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How to Have Hard Money Conversations

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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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
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Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at [email protected]

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How to Prepare Yourself for the Next Recession

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Anyone who lived through a recession knows that it can cause financial pain, no matter your level of wealth or employment status. This means that preparing for a recession is always the right move for your financial well-being.

It’s been more than 10 years since the Great Recession ended, which marked the close of the longest economic contraction since the Great Depression of the 1930s. Over the past decade, we have seen the longest economic expansion in U.S. history.

Many people wonder how much longer the current economic expansion will last and when the next recession might arrive. It’s impossible to know, so you should start to prepare for the next recession today.

How to prepare for a recession

The best way to prepare for a recession is to monitor and improve your financial health while the economic outlook remains positive. The list of things you should do to improve your finances isn’t long, and making solid financial plans isn’t a complicated formula.

“It’s the same advice you should generally always be following,” said Tendayi Kapfidze, chief economist at LendingTree, MagnifyMoney’s parent company. “The world is a risky place, and income is not always guaranteed. You should always be doing things to shore up your finances.”

8 things you can do to prepare for a recession

1. Build up your emergency fund

“The main challenge a recession creates is it could create some interruption to your income,” Kapfidze said. To protect yourself from a decline in income or a job loss, you should have enough money to pay at least three months of expenses stashed in your emergency fund — six if you have children.

Wherever you keep your emergency fund — in a savings account with a bricks-and-mortar bank, an online savings account or even a money market account — the most important thing is to keep the fund liquid. You don’t want to be forced to pull money out of the stock market during a recession.

According to Dennis Nolte, a certified financial planner who works for commission and fees in Winter Park, Fla., if you’re young and financially secure, you might consider investing part of your emergency fund in a Roth IRA. You can withdraw contributions from a Roth IRA at any time without paying tax penalties. You have to leave earned interest in the account, however, because withdrawing interest would trigger penalties.

2. Pay down debt

As a recession looms, one key strategy to protect yourself is to pay down debt. This helps to increase the amount of extra liquidity you have on hand when a recession hits.

“This is the best risk management tool,” Nolte said. He suggested that you prioritize paying off high-interest credit card debt.

In addition to directing available funds to pay off debt, consider refinancing or consolidating your debt at lower interest rates. This can reduce how much you pay in interest, decrease your monthly bills and increase the funds available for saving or paying down even more debt.

3. Review your investing strategy

It’s important not to let a looming recession dictate your investing decisions. In other words, don’t try to time the stock market. Instead, prepare for a recession by maintaining good habits at all times: Build a deliberate investing strategy, and stick with it.

“The best thing people can do now is verify that their portfolio is appropriate for them,” said Angela Dorsey, a fee-only certified financial planner based in Torrance, Calif. “If it’s too risky, you should make changes now.”

Determine that you have the right investment mix

Over the past few years, many people invested aggressively in equities as the stock market climbed higher and higher. Now, it’s time to ask yourself how you would feel if the market fell 20% in one year.

Be honest: If you believe that you can tolerate a loss of this magnitude, stick to your plan when the market falls, and stay on course. You should hold on to your investments particularly if you’re young, because time is on your side, and you’ll have lots of time to recover losses in a stock-heavy portfolio.

Dorsey recommends that you rebalance your portfolio if it strays too far from your strategic allocation, or mix of stocks, bonds and other securities.

Kapfidze agrees. “You want to have a balanced portfolio that meets your long-term goals,” he advised. That should be the goal regardless of where we are in the economic cycle.

For example, your plan might be to have 70% of your investments in stocks and 30% in bonds. The market has gone up, so a larger percentage of your portfolio now might be in stocks, say 75%. So, you should rebalance your portfolio — sell stocks and buy bonds — to reach your goal of 70% stocks and 30% bonds.

Change your strategy for peace of mind

Your portfolio should be appropriate for your risk tolerance. If you’re nervous about an economic downturn and believe that big losses in your retirement savings would keep you up at night, the time to reallocate is now.

Consider the strategy above: 70% in stocks and 30% in bonds. If you believe that you couldn’t endure a huge drop in the equity markets, now might be the time to change your allocation to, say, 50% stocks and 50% bonds. Just don’t wait for the market to tank to change it up, though.

“When you’re not emotional about it, when it’s not free falling like it did in 2008 or in 2001, 2002, you can make some adjustments,” said Scott Bishop, a fee-only certified financial planner in Houston. That’s because now “you can see if there [are] some flaws in your portfolio that might be subject to market risk by lack of diversification.”

4. Diversify your income with a side gig

When we think of diversification, we tend to focus on our investment allocation, but the idea can and should be applied to sources of income as well. Because a loss of income is one of the biggest threats during a recession, having multiple income streams can help to lessen the effect from a reduction in income or a job loss.

Millions of Americans have a side gig. If you don’t, now could be an excellent time to consider one. Do some research and identify a side gig you can pick up now to protect yourself against potential income reductions later.

5. Reduce your living expenses

Don’t wait for a recession. Now is the time to trim the fat in your spending. Review your recurring fixed monthly payments as well as your discretionary spending. See what you can eliminate, and reduce or downgrade services that aren’t vital to your household. Consider becoming conservative with your discretionary spending in favor of stocking up cash and paying down debt.

6. Assess your current job and employer

When you prepare for a recession, don’t monitor only national economic conditions: Take a closer look at circumstances close to home.

“Understand how well your employer is doing financially, because that may help you better assess your risk,” Kapfidze said. Trends in your company and your industry affect you more directly than what happens on a national level.

Employees of public businesses can stay abreast of company and industry happenings by listening to their company’s earnings calls.

In addition to knowing the state of your company, employees should find ways to insulate themselves against a potential job loss. Kapfidze suggested taking steps to increase your value to your company in your current role, such as increasing your knowledge and skills and taking on additional responsibilities.

7. Set aside cash for short-term goals

If you have money invested in the market for short-term goals, such as repairing your roof or buying a car, it’s time to shift gears. That money should be kept in an interest-bearing account, so it won’t be influenced by the stock market.

“[This] should be the case anyway,” Dorsey said. “But over the last few years, people have gotten a little too ambitious and say, ‘Oh gosh, I want to buy a house in five years, so let’s be super aggressive and put it all in stock, so it can grow.’ They can grow, but they can also go down.”

8. Don’t let fear drive your decisions

Recessions can be difficult, frightening times. A common pattern that financial planners see is that people act based on emotions and fears.

“When they are emotional, people tend to buy on greed when the market’s going high and sell on fear when the market’s going down,” Bishop said. “If you’re buying high and selling low, you’re doing exactly the opposite of what you need to do to make money in the market.”

A recession is a normal part of economic life. With your retirement savings, you have to keep a long-term perspective, because another economic expansion will arrive after a recession ends.

The bottom line: Don’t panic or allow your emotions to get in the way when the next recession hits. Instead, prepare for it now, and you’ll breathe easy later.

Recession FAQs

A recession is when the economy contracts, or gets smaller, for an extended period. Recessions are part of the economic cycle, and they’re followed by a period of economic expansion.

One marker of a recession is six consecutive months of negative gross domestic product (GDP). GDP measures the market value of all goods and services produced by the U.S. economy. However, six months of negative GDP isn’t the only determining factor for a recession.

The National Bureau of Economic Research (NBER), which designates recessions, also looks at real income, employment, industrial production and wholesale-retail sales.

Since 1945, recessions lasted 11 months on average. However, they can extend significantly longer. The Great Recession, for instance, lasted 18 months. History shows that the United States experiences a recession roughly every six years.

Although recent recessions last 11 months on average, consumers and businesses feel a recession’s effects for years or even decades afterward. Long-term unemployment or reduced wages can affect individuals and families in multiple ways.

For example, if a family no longer can afford to send their kids to college because of a job loss or depleted savings, the missed educational opportunity for that child can affect their earning potential and their future family.

In the last recession, many people lost their home to foreclosure, a blow to their personal finances that can take years to recover from. Long-term unemployment not only has a financial effect, but also an emotional one as well.

Plus, reduced earnings mean reduced buying and fewer dollars rotating in our economy, which results in further lost opportunities for consumers and businesses alike.

Trying to time a recession isn’t something the average person should try to do, Kapfidze said. “Professionals try to do that, and they lose money every day.”

Nevertheless, a recession can provide an excellent opportunity to buy assets at “discounted” prices. Kapfidze suggested waiting until the economy shows signs of recovery before you take the plunge, because trying to predict the bottom of the market also is risky.

“Don’t try to catch a falling knife, because you might grab it by the blade instead of the handle,” he warned.

“There are various things you can look at to assess the risk of recession,” Kapfidze said. One is the yield curve, which measures the difference between long-term and short-term interest rates. A lot of discussion about the risk of a recession in 2019 centered on the yield curve, but that chatter has died down.

“[That] doesn’t mean the recession risk is materially lower,” Kapfidze explained. “It’s probably a bit lower, but it could still happen within six to 18 months. That’s a pretty wide window.” Of course, there’s no guarantee that a recession will happen in that time frame. “Recently, the economy has looked a little bit better than it did a few months ago.”

Things can change rapidly. Earlier this year, the sentiment was negative, Kapfidze pointed out. “It can turn positive pretty quickly, and it can turn a little more negative pretty quickly.”

Again, Kapfidze stressed that instead of focusing on the timing of the next recession, consumers should take prudent steps to firm up their finances. “That increases the odds of success and certainly is way less stressful than trying to figure out where I am in the business cycle and what are the odds of a recession.”

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.

Alaya Linton
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Alaya Linton is a writer at MagnifyMoney. You can email Alaya here

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Survey: Consumers Hate ATM Fees Above All Others

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Paying an ATM fee can feel like a punch to the stomach. There’s nothing worse than having to spend money in order to access your money. With ATM fees typically running between $2.50 to $3, they can add up fast if you’re not paying attention to where you withdraw money.

A new survey of over 1,000 Americans by MagnifyMoney, a LendingTree company, found that Americans hate ATM fees even more than such widely despised charges as airline fees and shipping surcharges.

Despite ATM fees being America’s most hated fee, they are completely avoidable—it just takes a little legwork. We’ll even show you how easy it can be to skip out on your least favorite fee.

Key findings

  • Nearly 27% of respondents said they hate ATM fees more than any other fee—earning them the title as the most hated fee in the land.
  • The second most hated fee is the dreaded bank overdraft fee (22%), followed by credit card annual fees (7%).
  • Unsurprisingly, ATM fees are also the most commonly paid fees, with 37% of respondents having paid one or more in the last year.
  • Millennials and Midwesterners are most likely to fork over money to pay an ATM fee.
  • The second most commonly paid fee was a bank overdraft fee (18%), followed by shipping fees (15%).
  • Most people(76%) are willing to drive further out of their way to skip ATM fees. Nearly one in 10 would drive more than 10 miles out of their way to find an in-network ATM. However, most would only go one to five miles (48%) or six to 10 miles (19%) out of the way.

The top three most hated fees: ATM, overdraft and credit card fees

Out of all the annoying fees Americans get slapped with—from shipping fees to baggage fees to convenience fees for event tickets—people have the most aversion to ATMs fees.

One reason could be the staggering number of Americans who were forced to pay a surcharge to access their own cash. Our survey found that 37% of Americans have paid an ATM fee — either charged by the bank for out-of-network ATM use or by the ATM owner — in the past year, and 35% have paid one in the past month. Millennials and Midwesterners were the groups that incurred ATM fees the most often.

We found that the second most hated fee was bank overdraft charges, with 22% of Americans saying they hate those fees the most, followed by 7% who despise credit card annual fees the most. Interestingly, a whopping 18% of Americans were charged with an overdraft fee in the past year, while 13% paid a credit card annual fee.

While airline fees tend to get a bad rep, the number of Americans who hate those surcharges the most pales in comparison to those who hate financial fees: Only 7% of Americans hate airline baggage fees the most, 3% airline seat selection fees, and just 1% airline flight change fees.

What people do to avoid fees

Our survey reveals that most people would make a serious effort to avoid paying an ATM fees: Nearly half say they would drive between one to five miles to avoid an ATM fee, while one in 10 would really go the distance and over 10 miles to free themselves of an ATM fee. Not everyone is willing to put in the extra effort, though: A surprising 24% of Americans would not drive any distance to avoid an ATM fee.

Many Americans enroll in overdraft protection to avoid extra bank fees. In many cases, overdraft protection programs are effective shields against overdraft fees. It’s not surprising that since overdraft fees are the second most hated types of fees, nearly half of Americans are enrolled in some sort of protection plan. Other courses of action Americans took to avoid paying a fee included not signing up for a credit card with an annual fee (24%), making a purchase in-store instead of online (19%) and bringing only carry-on luggage (15%).

How to avoid paying ATM fees

While ATM fees are widely disliked, they are also completely avoidable. It might take a little bit of effort and inconvenience, but if you really don’t want to pay to access your own cash, there are simple steps you can take. For example:

  • Utilize your bank’s mobile app. Many of them have tools to help you find nearby in-network ATMs.
  • Next time you are paying with your debit card at a store, ask for cash back instead of using an ATM.
  • Consider a credit union that’s part of the CO-OP network. You’ll get fee-free access to nearly 30,000 ATMs.
  • Explore banks that reimburse you for ATM fees.

The best banks for people that hate ATM fees

A number of banks, particularly online banks, offer incentives that reduce or eliminate out-of-network ATM fees. If ATM fees are the bane of your existence (or if you just want to avoid paying cash to access your own cash), these banks could be a good fit for you.

Bank / account ATM fee policy
E* TRADE Max-Rate Checking AccountUnlimited ATM fee refunds. Must maintain an average monthly balance of $5,000 to waive $15 monthly fee.
Axos Bank Essential Checking accountUnlimited domestic ATM fee reimbursements.
TIAA Bank Yield Pledge Checking accountMonthly reimbursement up to $15 for U.S. ATM fees. Unlimited reimbursement for accounts with an average daily balance of $5,000.
State Farm Bank Checking and Interest Checking accountsUnlimited ATM fee reimbursement if direct deposit has been made to account during statement cycle. Or, if no deposit has been made, up to $10 ATM fee reimbursement per statement cycle.
Radius Bank Rewards Checking, Champion Checking, Superhero Checking and Hybrid Checking accountsUnlimited ATM fee reimbursements.
Schwab Bank High Yield Investor Checking AccountUnlimited ATM fee rebates.
Ally BankUp to $10 ATM fee reimbursement per statement cycle.
First Republic Bank ATM Rebate Checking accountUnlimited ATM fee rebates. Must maintain a minimum average balance of $3,500 to waive $25 monthly service fee.

Fee information is accurate as of November 5, 2019.

Methodology

For this survey, MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,028 Americans. The survey was fielded September 11-13, 2019, with the sample base proportioned to represent the general population.

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.

Sarah Berger
Sarah Berger |

Sarah Berger is a writer at MagnifyMoney. You can email Sarah here