What Are the Income Tax Brackets for 2021 vs. 2022?

This is a unique time of the year for taxpayers. On the one hand, you’re getting ready to file your 2021 tax return (which is due April 18, 2022, for most taxpayers). But, on the other hand, you’re also looking ahead (or should be) and starting to think about how to handle your 2022 finances in a tax-efficient way. In either case, you need to be familiar with the federal income tax rates and tax brackets that apply (or will apply) to you.

The tax rates themselves didn’t change from 2021 to 2022. There are still seven tax rates in effect for the 2022 tax year: 10%, 12%, 22%, 24%, 32%, 35% and 37%. However, as they are every year, the 2022 tax brackets were adjusted to account for inflation. That means you could wind up in a different tax bracket when you file your 2022 return than the bracket you were in for 2021 – which also means you could be subject to a different tax rate on some of your 2022 income, too.

Both the 2021 and 2022 tax bracket ranges also differ depending on your filing status. For example, the 22% tax bracket for the 2021 tax year goes from $40,526 to $86,375 for single taxpayers, but it starts at $54,201 and ends at $86,350 for head-of-household filers. (For 2022, the 22% tax bracket for singles goes from $41,776 to $89,075, while the same rate applied to head-of-household filers with taxable income from $55,901 to $89,050.)

When you’re working on your 2021 tax return, here are the tax brackets you’ll need:

2021 Tax Brackets for Single Filers and Married Couples Filing Jointly

Tax Rate

Taxable Income

Taxable Income
(Married Filing Jointly)


Up to $9,950

Up to $19,900


$9,951 to $40,525

$19,901 to $81,050


$40,526 to $86,375

$81,051 to $172,750


$86,376 to $164,925

$172,751 to $329,850


$164,926 to $209,425

$329,851 to $418,850


$209,426 to $523,600

$418,851 to $628,300


Over $523,600

Over $628,300

2021 Tax Brackets for Married Couples Filing Separately and Head-of-Household Filers

Tax Rate

Taxable Income
(Married Filing Separately)

Taxable Income
(Head of Household)


Up to $9,950

Up to $14,200


$9,951 to $40,525

$14,201 to $54,200


$40,526 to $86,375

$54,201 to $86,350


$86,376 to $164,925

$86,351 to $164,900


$164,926 to $209,425

$164,901 to $209,400


$209,426 to $314,150

$209,401 to $523,600


Over $314,150

Over $523,600

When you’re ready to focus on your 2022 taxes, you’ll want to use the following tax brackets:

2022 Tax Brackets for Single Filers and Married Couples Filing Jointly

Tax Rate

Taxable Income

Taxable Income
(Married Filing Jointly)


Up to $10,275

Up to $20,550


$10,276 to $41,775

$20,551 to $83,550


$41,776 to $89,075

$83,551 to $178,150


$89,076 to $170,050

$178,151 to $340,100


$170,051 to $215,950

$340,101 to $431,900


$215,951 to $539,900

$431,901 to $647,850


Over $539,900

Over $647,850

2022 Tax Brackets for Married Couples Filing Separately and Head-of-Household Filers

Tax Rate

Taxable Income
(Married Filing Separately)

Taxable Income
(Head of Household)


Up to $10,275

Up to $14,650


$10,276 to $41,775

$14,651 to $55,900


$41,776 to $89,075

$55,901 to $89,050


$89,076 to $170,050

$89,051 to $170,050


$170,051 to $215,950

$170,051 to $215,950


$215,951 to $323,925

$215,951 to $539,900


Over $332,925

Over $539,900

How the Tax Brackets Work

Suppose you’re single and had $90,000 of taxable income in 2021. Since $90,000 is in the 24% bracket for singles, is your 2021 tax bill simply a flat 24% of $90,000 – or $21,600? No! Your tax is actually less than that amount. That’s because, using marginal tax rates, only a portion of your income is taxed at the 24% rate. The rest of it is taxed at the 10%, 12%, and 22% rates.

Here’s how it works. Again, assuming you’re single with $90,000 taxable income in 2021, the first $9,950 of your income is taxed at the 10% rate for $995 of tax. The next $30,575 of income (the amount from $9,951 to $40,525) is taxed at the 12% rate for an additional $3,669 of tax. After that, the next $45,850 of your income (from $40,526 to $86,375) is taxed at the 22% rate for $10,087 of tax. That leaves only $3,625 of your taxable income (the amount over $86,375) that is taxed at the 24% rate, which comes to an additional $870 of tax. When you add it all up, your total 2021 tax is only $15,621. (That’s $5,979 less than if a flat 24% rate was applied to the entire $90,000.)

Now, suppose you’re a millionaire (we can all dream, right?). If you’re single, only your 2021 income over $523,600 is taxed at the top rate (37%). The rest is taxed at lower rates as described above. So, for example, the tax on $1 million for a single person in 2021 is $334,072. That’s a lot of money, but it’s still $35,928 less than if the 37% rate were applied as a flat rate on the entire $1 million (which would result in a $370,000 tax bill).

The Marriage Penalty

The difference between bracket ranges sometimes creates a “marriage penalty.” This tax-law twist makes certain married couples filing a joint return pay more tax than they would if they were single (typically, where the spouses’ incomes are similar). The penalty is triggered when, for any given rate, the minimum taxable income for the joint filers’ tax bracket is less than twice the minimum amount for the single filers’ bracket.

Before the 2017 tax reform law, this happened in the four highest tax brackets. But now, as you can see in the tables above, only the top tax bracket contains the marriage penalty trap. As a result, only couples with a combined taxable income over $628,300 are at risk when filing their 2021 federal tax return. For 2022 returns, the marriage penalty is possible only for married couples with a combined taxable income above $647,850. (Note that the tax brackets for your state’s income tax could contain a marriage penalty.)

Source: kiplinger.com

Retirement Checklist: 5 Things to Know Before Leaving the Workforce

Working more than 35 years can really pay off, especially if you’re making significantly more than you were in your early career because you get to replace some of those low-earning years with higher wages.
We’d love to say things get easier when you turn 65 and enroll in Medicare, but that’s not always the case.
Retirement is calling your name — but can your budget handle it? Check out these tips to avoid financial stress and worry during your golden years.
Another option is to extend your employer’s insurance benefits through COBRA for 18 months. But at an average cost of 0 to 0 per person per month, it’s a pricey option.
Let’s say you started collecting Social Security at 62 and receive ,200 a month.
Keep in mind that “taxable” doesn’t mean that’s what you pay in tax. Suppose you’re a single filer with ,000 of income: ,000 from Social Security benefits and ,000 from 401(k) withdrawals.

5 Essential Things to Put on Your Retirement Checklist

Source: thepennyhoarder.com

1. Know Your Social Security Full Retirement Age

But here are a few important guidelines about Medicare:
Once you reach full retirement age, Social Security will recalculate your monthly benefit amount and give you credit for the months they reduced your payment.
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You can start collecting Social Security retirement benefits as early as age 62. But if you opt in early, your monthly benefits will be reduced significantly.

  • If you were born between 1943 and 1954, your full retirement age is 66.
  • If you were born between 1955 and 1960, your full retirement age increases gradually up to age 67.
  • Anyone born since 1961 has a full retirement age of 67.

Here’s an example.
You get a larger monthly benefit by working past your full retirement age.

Pro Tip
You aren’t eligible for full Social Security benefits until you reach what’s known as your full retirement age.

2. Learn About Ways to Maximize Your Social Security Benefit

Contrary to popular belief, this federal health insurance program isn’t free and it doesn’t cover all your health care costs.
There’s a lot to know about Medicare — much more than we can cover here.
But many of those workers didn’t really quit — they retired.
If you’re married filing jointly:
Your benefit amount increases for every month you do not accept Social Security benefits, although this added benefit maxes out at age 70.
Report All Your Earnings
Marriage and Divorce Make a Difference
Like we mentioned above, you can increase your Social Security benefit by working past your full retirement age.
Work at Least 35 Years
That’s ,440 over the limit, so your yearly Social Security benefits would be reduced by ,520, or 0 a month.
Your Social Security benefits are technically income. So do you owe taxes on Social Security?
Or, if your current or ex-spouse dies, you could qualify for 100% of their benefit if you meet certain requirements.
But — and this is really important — that money isn’t gone forever.

3. Know the Social Security Earning Limits if You Plan on Working in Retirement

The Social Security Administration now bases your full retirement age on the year you were born:
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Ready to stop worrying about money?

  • Once you hit full retirement age, working doesn’t impact your Social Security benefits — no matter how much you earn.
  • If you’re not yet at full retirement age but receive Social Security benefits, you can make up to $19,560 a year without penalty. (For context, that’s $1,630 a month, or $376 a week).
  • After that, your benefits are reduced by $1 for every $2 you make over $19,560.

Make sure to report earnings you make from tips, freelancing and self-employment throughout your career. Failing to report these earnings could reduce the amount of Social Security you get later on.
Other health insurance options for early retirees include:
You can only qualify for Medicare before age 65 if you’ve been on Social Security Disability for at least 24 months. People diagnosed with end-stage renal disease or ALS also qualify.
Full retirement age used to be 65, but that hasn’t been the case for a while.
How much you receive from Social Security also depends on your marital status.
But if you make more than ,560 a year in 2022, your Social Security benefits will go down.
Waiting until you reach age 70 can result in a monthly benefit that’s 77% higher than if you claimed at 62.

4. Get Familiar With Your Health Care Options

If Social Security is your only income source, you most likely won’t pay any taxes on it. The average benefit amounts to just ,516 per year and you can make up to 25,000 before taxes kick in.
Generous federal stimulus checks, strong stock market gains and rising home values prompted some better-off Americans to retire early.

  1. If you retire before age 65, you’ll likely lose coverage at work and need to find your own health care.
  2. At 65, you’re eligible for Medicare.

Social Security uses your 35 highest-earning years to calculate your benefit, so it’s wise to stay in the workforce at least that long.
You might be able to get coverage through a spouse’s plan, assuming you’re married to someone with workplace health coverage. (If they’re on Medicare, they can’t add you to their plan).
Yes, you can work and collect Social Security at the same time.
That simply means that your income will be ,000 in the eyes of the IRS: ,000 from the 401(k), plus 50% of the ,000 from your Social Security benefits. Uncle Sam can’t touch the remaining 50%.

  • Try to find a part-time job that offers health care coverage. Just be mindful of those Social Security earning limits.
  • Find a plan on the Health Insurance Marketplace. Losing health coverage at work qualifies you for a 60-day special enrollment period on the Marketplace — the federal government’s health care shopping and enrollment service for uninsured Americans.
  • See if you qualify for Medicaid in your state. Especially if you know your income in retirement will be small.
  • Get private health insurance on your own. This can be complex and costly, especially if you’re in poor health or on a limited income.

A couple years later, you go back to work and earn ,000 in a calendar year.
If you’re a single filer:
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.

  • If you’re already receiving Social Security benefits when you turn 65, you’ll be automatically enrolled in Medicare. You don’t need to do anything else.
  • If you have coverage through a Marketplace plan, COBRA through a past employer or TRICARE for retired military members, you’re required to enroll in Medicare when you turn 65.
  • You may not need to sign up for Medicare right away if you’re still working and enrolled in your employer’s group health plan or if your spouse is still working and you’re covered under their plan. But be sure to check with your employer.
  • Otherwise, your Medicare eligibility begins around your 65th birthday, and you have a seven-month window to sign up.

For example, if you’re divorced and not remarried, you might be eligible to claim benefits based on your ex’s work record (provided that your marriage lasted at least 10 years). Doing so won’t impact their benefits.

5. Understand How Your Social Security Benefits Are Taxed

Nearly every strategy that might increase your Social Security check boils down to this: Work longer, earn more money and wait as long as possible.
Health care will likely be one of your biggest expenses in retirement.
If you have additional income, whether it’s from a job or investments, there’s a good chance at least part of your Social Security will be taxed.
In some cases, yes.

  • 0% of your benefit is taxable if your income is below $25,000.
  • Up to 50% of your benefit is taxable if your income is between $25,000 and $34,000.
  • Up to 85% of your benefit is taxable if your income is above $34,000.

Meanwhile, some Americans with modest incomes were forced into retirement due to job loss, COVID-19 health concerns and caregiving responsibilities.

  • 0% of your benefit is taxable if your combined incomes are below $32,000.
  • 50% of your benefit is taxable if your combined incomes are between $32,000 and $44,000.
  • 85% of your benefit is taxable if your combined incomes are above $44,000.

Millions of Americans quit their jobs this year as the Great Resignation took hold of the U.S. labor market.
The United State’s retiree population has grown by about 3 million since the pandemic, according to The Washington Post. That’s about double pre-pandemic retirement trends.
That’s why it’s essential to understand your health care options.
There are other ways to boost your monthly benefit, but unfortunately, there aren’t any quick fixes. <!–


In other words, making ,000 during a year that falls between 62 and your full retirement age reduces your ,200 monthly check to 0.

Dear Penny: I Dumped My Live-in Boyfriend. Do I Owe Half of the Bills?

Dear Penny,

I started dating a guy I really liked about 10 months ago. Into our third month of dating, he received an amazing job offer in another state and asked me if I would be down to move with him. 

It was a big commitment, but I decided I would like to get away from my tiny hometown, so I agreed to move with him. I have two young children as well from a previous relationship. (Their dad is not involved, so it was an easy move.) 

He decided before we moved to sell his car because the payments were insane, so he was looking at cheaper cars. I put the down payment on the vehicle he selected. It was significantly cheaper than the other car he had, and we were going to share it when we moved.

It was a fairly large effort to find housing, but we finally found a house we liked. Rent is expensive where we are, so it was a hefty price just to move in alone. It cost us about $9,500 to move, not including the U-Haul we had to rent. I spent a little more than he did, however. I had a large lump sum of money saved up from my previous job and didn’t really think anything of it. 

He bought a cheap living room set shortly after we moved in. When I say cheap, I mean CHEAP. I bought everything else for the house: decorations, rugs, towels, kitchen stuff, silverware, everything else. Keep in mind, I have two toddlers and yet I still paid more for this house and the things in it.

Upon moving, he started his job and I stayed home with the kids. With the money I had saved, I bought groceries and other things we needed for the house. Every day he went to work, I stayed home with the kids, took care of the house, cleaned everything, and always had dinner cooked and ready for him when he got home. 

I started to try to look for a job as well, but with two young kids, it is very difficult and the area we moved to doesn’t exactly have very secure-looking childcare. He paid the bills while I paid for groceries and other things we needed. But the money obviously started to dissipate on my end. 

After living with him for a few months, I realized he wasn’t someone I wanted to stay with. I care for him, but I just can’t deal with him rambling on and on anymore. He’s so needy and he constantly wants my attention, but I can’t always give it to him because I have children who need me, too. 

He got fired from his job shortly after. Then, something bad happened back home with his family. We decided to move back home before our lease was up. I’m relieved in a way, I am excited to go home, and I feel like this is my out with this guy. But I’m trying to sort out the money situation. 

Considering the $3,000 down payment I put down on the car and all of the money I dropped on stuff for the house and groceries, do you think I owe him for half of our bills for three months there? Or do you think he owes me for the car since he’s the one driving it and taking it home with him?


Dear D.,

It’s easy to split things 50/50 when you’re on a date. But when you blend households, it becomes complicated, especially when you factor in the support for children from past relationships.

I can’t say for sure who spent more on this attempt at living together. Presumably, you’ll each get to keep the items you purchased for the home. If you paid $3,000 for the car down payment but he paid for the bulk of expenses for you and your kids for three months, it doesn’t really sound like either of you is screwing the other over here.

Moreover, if he’s lost his job and your savings is dwindling, it doesn’t really matter what I think is fair. Each of you needs to focus on re-establishing separate residences instead of splitting hairs.

My advice is to use this as a learning experience. In the future if you decide to combine finances with someone — whether you’re moving in together or making a major purchase — it’s essential that you spell out in writing who gets what if the relationship ends. One of the big benefits of marriage is that it’s a contract. There’s a process for when it ends, i.e., divorce. But when you’re not married, it’s up to you to set the terms for what happens if things don’t work.

This may have been an expensive lesson. But fortunately, you learned this relationship wasn’t viable within three months. In terms of the time it cost you, I’d say that’s a pretty darn cheap lesson.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected] or chat with her in The Penny Hoarder Community.

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Source: thepennyhoarder.com

Dear Penny: Do I Confront My Husband Over His Secret Investments for His Ex?

Dear Penny,

My husband has a hidden investment account where his beneficiaries are his ex-wife and son. I think he opened this investment account while we were married. Also, we have an account where the same son is the beneficiary, along with the other children of my husband. How can I stop and make it fair? 

My husband doesn’t know that I know about his hidden investment. Do I consult first with a lawyer, or do I talk to my husband about his wrong action? What steps do I have to take in order to safeguard my finances?


Dear G.,

The answer depends on how much you trust your husband. Were you shocked to learn about this investment account? Or does siphoning off investments into a secret account seem like par for the course with him?

If your husband is trustworthy and is open with you about financial matters, I’d start with him. You don’t need to approach this in full-blown confrontation mode. Tell him what you found, and ask him to explain.

You say you think he opened the investment account while the two of you were married — but you don’t know this to be the case. If he actually opened the account while he was still married to his ex, perhaps he was ordered to make her the beneficiary as part of his divorce agreement. Another possibility would be that he simply forgot to update the beneficiary, which is actually quite common.

I raise these as possibilities because most people aren’t exactly eager to fork over more money to their ex-spouses. Sure, he could be hiding money in his ex-wife’s name. But sometimes the simplest explanation is the correct one.

However, if your husband has a pattern of dishonesty or he refuses to discuss financial matters with you, then consult with an attorney first. That won’t get you out of having a difficult conversation with your husband, of course. If you can’t trust your spouse, I’d seriously question whether you want to stay in this marriage.

Even if your husband has an explanation for this investment account that’s satisfactory to you, it sounds like you’re not communicating openly about money. I can’t tell you how to fairly divide assets among your husband’s kids from the little information I have. (It’s not clear in your letter whether the other children are yours as well.) But the two of you should meet with an estate planning attorney to review your beneficiary designations and wills.

The two of you should each know about the other’s assets and major expenses. That doesn’t mean you need to scrutinize every $12 Amazon purchase the other person makes. But you should ask your husband to go over any investment accounts and bank accounts each of you owns. Try to get in the habit of reviewing the money you’re spending and bringing in each month together. If your husband refuses, consider that a major red flag.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected] or chat with her in The Penny Hoarder Community.

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Source: thepennyhoarder.com

How to Financially Prepare for a Child – 13 Steps to Take

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Stressed about how much it costs to have and raise kids?

Having extra mouths to feed barely scratches the surface of the expenses to come. From larger housing to larger cars, higher health care costs to higher education, diapers to child care, strap in for a costly ride.

But like everything else in life, it helps to be prepared. The better your financial planning, the better you can navigate the costs without derailing your current lifestyle. 

How to Financially Prepare for a Child

If you tried to make every ideal financial move before having kids, you’d reach retirement age before even trying. So don’t think of these as prerequisites for trying to get pregnant. 

Instead, think of them as parts of your larger financial plan that apply more than ever as you start having children.

1. Reconsider Your Income

There’s nothing wrong with pursuing low-paying work you love. I never believed my mother — an educator — when she said, “Do what you love, and the money will follow.” She proved me wrong by achieving a seven-figure net worth through frugal living, working a side hustle (tutoring), and consistent investing. 

But your motivation matters. There’s a difference between choosing a modest-income career because you’re passionate about it and being stuck in one due to inertia. 

I know teachers who love what they do and wouldn’t want another job even if someone offered to double their salary. Others coast their way through every tedious lesson plan. 

If you don’t love what you do, go back to the drawing board. That goes doubly if you also don’t love your salary. 

Brainstorm jobs that provide fulfillment and meaning to you personally. Then get creative and explore remote positions, jobs that provide free housing, or jobs that pay well even without a college degree. 

Choose a career that fulfills you both personally and financially. It doesn’t need to pay a huge salary, but aim to get up every morning happy with the career choice you made. 

2. Enroll in Health Insurance

Pregnancy is expensive. So are delivery, infant checkups, and pediatric health care in general. If you do nothing else before your baby arrives, get health insurance. 

Fortunately, not having insurance through your employer doesn’t mean you have to go without it. Explore options for health insurance without employer coverage. There are even part-time jobs that provide medical insurance. 

Note that families with a high-deductible health insurance plan may well burn through every dollar of that deductible over the course of pregnancy, delivery, and the first few months of life. Plan accordingly. 

Low-income families can explore the Children’s Health Insurance Program as another option.

3. Revamp Your Budget

Once upon a time, I spent more money on happy hours, dinners out, concerts, and entertainment in general. My budget looked different before I got married, and then it changed again after my wife and I had children. 

That’s normal. Your budget isn’t static. It’s a living thing that evolves over time alongside your life. And if you do it right, you can save more money even after having children. I managed to do it through a mix of house hacking, getting rid of a car, and moving overseas. 

If you don’t have one, create a formal budget. If you do have one, look over all your budgeting categories and start brainstorming ways to spend less and save more. 

4. Check Your Emergency Fund

You never know when an emergency or unexpected job loss could leave you without an income. And when you have children, the stakes are higher. 

As you prepare for the responsibility of a family, set up an emergency fund to cover two to 12 months’ worth of expenses. 

How much you need depends on the stability of your income and expenses. The more variable each is, the more months of living expenses you should stash away. An average person needs three to six months’ expenses, but people with inconsistent incomes or living expenses need closer to a year’s worth. 

You can always temporarily cut out costs like entertainment or a gym membership to save on expenses. But needs like electricity and food are nonnegotiable. 

And while some of your expenses may go down while you’re unemployed (such as gasoline), others may go up. For example, if you spend $200 per month on employer-subsidized health insurance, that expense may rise while you’re unemployed, as you may be forced onto a new plan or required to pay for your current plan in full.

5. Get Serious About Paying Off Unsecured Debts

Many people have unsecured debts, such as credit card debt, personal loans, and student loans. And those often come with high interest rates that exceed the long-term returns you can earn by investing. 

That makes paying off your unsecured debts a high priority. Follow a structured plan to pay them off quickly, such as the debt snowball method. 

Once you incur the added expenses that come with having kids, you’re less likely to have room in your budget to chip away at that old debt. Plus, the interest on it can make the expenses your child requires that much harder to manage.

While baby-related expenses tend to be significant initially, they don’t completely go away once your children are done with diapers. In fact, school-age kids can cost more than infants because they require more expensive clothing and food as well as money for activities like soccer lessons and ballet classes.

6. Plan for Child Care

Child care is the elephant in the room when planning the financial costs of having children. 

Explore all your child care options, from nannies and au pairs to day care to relatives and friends. If one parent doesn’t love their job, you can explore becoming a single-income family, with one parent staying home for the first few years of your children’s lives. 

Whatever you decide, plan and budget accordingly — because parental leave will be over before you blink. 

7. Plan for Baby Essentials

My wife wouldn’t let me try this experiment, but I believe you could get everything you need for an infant for free — or almost anything. 

Diapers cost money, and there are some things you should never buy used for safety reasons. Everything else you can get either free through services like Freecycle or inexpensively used via eBay, Craigslist, or local garage sales. 

Whether you buy used or new, get creative to save money on baby gear. See this baby supplies checklist from The Bump to ensure you plan for every need. 

8. Update Your Will

Your estate plan does more than tell your family and friends who gets your autographed guitars after you die. It also makes provisions for child care if you die prematurely. Your will can include provisions for an unborn child, which you can amend after they’re born.

You have a couple of options for creating a will (or any other estate planning documents):

  • Do It Yourself. You don’t need a lawyer to create a valid will. You simply need to be 18 or older and of sound mind. You also need to sign your will in front of two witnesses and ensure it’s accessible once you die. You can use an online service like Trust & Will to draft one affordably.
  • Hire an Attorney. The cost is significantly more, but a lawyer handles all the details for you. Expect to pay anywhere from $300 to $1,000 for a basic will. If your assets and estate are complex or you need to establish a trust, it could cost upward of $10,000.

Optional Financial Moves to Consider

Some moves could help you feel more ready for kids, though they aren’t strictly necessary. If you can’t do them, no need to worry. In fact, some people may decide holding off on these is smarter than doing it before they have kids. 

So consider this type of financial planning purely optional: a list of ideas for thought rather than more reasons to fret. 

9. Reevaluate Your Housing

You can care for an infant in a studio apartment. They certainly won’t know the difference. But that doesn’t mean you’d enjoy it. 

As a long-term planning exercise, think about what type of home you want to live in for the next few years. You don’t need extra bedrooms or bathrooms right away, as infants can sleep in the same room as you for a while. Even when they move out of your room, they could move into a room with an older sibling. 

But you may decide you want a larger home, so start thinking about what that looks like and how to pay for it. Only buy a home if you plan to stay for at least a few years, as closing costs on either end of the transaction make it cheaper to rent otherwise. 

10. Reevaluate Your Transportation

If you and your spouse each drive two-seat sports cars, one of you may need to swap it out for a more family-friendly option. 

Of course, you don’t always need a car. My wife and I don’t have one. We simply take the car seat with us when we hire an Uber. I also installed a baby seat on my bike so I can transport my daughter that way too. 

Consider the public transportation, walkability, and bikeability of the area you live in. It’s possible you could live without a car too.

But most Americans drive cars as their primary means of transportation, so if yours is either too small to fit your whole family or unreliable, it’s probably time to get a different one. But explore used cars first as a more budget-friendly option. 

Give yourself more flexibility by choosing three to five models you’d be happy to buy, and shop around among both dealerships and individual owners to find the ideal used car for you and your growing family.  

11. Buy Life Insurance or Disability Insurance

In households with one breadwinner or a partner who significantly outearns the other, life insurance makes sense. You want to ensure your family would survive financially if it lost that primary breadwinner. 

Life insurance policies come in two broad buckets:

  • Term Life Insurance. Term life offers coverage for a specified period. It’s generally cheaper and comes with a guaranteed set death benefit. With term life insurance, your premiums increase at preset intervals, such as 10, 20, or 30 years.
  • Whole or Universal Life Insurance. Also known as permanent life insurance, whole or universal life insurance death benefits never expire as long as you pay premiums. These policies often also provide certain living benefits, such as the ability to borrow money against the policy.

As a rule of thumb, your death benefit should be six to eight times your annual salary. But there are other considerations to take into account, such as your homeownership status and anticipated number of dependents as well as how much you can afford. 

If you’re unsure about your coverage needs, talk to an independent financial advisor and shop around for the right plan. You can compare policies on sites like Policygenius and GoCompare.

The same concepts apply to long-term disability insurance. Both protect against the risk of the breadwinner losing their ability to earn. 

Granted, not everyone needs life insurance or disability insurance.

For example, my wife and I live on one income even though we both work. We live on her income and save every dime of mine. And we don’t have life or disability insurance because we maintain low living expenses relative to our income and a high savings rate to build our net worth quickly. 

If either of us kicked the bucket tomorrow, each of our incomes would be enough in itself to support ourselves and our child, and the surviving spouse would have a hefty nest egg to fall back on in a crunch. 

Avoiding the need for life insurance and disability insurance by “self-insuring” are two of the many hidden benefits of pursuing a financially independent lifestyle. Once you build enough money, you can opt out of life and disability insurance. 

12. Double Down on Retirement Investments

I joke that my backup plan for retirement is my daughter. If she were old enough to get the joke, she wouldn’t laugh. 

The worst thing you can put on your adult children is asking them to take care of you in retirement. It adds a burden on them in an already hectic time of their lives, when they’re trying to start and raise their own families. 

Before you even consider setting aside money for their college education, take a closer look at your retirement investments. If you have the slightest worries about them, put more money into your tax-sheltered retirement accounts long before saving money for your kids’ college tuition. 

They have many other ways to pay for college, but you only have one way to pay for your retirement. 

Invest money now so it can start compounding, and decide what to do with it later. You can withdraw contributions from a Roth individual retirement account tax- and penalty-free to put toward any costs, but you can only use 529 plans or ESAs for education costs.

13. Invest to Help With College Costs

Not paying your kids’ college tuition doesn’t make you a bad parent. Young adults who pay for their own college education often take the experience much more seriously. And many parents question whether to help with college even when they can afford it. 

Even small amounts invested when your child is young can compound into significant sums by the time they turn 18. If you decide to chip in, you have several tax-friendly options to do so. 

  • 529 Plan. Your 529 college savings plan earnings grow and remain tax-free if you spend them on qualified educational expenses. 
  • Coverdell Education Savings Account. A Coverdell ESA works similarly to a Roth IRA for education expenses. There are income limits ($110,000 for single filers and $220,000 for married), and the maximum allowable yearly contribution is $2,000, regardless of your income.
  • Upromise.Upromise allows you to earn cash back to use to pay for college. Unlike 529 plans and ESAs, you don’t have to contribute additional money. Rather, you earn cash back on expenses like online retail purchases and restaurant meals.

In all cases, you can open the accounts early and designate your child as a beneficiary after birth.

Final Word

As much as I preach fiscal responsibility, I know firsthand that putting off children doesn’t always make sense, financially or otherwise.

My wife and I married in our early 30s and agreed to spend one year building a foundation for our marriage before having children. Then one year became two, then three. 

I started a business, and my wife worried about money. Then we went through a rough patch in our marriage. We survived it but had reached our late 30s by that point. 

When we finally started trying in earnest, nothing happened, which kicked off a stretch of infertility questions and interventions. Eventually, we did have a child, but not all couples are so lucky. 

Many of my friends haven’t experienced the joy of having children despite spending large sums of money — not to mention enduring immense heartache — trying to do so. In one of life’s bitter ironies, many delayed trying for children because they worried about money. 

On the opposite end of the spectrum, I know plenty of parents without much money who have multiple children. And every one of them finds a way to make it work.

There’s no perfect time to have children. They disrupt your life in every possible way. But like billions of parents with less money than you have, you’ll find a way to make it work too.

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Source: moneycrashers.com

Dear Penny: Did My Husband Betray Me by Giving Our Broke Daughter Our Car?

Dear Penny,
A couple of things in your letter — like the fact that he was swayed by your daughter’s tears into giving over the car keys and then told you by phone instead of in person — make me think that he may be the type who doesn’t like conflict. If you think that’s the case, make it clear that avoiding tough discussions is causing way more conflict. But if your husband doesn’t involve you out of arrogance, your problem will be a lot harder to solve. This isn’t going to be an easy pattern to fix, particularly if it’s persisted throughout the past 48 years. But your husband needs an impetus to change. Otherwise, this cycle will continue and your feelings of hurt and betrayal will only compound. -Livid Wife We have been married for 48 years. I was LIVID that he didn’t have the guts to talk to me about it and told me on a phone call with everyone there. I am mad and hurt over this. I feel betrayed. My daughter just about ruined our credit because our names were on the title of her past vehicle. Now he does the same thing AGAIN!!  Tell your husband that you feel hurt and betrayed, and explain how his actions affect you. Ask him why he feels that he can’t talk over these matters with you. The key here is to be proactive and talk about this before he makes another big decision.
You need to focus on mitigating the damage from your husband’s latest decision. Your daughter clearly has a history of not making payments, so your husband has put your credit at risk again.

More importantly, you need to get it across to your husband that making big decisions unilaterally is not OK.
Your husband made at least three big financial decisions without your consent. So the answer to your question is, yes, you have every reason to feel betrayed. But focusing on whether you have a right to feel a certain way doesn’t get you anywhere.
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The bigger challenge is communicating with your husband, particularly if he’s gotten used to being the sole decision maker in your 48 years of marriage. You need to have a frank discussion with him about how you handle money matters before he makes another big decision without involving you.
The best way to protect your finances from your daughter is to have her make payments directly to you. Then, you can directly make the payment to the lender. At the very least, you need to have access to the account so you can confirm that your daughter is actually making payments.
Our daughter got a check for ,400 and wanted him to help her find a car, but her credit wasn’t good enough to get one. She was upset and crying. So unbeknownst to me, he sold her our car for 0 down and had her take over payments. 
In that year he kept trying to get rid of his truck. Fast-forward to now. He made a deal to sell it to a car dealer without me. Then he bought a different car. Of course I wasn’t happy about it, but it did take our interest down and the payment to 0 per month. 
Ready to stop worrying about money?
Dear Livid,
Unfortunately, the reality of helping someone who isn’t creditworthy is that there’s a high likelihood you won’t get repaid. So you’ll need to budget with the assumption that you won’t get that 0 each month. If your names are still on the title, that’s actually a good thing because you can take back the car if your daughter fails to make payments.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected] or chat with her in The Penny Hoarder Community.

He trusted her to make payments that will end up being 0 with the other money she owes us. Am I right to be so hurt and betrayed?



My husband and I had a four-wheel drive pickup. He bought this vehicle unseen in 2017. The car lot drove it to our house, all without my input. We had it for one year. In that time, our payments were 3 a month.  

Dear Penny: Can My Boyfriend Sue Me for His Big Sacrifice if We Break up?

Dear Penny,

I am going to be starting nursing school in January 2022 and have a question about potential future obligations to my boyfriend. He has offered to drive me to all of my school obligations until my license is restored in May 2022. My alternative would be to pay for a ride-share which could cost $2,000 or more per month. 

This is obviously very generous and I am deeply appreciative. He will be making large sacrifices of his time to help me with this.

Our relationship is great, and I don’t see that changing. We’ve even talked about getting married, but that would not happen until after nursing school. (We both graduate at almost the same time.) 

I know that pre-written agreements in a marriage can be helpful in situations like this in case of separation. I’m trying to be responsible not knowing the future. If he and I do break up, would I have any legal responsibility to compensate him for his help? If so, is there an agreement we can make beforehand to avoid that unlikely scenario?

-Nervous Nursing Student

Dear Nervous,

It’s impossible to plan for every nightmare scenario that could occur during a breakup. I think you’re on pretty safe turf accepting your boyfriend’s generosity, though.

Typically, couples need a written agreement when significant assets or debt is involved. For unmarried couples buying a house together, for example, a legally binding agreement is a must. You’d want a domestic partnership agreement that spells out who would get to stay in the home and how you’d manage any related debts if you broke up. But unless your boyfriend has asked you to sign a contract spelling out his compensation for being your chauffeur, it would be tough for him to sue you for his services in the event that the two of you split.

What I’d worry more about is the toll that this arrangement will take on your relationship. It sounds like you’re going to be spending a lot of time in the car together if paying for ride-shares would cost you $2,000 a month. That may sound peachy right now. But it may be a different story after a couple of months, particularly if you’re both exhausted from studying.

In deciding whether to accept this offer from your boyfriend, think about what it will cost him not just in terms of money, but also time. If he wouldn’t be going that far out of his way, riding along with him seems like a no-brainer. But if he’d be spending a couple hours each day driving you around while trying to complete his own studies, relying on him for 100% of your transportation needs probably won’t be a great option.

Fortunately, this doesn’t seem like an all-or-nothing decision. You can accept your boyfriend’s offer, but also set aside some money so you can give him a break when he needs it.

Instead of budgeting $2,000 a month for ride-sharing, maybe you can set aside several hundred dollars a month. You can use that money to pay for an Uber or stay in a motel that’s close to your campus from time to time. Once you start school, you might also want to ask around to see if any classmates live near you. Perhaps they’d be willing to let you hitch a ride in exchange for gas money. Regardless, be sure to throw some gas money your boyfriend’s way.

Your boyfriend sounds like a good guy, given his willingness to sacrifice for you. It also sounds like you’re appropriately grateful to him. Whenever possible, try to show that gratitude by freeing up his time in other ways. For example, you could cook for him or do extra household chores if you live together.

This situation may be tough, but it’s only temporary. But if you communicate clearly and find alternative options so your boyfriend can prioritize his needs when he’s short on time, I think you’ll be able to make this work.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected] or chat with her in The Penny Hoarder Community.

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Source: thepennyhoarder.com

Time to Question Your Old Work Habits

Are your work defaults helping you stay organized, on track, and productive? Or are they bad habits that sap your energy and creativity? Today, Modern Mentor shares some bad habits to watch out for at work.


Rachel Cooke
November 15, 2021

fitness, I took up running. Because in my family, fitness was running.

Two years later, slim and grumpy, I had an epiphany. I HATE running! I had defaulted to running as a means of fitness simply because I’d never stopped to question it. But in 2003 I joined my first gym, and a whole new beautiful world opened up to me. Today, I do everything at the gym…except run. And I’m fitter now than ever. Sorry, Dad.
The point is that sometimes we hold onto assumptions about the way things are or should be. We stick with routines and habits. Not because they’re true or good. Just because we’ve never questioned them. And sometimes those old assumptions can get in the way of our best results.
I see people doing the same thing in the workplace. We do things on autopilot out of habit. But it’s time to stop and question some of these defaults. 
Today let’s talk about the most common habits that have us stuck, and the tactics we can use to break out of them.

1. Saying yes to the meeting

When a meeting request comes in, chances are you check your availability. And if the time is open on your calendar, you accept. Right? I was guilty of this for years. 

But what if we asked better questions? Instead of asking “am I available?” what if you tried asking…
  • Do I believe that whatever is on the agenda for this meeting actually warrants a meeting?
  • Is there something specific the organizer is looking for me to deliver in this meeting or is it just to keep me in the loop (in which case, a quick email after the meeting would suffice)?
  • Would attending this meeting help me to deliver on my goals and commitments?
  • Will this meeting provide me with an opportunity for exposure or connection to someone important?
  • Is participating in this meeting the best relative use of that hour?
If your answers are anything but yes, then you owe yourself the gift of a pause before you hit “accept.”
Being invited to a meeting doesn’t—or shouldn’t—obligate you to donate an hour of your time to someone else’s agenda. An open slot on your calendar doesn’t have to equate to an implicit invitation to anyone else to snatch up that time.
Next time you receive a calendar invite, pause and reflect before you hit yes. Your time is a precious resource, and part of your job is to manage its expenditure wisely. 
Is that meeting indeed the best use of your time? Or is saying yes just a habit worth breaking? 

5 Reasons Your Career is Stalled and How to Get Unstuck

2. Responding immediately to that email

An email in your inbox commands a quick reply…right?
There are emails that do indeed command immediate attention. Ignoring that customer complaint, that question from your boss’s boss’s boss, or even that electronic tap on the shoulder from HR might be a dangerous move.
But so many of the emails tortuously hitting our inboxes daily are, frankly, things—issues, questions, and concerns—that if given a bit of time to air out will likely resolve themselves.
My husband has mastered this one. I’m notorious at losing things and he’s my go-to finder. He gets countless texts and emails from me each week whining about something I’ve lost. He ignores me for a while knowing I’ll find 90% of it on my own. And for the sake of our marriage, once I’ve survived the waiting period, he will indeed help me find that 10%.
The same concept applies at work. Your colleague is having trouble interpreting the data you’ve shared, or can’t recall where you filed that monthly report, or is wondering whether you can help her fix this glitchy thing.
I’m not suggesting you ignore her completely. I’m just suggesting that you sit on it for 24 hours or so. Because in that time, it’s likely she’ll figure out the data, find the report, and realize she just needed to restart her computer…because restarting your computer is the answer 94% of the time (in my experience).
By letting go of your default habit to answer every email right away, you win back time, energy, and attention you can better direct elsewhere.

3. Accepting every assignment your boss offers

You want to be a good citizen at work. But don’t confuse saying “yes” to everything with being the most strategic team member you can be. 
Bosses, on balance, are busy. They don’t always have the time or presence of mind to track all they’ve asked you to do or to assess the strategic relevance of each project.
Last week, one of my clients was complaining about Essie, his director of strategy. “I asked her nearly two weeks ago to deliver a report to me and I’m still waiting on it.”
Out of curiosity, I asked him how many other things he’d asked of Essie in the past few weeks. He did a quick scan of his “sent” box and realized he’d asked 7 different things of her in the past 3 weeks. He wasn’t tracking these things and suddenly realized he had asked a LOT of her. 
He needed to help her prioritize. But Essie needed to be asking better questions of him. 
Next time you’re in Essie’s position, challenge your default to say yes, and try asking your boss:
  • How should I think about the priority of this project/task/activity relative to the others on my plate?
  • What is the outcome you’re hoping this project will deliver and is there a faster or more efficient way for us to get to that same outcome?
  • Might anyone else in the organization be working on something similar that could leverage?
Play the role of strategic thinker to ensure you’re spending your limited time and energy in the most productive ways.
What are some of the other default habits you find yourself falling into? Maybe you’re chasing the next promotion…without asking yourself whether you really want it. Or you say yes to every invitation to network with someone…without wondering whether this introduction will serve your goals.
Don’t be afraid to look at your own default settings. What is the one thing you really need to start questioning, and how might doing so move you forward in a more intentional way?