Everyday Money


March 15, 2018

Have a Financial Question? Ask us!   We will compile the financial questions we receive, big and small, into a blog called #moneyminute. Feel your question is silly? No question is silly, but no worries, you’ll remain anonymous. Email your questions to marketing@bankfivenine.com with #moneyminute as the Subject or message us on Facebook!

Can my spouse’s credit report affect mine?

Yes and no. 
First, the no: Each person has his or her own credit score and report. When you get married, many aspects of your life merge, but your scores and reports will always be separate. Any accounts your spouse has in his or her name alone affect only his or her credit report, and vice versa.
Now on to the yes: Any missed payments on joint accounts – whether credit cards, mortgages, or utilities – will negatively affect both scores.

What in the world is an “HSA”?

HSAs, or health savings accounts, are like personal savings accounts, but you can only spend the money on qualified healthcare expenses. HSAs are only available to those with high-deductible insurance plans. Pros: Money in an HSA can be put toward your deductible (the money you have to hand over before insurance kicks in), earns interest, and rolls over from year to year. It can also help pay for health costs not covered by insurance, such as that new pair of eye glasses you really love. Bonus Pro: Contributions are tax-deductible, you can’t be taxed when you take money out to pay medical costs, and the money rolls over from year to year indefinitely.
*Please consult your tax advisor for additional details.

How much should I have in my emergency fund?

I know this may not be the exact answer you are looking for but there is no set number. A general rule of thumb is to have three to six months’ worth of your total living expenses (we are talking about things such as rent, food, transportation, monthly bills) tucked away for emergencies. That way, if you suddenly lose your job or fall upon hard times, you can have money saved  to use without racking up major debt. Bottom line: Everyone needs an emergency fund. And yes, you should have this cushion established before you fund a vacation.

What is an UTMA account and should I set one up for my child?

An UTMA (Uniform Transfers to Minors Act) Account is an account set up with you as the Custodian of an account for the benefit of a minor child. The child’s social security number is used to open the account and becomes the property of the child when majority is reached (this age can vary depending on the state.) The Custodian’s responsibility is to safeguard the account or use the proceeds for the child’s benefit. Note: The income produced by the account is taxed on the child’s return.

I am looking at getting engaged in the next couple of months. What is the rule to determine how much should I spend on an engagement ring?

First off congratulations! How exciting!
You might have heard that the standard price of an engagement ring should be three months’ salary. Just so you know, that idea was started by diamond company – De Beers – during a 1930s marketing campaign. Back in the 1930s the De Beers diamond  company created a pretty “brilliant” marketing campaign (pun, intended) in where they established the salary calculation as well as linked the diamond to the concept of an engagement ring . Read the interesting story about it here
Anyways, back to your question –
How much should you REALLY spend? The average American today will spend anywhere from $3,000 to $5,000 for an engagement ring but when it comes down to it, how much you spend on a ring is a very personal choice. Come up with a budget. A reasonable budget shows your beloved that you are making an investment for your future together. It makes little sense to start your married life deeply in debt. It should also be within what you can reasonably afford. Remember: the ring is the most important piece of jewelry your significant other will wear and you will buy, so you should both should feel happy and comfortable with your decision.

I’ve heard that people should have anywhere from 2-8 months worth of income in savings, then invest the rest. What would be your suggestion as far as the amount of income in savings?

3-6 months is the “rule of thumb” in a liquid savings account.  Anything above that amount should be allocated to a higher yielding account/investment.

What Is APR when it comes to Credit Cards?

APR when it is regards to credit cards, is an acronym for Annual Percentage Rate. It primarily matters if you plan on not paying off your credit card bill every month.
APR is the interest you will be charged on any amount you did not pay in full from your last statement balance. If you’re debating between credit cards and plan to carry a balance, comparing APRs is a good way to see which card might be better for you.
Tip: Don’t carry balances on credit cards unless you absolutely have to. Then you get to use your credit cards for free and APR is irrelevant!

Email your questions to marketing@bankfivenine.com with #moneyminute as the Subject or message us on Facebook!

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