Family Finances
Family Finances
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If you can resist the siren call of just-arrived-in-the-store fashions, prices tend to get marked down about six weeks into the season. Waiting just a little more than a month can mean a better price than buying immediately. One of the downsides is that some popular items might sell out over that six-week period. If you're purchasing from a chain store, you can always ask a sales associate to phone other locations to see if your item is in stock elsewhere. Another great perk of waiting to buy is that it helps to curtail impulse spending.
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Saving for the future can be challenging for spouses who can't work or are underemployed. Couples may want to establish a spousal individual retirement account (IRA). This tax-advantaged IRA allows the working service member to contribute up to $6,000 in 2022 to a traditional or Roth IRA in their spouse's name. The IRS allows taxpayers to set aside an additional $1,000 catch-up contribution each year if they're 50 or older.
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Banks may engage in any number of activities that generate revenue. However, the primary way that most banks make money is by lending it to customers and charging interest in return. By receiving a higher rate of interest than they pay on deposits, they’re able to make a profit.
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If you hire someone to take care of your children in your home and pay them more than $2,400 in 2022, you’ll need to file Schedule H—household employment taxes. Not doing so can result in a large fine. Fortunately, a number of payroll services that specialize in this form of payroll can make it easier to comply. You’ll want to review the offerings to see if they offer email support, a free trial, direct deposit, mobile apps for both employer and employee, help with preparing end-of-year W2 forms, among other features.
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Very. Making repairs is one of the new expenses that accompany homeownership. Suddenly, there's no landlord to call if your roof leaks or your drains clog. On the bright side, you won’t get a sudden rent increase on a random Friday afternoon. Don’t neglect any issue that could worsen over time—delay can turn a relatively small problem into a larger, costlier one. Consider protecting yourself against potential maintenance issues by having a potential home inspected before buying it.
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You might consider forming a family LLC, a type of closed corporation that is widely used in estate planning as well as for business purposes. For instance, it can be used to divide income among generations. A family LLC can help you control and protect assets during your lifetime, keep assets in the family, and reduce taxes owed by you or family members during your lifetime or after your death. Each member's financial contribution limits their debt liability for the LLC.
Key Terms
- Immediate Family
The immediate family usually consists of parents, siblings, spouse, and children.
The definition is important since it is used in situations such as a company's family leave policy.
The Family and Medical Leave Act, for example, defines immediate family as your spouse, parents, and dependent children. Exact inclusions may differ depending on the law or organization that defines an individual's immediate family.
- Household Income
The definition of household income depends on context: Who belongs to a household and which items are included in income may vary in different studies and for different government programs. As defined by the U.S. Census Bureau, household income refers to the combined gross cash income of all members of a household—in other words, a group of people living together, who are 15 years or older. It is used to evaluate the economic health of an area or to compare living conditions between geographic regions.
- G.I. Bill
The GI Bill was a federal effort to provide financial and social benefits to World War II veterans after they returned home. Since its inception, there have been several iterations of the bill. Today it provides education benefits, now extended to include vocational and technical training programs, to active service members and honorably discharged veterans.
- Unemployment Income
Unemployment income, temporarily paid by the government to unemployed workers who have lost their jobs, provides a social safety net to those individuals who have become unemployed while looking for a new job. Typically, unemployment is treated as ordinary income for tax purposes and must be reported to the IRS. Employers and employees are assessed a payroll tax to cover the cost of this benefit.
- Unsatisfied Judgment Fund
Some states set aside money known as an unsatisfied judgment fund to cover uncompensated expenses related to bodily injuries sustained in motor vehicle accidents. The unsatisfied judgment fund is intended to protect drivers from financial losses resulting from motor vehicle accidents for which they are not responsible, in which the responsible driver is unable to pay for the damages.
- ACCRA Cost Of Living Index (COLI)
The ACCRA Cost of Living Index (COLI)—a quarterly publication put out by the American Chamber of Commerce Researchers Association and the Council for Community and Economic Research—is a dataset of living costs. Groceries, housing, utilities, transportation, health care, and other goods and services comprise the index. These costs are based on spending patterns identified in households with mid-management income in more than 300 U.S. cities, aggregated by county and by metropolitan statistical area.
- Financial Infidelity
When couples with intertwined finances lie to each other about money, it’s known as financial infidelity. Hiding existing debts, excessive expenditures without notifying the other partner, and lying about the use of money are some examples. Financial infidelity can create tension and difficulty in relationships that may lead to the end of the relationship if not corrected.
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