credit bureaus — Equifax, Experian and TransUnion — or contact the FTC for personalized advice on your situation.
  • Consider opening your own checking account, if you can do so safely, and getting a credit card in your name only. That will help you build your own credit history and develop financial independence.
  • If leaving your relationship results in financial hardship, resources like the Moving Ahead Curriculum, a five-part online program developed for survivors of domestic violence by the National Network to End Domestic Violence and the Allstate Foundation, can help you explore how to rebuild your finances.

The bottom line

You’re not alone as a victim of financial abuse. In a 2018 survey administered to domestic violence survivors who contacted the National Domestic Violence Hotline, 67% said they stayed in or returned to abusive relationships due to financial concerns.

If you’re struggling to free yourself from your abuser, there is a community of support available to assist you at any point. To get help:

  • Call 911 if you’re in immediate danger.
  • Contact the National Domestic Violence Hotline to talk to an advocate who can connect you with resources in your area and help form a plan to get out of the relationship safely. Experts are available 24/7 at 1-800-799-SAFE or via online chat.

A National Domestic Violence Hotline advocate can put you in touch with local agencies that provide support finding housing and getting public benefits. Each state also has its own organizations that offer resources to victims. There is hope and happiness on the other side of financial abuse; the first step is to ask for help.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brianna McGurran |

Brianna McGurran is a writer at MagnifyMoney. You can email Brianna here

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