Planning for Two: Coordinating Finances With Your Spouse

July 24, 2019 by Comerica Bank


Financial planning can be a major hurdle for new couples. Choosing to partner in life is a big step: It requires a great deal of trust and openness. Clear conversations about key issues such as a target minimum balance for accounts or how to manage saving and spending are critical.

It can be easy to focus heavily on big-picture issues. How much debt is each partner carrying into the relationship? How do you want to share responsibility for individual debt now that you're a couple? What are your savings goals? Those are the kinds ofmajor issues you'll often find in advice articles for partners getting started in life together. Managing key day-to-day financial issues can fly under the radar.

Everyday financial considerations for new couples

Managing your finances as a couple may force you to reconsider best practices around managing your bank accounts. Whether you choose to open new shared accounts, to maintain individual accounts or to blend the two options, it can help to revisit core banking issues that can influence your decisions. Here are a few primary considerations to keep in mind:

Balancing account types

At any given time, you may want to maintain a balance of checking, savings and money market accounts.

Checking accounts are great for money that is going to move in and out of the account frequently. You can configure them for direct deposits and payments, making them a natural fit for regular expenses such as rent or predictable bills.

Savings accounts let you set aside cash so it can earn interest. You can access money in a savings account, but there are often specific account policies that make it beneficial to only use funds from savings when you really need it. The account is not designed for frequent withdrawals.

Money market accounts blend checking and savings. They deliver interest comparable to and sometimes exceeding savings and you can also write a limited number of checks per month.

Mixing and matching these account types based on what you and your partner need can give you the right blend of flexibility and stability with your everyday banking resources.

Addressing hard-and-fast rules

If you are taking the step to share income, you may want to also create a few rules on how you will both use your money. For example, many couples will work to discuss any spending before making a purchase, but also set a baseline for what they consider a small enough amount to allow spending without having a conversation.

Identifying goals for a minimum account balance can also be helpful. You may want to do this to avoid overdrafting your checking account or to ensure you always maintain enough funds in your savings and/or money market account to ensure you are getting sufficient value from interest.

It is also worth talking about any bank policies — such as maintaining a certain minimum account balance for accounts, how the firm handles automatic payments and what happens when you overdraft — so both of you know what to expect.

Setting a foundation for financial partnership

This is not an exhaustive list of the kind of banking issues new couples should keep in mind. But as you consider these primary matters, you can start laying the groundwork for financial transparency with your partner. Getting on the same page and setting clear expectations can position you to avoid relationship stress due to financial uncertainty later down the line.

If you are looking for some help to navigate these issues, reach out to Comerica Bank today. We would be happy to talk with you and your partner about strategies we have helped couples enact to manage their day-to-day banking needs in today's fast-paced digital world. We also offer online banking tools to help you and your partner manage your finances together.

 

This information is provided for general awareness purposes only and is not intended to be reliedupon as legal or compliance advice.

 This article is provided for informational purposes only. While the information contained within has been compiled from source[s] which are believed to be reliable and accurate, Comerica Bank does not guarantee its accuracy. Consequently, it should not be considered a comprehensive statement on any matter nor be relied upon as such.

 

      

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Considerations to Make When Figuring out How to Pay for Daycare

July 22, 2019 by Comerica Bank

The matter of how to pay for daycare can leave many parents and guardians with sleepless nights. The high costs of child care are exacerbated by the educational and social development offered by daycare services. The result is often escalating costs and a need to build family schedules around the way a daycare functions.

These barriers can create a great deal of stress. But as families consider how to pay for daycare, they do have a few options at their disposal, including methods to defray the costs of care or manage their finances in a way that eases the burden of dealing with expenses.

Limiting the costs of daycare

There are a few ways to reduce how much your family is spending on child care, even without going with a lower-cost alternative. Finding the right care provider is challenging enough. Trying to switch just to save a bit of money is not always simple. However, you can work with your employer to see what options you may have available. In particular, many businesses today are more open to offering flexible work schedules, especially for those responsible for taking care of family members. Making arrangements to work at alternate hours some days can reduce the amount of time your child spends in daycare, cutting your costs.

If you do not need all-day coverage, you can also consider nanny share programs in which multiple households work together to pay a full-time nanny, with the child care provider splitting time between the participants.

Another child care assistance option comes in the form of a flexible spending account. Some employers offer flexible spending accounts as a means for employees to pay for key expenses either with pre-tax income or at a reduced tax rate. Many banks also offer savings programs designed to help families pay for education-related expenses.

Additionally, there are numerous child care assistance programs from state and federal government agencies. The specific provisions around these initiatives can be highly variable, but the government has created a centralized resource you can use to explore opportunities and find out what may work for your family.

Simplifying financial management to handle expenses

The saying, "Time is money," may be a cliché, but it is used repeatedly for a reason. Your time is valuable and, when it comes to managing the cost of child care, time you spend balancing the budget and handling payments could otherwise be spent with your child. Modern banking solutions are providing increased access to digital services, letting you automate payments and manage your account from a wide range of devices and locations. Even if you are only saving a half an hour a week that would be spent writing checks, mailing bills, and otherwise arranging finances with your daycare provider, that time adds up quickly over the years.

Mobile and online banking solutions can also provide instant visibility into account balances, making it easier to budget by reducing the need to manually track expenses.

When you are considering how you will handle the costs of daycare, it is important to think about more than just the monetary factor. The costs in terms of time and management can also add up in a hurry, and today's digital banking tools can help you along the way.

Comerica Bank can help you in this process. We offer robust mobile and online banking tools to help you manage your account and access key services at your convenience. We can give you the easy access to banking resources you need.

 

This information is provided for general awareness purposes only and is not intended to be relied upon as legal or compliance advice.

This article is provided for informational purposes only. While the information contained within has been compiled from source[s] which are believed to be reliable and accurate, Comerica Bank does not guarantee its accuracy. Consequently, it should not be considered a comprehensive statement on any matter nor be relied upon as such.
 

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Assessing the Financial Pros and Cons of an Advanced Degree

July 19, 2019 by Comerica Bank

Getting an advanced degree presents a rare mix of incredible potential and extreme risk. On one side, you could end up getting the degree and obtaining a high-paying job that makes student debt easy to deal with and sets you up for long-term earnings. On the other, you could be left with huge costs, more debt than you can handle and poor job prospects. Sometimes an advanced degree does not lead to significantly higher salaries. In other cases, the specialization that comes with a master's degree or PhD means you have fewer job options at your disposal, and you end up unable to work in your field or forced to relocate to a more expensive region.

The potential risk is not necessarily a reason to avoid pursuing an advanced degree, but it is a reason to be more careful about researching the degrees you are considering. You may also want to open a checking account online so you get full digital visibility into your income and expenses at any time, from any location. Complete financial visibility can make it easier to project what you can really afford when it comes to seeking an advanced degree.

The ROI potential of advanced degrees

The Georgetown University McCourt School of Public Policy, Center on Education and the Workforce®, regularly analyzes higher education trends and how they impact society. One of its studies, the "Five Rules of the College and Career Game," found that median earnings increase relative to level of education. The median annual salary of professionals with bachelor's degrees was $62,000 in 2018. That median annual salary figure jumped to $80,000 for those with graduate degrees. However, the study also found that the specific major or area of study pursued can be highly influential on salary potential. There are plenty of instances in which bachelor's degrees can lead to earnings that outpace the median salary of those with advanced degrees.

Advanced degrees can drive a serious return on investment, but the extent to which the degree is valuable depends heavily on the specific career outcomes you can expect from your degree. In simplest terms, the financial upside of an advanced degree comes in the form of higher lifetime earnings. But the downside that counters this benefit is high levels of debt and potential challenges in initial earning potential.

Optimizing financial management to minimize risk

Calculating the actual return on investment you can expect from an advanced degree requires a careful analysis of your current financial situation, job prospects in the sector where you want to work and the cost of the programs you are considering.

To do that, you need easy, daily access to your bank accounts. You do not want to be waiting for paper bank statements that get mailed to you each week. You likely do not want to be tracking your spending manually in a check register. Instead, online banking tools can give you immediate, constant access to your accounts. Web and mobile banking solutions let you understand your spending through complete and easy visibility into what you spend and how. You can use this visibility to calculate your living costs, assess how much debt you can afford, and project how much new income after pursuing a degree can help you evaluate ROI potential.

Comerica Bank blends our longstanding tradition of highly relational financial services with modern, digital banking opportunities. We can give you the tools you need to manage your accounts and provide banking products that help you gain a stronger understanding of your financial situation. From there, you can be better positioned to keep up with everyday costs and save for major expenses like pursuing an advanced degree.


This information is provided for general awareness purposes only and is not intended to be relied upon as legal or compliance advice.

This article is provided for informational purposes only. While the information contained within has been compiled from source[s] which are believed to be reliable and accurate, Comerica Bank does not guarantee its accuracy. Consequently, it should not be considered a comprehensive statement on any matter nor be relied upon as such.


 

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Everything You Need to Know About Elder Fraud

March 21, 2019 by Comerica Bank

Financial scams are widespread, meaning consumers always need to stay on guard when it comes to their personal finances. Yet the scale of elder fraud and financial abuse in the U.S. makes it difficult for older Americans to address all the risks that come their way. Whether through fake IRS phone scams or a deceptive marketing campaign, elderly Americans are often the target of con artists and financial fraudsters.

However, despite this reality, there are many tools and strategies available to seniors and their loved ones. Taking advantage of these resources is an important step for consumers as criminal tactics become more advanced and generational shifts mean more older Americans than ever may be at risk. According to the Population Reference Bureau™, the number of Americans aged 65 and older is expected to more than double to 98 million in 2060.

Combating elder fraud requires becoming educated on the topic and then pursuing measures to protect bank account and personal information. Read on for more information on everything you need to know about elder fraud:

Millions in self-reported losses a year

The first thing to know about elder fraud is that it is a big problem in the U.S - and growing even bigger. According to the Federal Trade Commission, American adults 60 years and older reported losing around $250 million due to fraud in 2017. But that number only tells half the story. The same FTC data indicated that adults 80 years and older lost an average of $1,092 per instance of reported fraud, almost double the next highest average ($621 for adults 70 – 79). Furthermore, seniors were the least likely age group to report fraud. While nearly a third of consumers 30 – 39 reported an incident in 2017, only 20 percent of those 60 – 69 reported fraud; this occurred despite that age group accounting for 19 percent of all reported cases.

These statistics underscore the reality that seniors are not only more vulnerable to fraud, but they are also often hit hardest by its financial impacts. This is compounded by the lower likelihood of self-reporting fraud, which only increases the risk older adults face.

How to identify and address the most common scams targeting seniors

Key to addressing elder fraud in real life is getting to know the usual suspects. There are many forms that senior financial abuse may take, but some of the most common actors to be aware of include:

  • Telephone and mail scammers.

  • Medicare scam operators.

  • Internet scammers.

  • Persons seeking or claiming to have the power of attorney or the legal authority to access or manage one’s money.

However, watching persons assumed to be close to seniors is important. Family, caregivers, and other relatives and friends may just as likely be after hard-earned money or personal information. A couple of the scams that are most commonly perpetrated to obtain such information or material gains include:

  • IRS phone scam: The No. 1 thing for any consumer — especially those who are seniors — to know is that the Internal Revenue Service does not and will not call you personally to demand immediate payment or face referral to law enforcement or some other form of punishment. The agency says so itself clearly, so be wary of anyone phoning that presents themselves as the IRS and demands such action. Never give out your Social Security number or credit card details over the phone to unknown callers.

  • Medicare fraud: This can come in different forms. For instance, criminals may steal Medicare insurance information to abuse directly through phishing scams or the like, while others operate seemingly legitimate services that will use your Medicare information to make bogus claims. Seniors may also be bombarded with marketing for medical equipment that could lead to financial fraud. 

Know what makes a senior vulnerable

Barring serious illness, the Center for Retirement Research of Boston College® said most seniors are capable of handling their finances. If cognitive ability isn't at fault for financial loss, it becomes more important to identify root causes:

  • Telephone calls: A senior who receives several telemarketing calls a day is greatly exposed to potential fraud. Opting out of marketing lists and opting into Do Not Call lists is a necessary step to take.

  • Loneliness: Lack of social and emotional support leaves seniors isolated and without mechanisms of defense against financial predators. Those living alone, recently widowed or living far from close family need the most attention and should find services that help them protect their finances.

     

Yet even if all precautions and measures are taken, elder abuse can still happen. When, and if, it does happen, you or your loved one will need to know what actions should be taken in the aftermath. You can report instances of suspected fraud or abuse to the Consumer Protection Financial Bureau, the Better Business Bureau®, the Federal Trade Commission and state attorneys general offices. Also check with credit reporting agencies to ensure your information has not been used to open fraudulent accounts. You can even request a freeze on inquiries into your score, which could prevent further harm.

Whenever seeking ways to avoid elder fraud, talking to a financial partner is at the top of the list. Speaking to a reputable institution like Comerica Bank with proven tools and services can help connect seniors with the means they need to ensure their accounts and money are safe from the hands of prying calls and internet scams.

This information is provided for general awareness purposes only and is not intended to be relied upon as legal or compliance advice.

This article is provided for informational purposes only. While the information contained within has been compiled from source[s] which are believed to be reliable and accurate, Comerica Bank does not guarantee its accuracy. Consequently, it should not be considered a comprehensive statement on any matter nor be relied upon as such.

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Understanding How Student Loans Work

February 5, 2019 by Comerica Bank

Student loans rank among the dominant themes of personal finance today. Rising tuition costs across the nation and increased debt carried by graduates has rocketed student loans to the top of the priorities list for many consumers. Indeed, there are several macro factors influencing the discussion: generational shifts in the population, the overall economic recovery and job creation post-Great Recession, for example. 

Yet these overarching factors can sometimes cloud what is already a complex concept. Student loans themselves, while seemingly essential to the financing of higher education, can be difficult to get one's head around. There are a number of variables to become familiar with, from what terms you receive to how you plan for repayment.

Understanding how student loans from a bank work versus how a government loan works is a critical differentiation to make. Finding the right financing for your education depends on what you know about student loans. Consumers considering college or university can talk to their local bank to learn more about getting a loan, but to start, here's a guide to the most important points.

Quick facts about student loans

According to Federal Reserve statistics, U.S. consumers owed more than $1.5 trillion in student loan debt at the end of 2018, which is more than double the amount just a decade earlier. The share of debt held by younger students has rapidly inflated: Of adults with student loan debt, nearly 40 percent are ages 18 - 29. Tuition cost increases have fed this rise in part. U.S. News and World Report®️ data showed the average annual cost of attending a public, in-state school in 2007 was $6,468 (that's including tuition and room and board). By 2017, that figure reached $10,691. For private college, the increase is even more extreme, with average tuition and fees climbing from nearly $28,000 in 2007 to above $41,000 in 2017. 

The average bachelor's degree holder owes $27,000 by the time he or she completes school, Pew Research Center®️ said. Seeking more education costs more money, as postgraduate students owe on average $45,000.

How a private student loan works

Private student loans only enter the equation after a student has filled out the Free Application for Student Aid (FAFSA). Upon completing this form, borrowers will receive a letter stating how much in grants and federal loans a student can expect. If this aid does not meet all costs concerned, students can then apply for a private loan from a bank or other financial institution.

Application process

While many students seek private loans from a bank or other financial institution as a supplement to federal financial aid to help pay tuition, that's not the only direct cost of education private loans can help with. Other items include textbooks and other living costs. It all starts with the application process, which is a key stage of the loan process. Applicants must:

  • Gather documentation: This includes readying your driver's license, Social Security number, school information and any other materials needed to establish identity or personal history.
  • Decide on how much to borrow: Since federal loans are tied to financial need, their amounts are limited. Private loans, however, are not capped and students can request what they want (even if they only get a portion of that initial figure). It's crucial here to budget and plan out what you need from a private loan. You don't want to get stuck with debt you don't actually need, but now must pay interest back on.
  • Get a cosigner: Loan applicants without a credit history (as most students about to enter college are) need to get a cosigner for their loan to satisfy lender demands. More on this below.

Credit-based decision

A key differentiator between private loans and government loans is that those in the former category are based on creditworthiness. That means the amount you receive and the rates you borrow at are influenced by credit history. This is what makes a cosigner so important. Students don't often have the employment history and established credit that qualifies them for beneficial rates and terms, so most use a relative or close relation to act as a cosigner to their loan. Another alternative is a parent loan, where a credit-worthy parent or guardian takes out a loan on behalf of their college-bound child, which can mitigate the latter's potential lack of credit. This means that even if you have no credit or bad credit as a student, there are still opportunities to get a private loan under the right circumstances.

Fixed and variable rates available

One of the bigger draws to a private loan is the borrower's ability to benefit from a variable rate arrangement. Private loans generally come in two formats: the fixed rate and the variable rate. Both are fairly self-evident, but a fixed rate loan is one with a locked-in interest rate from the beginning, while variable rate loans come with adjustable terms that may fluctuate with the greater economy and open students to the possibility of reduced costs. However, many variable rate plans also come with low introductory rates that can increase dramatically later on. Students must be sure to talk through the loan offering with their bank to be totally clear on the variables offered. 

Repayment plan

It is vitally important to understand your private loan repayment terms. While federal loans across the board do not require payment until after graduation (and even then, offer flexible repayment strategies), some private loans may require payment while you're still in school. Lenders may expect timely repayment upon disbursal of funds without a grace period. At other times, there may be penalties for earlier repayment that students and any cosigners have to be aware of. Also, it's less likely that a private loan will be forgiven if the borrower cannot make payments. While the government does forgive student debt in certain cases, private lenders typically maintain much more stringent criteria. In such cases, however, working with your bank or financial partner to find a pathway to repayment is possible and may lead to more flexible terms.

What separates government loans from private loans

While the differences between federal and private loans seem clear, the details are always the deciding factor:

  • Interest rates: As mentioned, federal student loans come at only fixed rates, whereas private loans allow for fixed or variable interest rates. Also, if a student qualifies for a subsidized federal loan, the government will pay interest for him or her throughout the duration of schooling, or at least on a short-term basis. Interest paid on federal loans is always tax-deductible up to a maximum cap, while students will have to check their tax-exempt status with their private lender.
  • Repayment options: Federal student loans don't have to be repaid until a student graduates, leaves school or becomes less than a half-time student. Even then, students have a number of deferment options they can take advantage of if personal economic difficulty makes full payments a challenge. The government, for instance, allows students to tie payments to monthly income. Consumers with multiple loans from the government may also consolidate their accounts under the U.S. Department of Education and its partners, something that those with a private loan might not be able to do.
  • Credit impact: Federal loans are not made on the basis of credit and thus don't require a cosigner or credit checks. However, federal loans are reported to national credit bureaus, so taking out such loans can help students build first-time credit by establishing an account, history and track record of payments once they begin.

Student loan refinancing

Yet another distinction to be made between the two types of student loans is the possibility of refinancing. Since the federal government disperses loans on a fixed-rate basis, students can only refinance their loans into a new federal loan called a Federal Consolidation Loan. Students can, on the other hand, refinance their private loans into a new private loan. Refinancing is an attractive option for many young consumers because it allows them to take advantage of current economic conditions. If the opportunity for a lower rate arises thanks to market movements or policy decisions, students can work with their bank to explore refinancing options. Student loans are a big decision in the life of any student or parent. Finding the right financing from the best partners means all the difference in getting a loan with the right terms and repayment options. Reach out to Comerica Bank today to talk to our qualified professionals on any of the private student loan products. These offerings include parent loans that can limit the effect a student's lack of credit or financial means may have on the loan. 

 

This information is provided for general awareness purposes only and is not intended to be relied upon as legal or compliance advice. 

This article is provided for informational purposes only. While the information contained within has been compiled from source[s] which are believed to be reliable and accurate, Comerica Bank does not guarantee its accuracy. Consequently, it should not be considered a comprehensive statement on any matter nor be relied upon as such.

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