We've arrived at the shortest month of the year, and with it comes a smaller — but important — list of money chores.
You may have lost some of your new year motivation to save more or spend less, but the start of a February is a perfect time to check in and recommit to any money goals you set for yourself at the start of the year. Then, turn your attention to taxes, taking advantage of high interest rates and talking money with your partner. While we can't help with your Valentine's (or Palentine's) Day arrangements, we can help you help you navigate this month's financial checklist.
Here's how to make the most of these next 29 days.
1. Talk to your partner about finances
Ok, we know this one sounds like a romance killer, but hear us out: Research shows that not only do romantic partners underestimate the value of talking about money, they also overestimate the level of negative emotions that they’ll experience during such conversations. Even if you don’t have a special someone, a 2023 study from Bread Financial found that 55% of singles find it attractive when a prospective partner is financially responsible, so you might want to listen up, too.
Money matters pop up in relationships more than you may even realize. When you go out, does one person always pay the bill, or do you split it? Do you have parallel homeownership and retirement goals? Have you even discussed it?
There’s stigma attached to talking about money, especially within relationships, where silent factors like gender norms and power imbalances can covertly influence how people share financial responsibilities. But being silent about the big stuff rarely works out in anyone’s favor. You don’t want to find out your significant other has an issue with credit card overspending once you’re locked into a lease or a marriage. Any debt you or your partner incur after tying the knot, like a mortgage or auto loan, can affect both spouses' credit scores.
Make no mistake, we're not encouraging you to ambush your partner about their student loan balance or whether they have an inheritance. Broach the subject gently and agree on a time when you can both have an honest (and calm) conversation about your financial situations. By honest, we mean you should be prepared to talk about your debt, spending habits (even the bad ones) and goals for the future. That doesn't mean you have to make decisions about everything together now, but putting all your cards on the table can establish positive communication and a shared understanding.
Need more motivation? Being transparent about finances with your partner has proven benefits. Engaged and newly wed couples with joint bank accounts have been shown to have significantly higher relationship quality than those who keep their money separate, according to a study released last year by Indiana University Kelley School of Business. Merging accounts resulted in greater financial harmony for those couples, who reported more satisfaction with how they discuss and handle money together.
“They frequently told us they felt more like they were ‘in this together,’” Jenny Olson, the study’s lead author, said in a news release.
2. Buy a CD before rates go down
One silver lining of the Federal Reserve’s inflation-busting interest rate hikes has been high APYs on savings products like certificates of deposit (CDs), but time is running out to snag those attractive rates.
With the central bank planning to cut interest rates later this year, several major online banks are already starting to lower their 12-month CD rates. Barclays’ 12-month CD, for instance, is now down to 5.3% from 5.5% last month — and Discover, Marcus, Sallie Mae, and Synchrony have also slashed theirs in recent weeks.
While no one knows exactly when — or how much — CD rates might fall in 2024, it's safe to they aren't going to get any higher than they are now. These accounts aren't right for everyone, since they lock up for money for a specified amount of time. But consider this your go-ahead to buy them now if you’ve been thinking about taking advantage of current rates. CD laddering is one way to do it while keeping your savings liquid (you can learn more about this strategy from this Money story).
3. Get started on your 1040
Do yourself a favor and get one of the peskiest annual money tasks out of the way by prepping your tax return now. You’ll thank yourself later when you get your refund before everyone who waits until the last minute to file. (The filing deadline is April 15 this year).
Tax season is officially in full swing: The IRS started processing tax returns on Jan. 29. By now, you should have received most of your tax documents — and if not, you should check with your employer about the whereabouts of your W-2.
There are few changes that could make how you file look a little different this year: The IRS has expanded Free File to taxpayers who had an adjusted gross income (AGI) of $79,000 or less in 2023 — $6,000 more than last tax season. Eligible taxpayers in select states will also be able to file using the agency's new Direct File pilot, which will be rolled out in phases as it undergoes final testing.
At first, the program will only accept individual federal tax returns. If you need to file a state return after submitting your federal one, the Direct File will take you to a state-sponsored platform where you can do that. You can find out more about which states are participating and eligibility in Money's handy explainer.
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