The Moneyist’s advice for financial fitness – On Watch by MarketWatch

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Speaker 1: Hello and welcome to On Watch by MarketWatch. I’m Jeremy Owens. This is the final episode of Financial Literacy Month, and it’s also the first podcast with MarketWatch’s most popular columnist, The Moneyist. Quentin Fottrell joins us to discuss how to avoid ending up in one of his columns, which deal as much with relationships as money. Then we’ll take the same topic into a debate, in the return of Financial Faceoff two MarketWatchers take opposite sides on the question of whether married couples should have separate bank accounts. I will decide the winner. Plus we’ll take a quick look at the news stories we’re watching right now and how they’ll affect your wallet. First, let’s talk to The Moneyist.
Quentin Fottrell has been writing Moneyist columns for MarketWatch for a decade. When I asked him to summarize what he does with The Moneyist, he told me it is really a relationship advice column disguised as a financial advice column. Digging through the archives that makes sense. Some of the hardest financial dilemmas we go through are because we trusted someone else and it came back to bite us. From cosigning on the wrong loan to marrying the wrong person, to having to step in to protect an elder relative, the most common theme of Moneyist questions is a personal relationship causing financial hardship. I asked Quentin to come up with some basic advice to keep people from ending up in the tough situations on which he advises readers. Quentin, how do people avoid ending up in a Moneyist column?

Speaker 2: There’s no avoiding coming across bad actors. You have to put your trust and faith in people at some point in your life. You want to get married, you want to think the best of your stepchildren or even your own children. You want to believe that your caretaker has taken an oath. But unfortunately, we live in the real world and oftentimes our best laid plans are upended by either our own lack of foresight or maybe the skullduggery of other people.

Speaker 1: And trust is the biggest word you use there, I think. You do have to trust people, but in trusting people, you make yourself vulnerable in some ways. The key is to trust but verify. How do you in your relationships, build in not just trust but protect yourself?

Speaker 2: Because we all have a social contract, there’s going to be a period of time where you are suspicious, and that’s when maybe people write to me or worse, they write to me after the trust has been broken. For example, I get a lot of questions about financial abuse and particularly elder financial abuse. I recently had a letter from a person whose relative was in a nursing home and the nursing home according to this letter, hired a lawyer and had this patient change their will to leave their assets to a charitable fund owned by the nursing home.
It could be anyone. And if you’re an onlooker, one of the biggest red flags is isolation. Many studies say that the lack of a good support system and that physical and psychological isolation are hallmarks of the problem. Another red flag, somebody’s new in their life suddenly. They moved in suddenly, or a recent letter I had a man three months before he died, got back with his ex-girlfriend. She changed all the beneficiaries on his accounts and made sure he left every single penny to her. If somebody new on the scene, if your friend or loved one is isolated, if you feel like your spidey sense is telling you that something’s wrong, you don’t have access to the person or their financial documents and somebody else is controlling who they see, that’s a big red flag.

Speaker 1: And there are ways if you are worried about that, to try to get something on paper or try to get out in front of that. And there are other ways just to act in the moment when you see that?

Speaker 2: And a lot of people when they write to me, they’re very clearly being scammed or somebody is trying to steal an inheritance, very common at least in the pages of The Moneyist. And the bad actor in those situations is relying on people’s sense of powerlessness and their lack of knowledge of the legal system. All you have to know is that something is wrong and there are organizations that can help you. You can call a family lawyer, they’ll point you in the right direction, but you don’t need to have a forensic knowledge of accounting or the legal system in order to try and do battle with a bad actor. You just have to have a phone and a number and to call and ask for help.

Speaker 1: Obviously, elder financial abuse is a big topic in Moneyist columns. Another one that may be even more common is just romantic relationships and how they can mess with your money. Are there general rules you’d look for to avoid that happening as well?

Speaker 2: Let’s face it, people get married and they think the mention of a prenup is a slap in the face. Many people, they see it as a lack of trust. They think the person is after them for their money or vice versa. And unfortunately, there was one study I read Jeremy that said only 4% of Americans who have ever been married have gotten a prenuptial agreement. But I really believe times are changing, especially among younger people. They know that they’ve worked hard, they’re much more financially literate, I think than older generations at that young age. There’s been such a focus on financial literacy, particularly in schools. And we are crossing this Rubicon where asking for a prenuptial agreement is no longer seen as a terrible thing.

Speaker 1: It is a very serious thing to get married. It seems like also signing a contract on the economic side of that, on the financial side of that is just one thing that could be added to what you’re already doing in terms of aligning yourself with each other.

Speaker 2: They say about marriage is like the Hotel California, you can check in, but you can never leave. Talk to anybody who’s gotten married, it takes two seconds to sign that contract and it can take you up to 10 years in a messy divorce to get out of it.

Speaker 1: And a lot of money. And I think that the big thing there, Quentin, is just to be open and honest about your financial life before you get married early on in the relationship.

Speaker 2: You have to be honest about what you have, what you don’t have. You have to share your own story. If you have student debt, share it because that’s going to be a joint financial burden on you as a couple, particularly if you’re going to have a family. If you have a million dollars in the bank or you have a vast real estate empire, you might want to put that in a trust because in many states the appreciation on those assets, even if they were acquired before the marriage can be deemed marital property. You want to be very careful about not commingling. If you get an inheritance and inheritance is generally considered separate property, even if you get it during the marriage, you may want put that in a trust or you might want to make sure it’s in a separate bank account and never the twain shall meet.

Speaker 1: And one thing you mentioned to me that I find crazy is bringing up credit scores on dates. But you told me that actually the credit scores are a good predictor of whether a relationship will work.

Speaker 2: Jeremy, forget about before they meet. People put their credit scores on their dating profiles. That’s how clued in to the fact that they want to meet somebody who is equally able to manage their finances and sites like OkCupid have questions like, “Would you go with somebody who has a lot of debt?” Some people say, “Yes.” It depends on what the debt’s related to, maybe it was student debt. Some people just say a flat no, they don’t care whether it’s credit card debt or student debt, they’re going to give you a flat no. Even on dating profiles, but yeah, you’re right.
There have been studies that have shown that people with higher credit scores having more successful relationship. There was one actually really big study from researchers at the Federal Reserve Board in The Brookings Institute in UCLA, and it said the higher your credit score, the less likely you are to separate from your partner. And for every 105 point spike in that credit score, there’s a 32% drop in the likelihood of you separating. Maybe the statistic there, take it with a pinch of salt but the overall lesson is that if you have good credit scores, you are probably good at managing your life.

Speaker 1: What are some general rules from getting to that point, Quentin? What should people be doing to make sure that they are secure financially to the point that they can feel that security in relationship as well?

Speaker 2: You always need to pay off your credit card bills every month. That’s the biggest, that’s really, it’s particularly a problem at the moment with rising prices. Listen to this, Americans carried an average personal debt of 21,800 last year, and that’s not including mortgages.

Speaker 1: That’s cars, credit cards, everything else besides housing basically.

Speaker 2: And those people who are carrying debt are spending 30% of their income to pay it off. And most of those people, just under a third, actually have credit card debt. As you say, you want to keep your credit card balance low in relation to the amount that you can spend on your credit card because that debt to allowance ratio is going to impact your credit score. But also you’ve got to have your own get out of jail free fund.

Speaker 1: Six months of expenses of what you would normally spend in a month, having that put aside.

Speaker 2: One of the main reasons why people are trapped, particularly in toxic or abusive relationships is because they don’t have financial independence. If you’re meeting somebody, especially later in life, I get letters from people Jeremy and they’re selling their homes and co-mingling all their assets. Don’t do that. If you are lucky enough to have a home, keep it separate, you may want to go back to it.

Speaker 1: Quentin, everybody runs into money issues and it’s not something to feel ashamed about. It’s why you have this column is to help people out and there are several services that exist to help people in these situations.

Speaker 2: And I’m really glad you said that because I think it’s really important to state that if you have a lot of credit card debt, you’re not a bad person. Being behind in your mortgage does not mean you’re a bad person. People lose their jobs, people find it hard to make ends meet. People are not getting paid enough. Prices are growing up. And it’s really important to remember that because I feel like particularly in the financial press, there is a lot of aspersions cast upon people who carry debt. And if you look at those people, they’re just like you and me and sometimes they are you and me.

Speaker 1: You don’t want to let shame get in the way of fixing a problem. The first thing to do when you realize you have a problem is admitting it and then looking to correct it or fix it in whatever way you can.

Speaker 2: And honestly, that’s one reason why The Moneyist exists, why advice column like mine is so useful because people can ask for that advice in confidence and privately without having to reveal their identity.

Speaker 1: And for those who have not been able to avoid running into a situation where they could use The Moneyist’s advice, you can reach Quentin at his email, qfottrell@marketwatch.com, check out any Moneyist and there’ll be a link in there to it. And Quentin, we thank you so much for coming on. We’ll have you on again.

Speaker 2: My pleasure.

Speaker 1: We’re going to take a quick break. Coming up, Financial Faceoff, stay with us.
Welcome back to On Watch by MarketWatch. Before the break, we talked with The Moneyist, Quentin Fottrell. Now we’re going to stay on the topic of how relationships and financial fitness intertwine with a financial face-off. This is a MarketWatch feature in which we debate to help you make more informed financial decisions. I’m going to act as the referee and judge for today’s contentious debate, should couples combine their finances when they get married? Couples committing to one another, face many financial decisions from whether to rent or buy a home to prenuptial agreements to actually paying for the wedding. But the most basic decision is the level to which they want to combine their finances as they combine the rest of their lives. One survey shows that roughly half of couples don’t discuss how they will combine their finances before they get married. Today we’re going to help you think through both sides of this crucial decision. And joining us for this are MarketWatch’s, Angela Moore and Andrew Keshner. Welcome to the show guys.

Speaker 3: Thank you.

Speaker 4: Glad to be here.

Speaker 1: Here’s how Financial Faceoff works. Both contestants will get to make their argument, then I’ll ask each of them a follow-up. At the end, I’ll make my judgment, which I’m sure all participants and listeners will support without disagreement. And now to argue for keeping your account separate as a couple is MarketWatch, personal finance reporter and tax expert Andrew Keshner. Andrew, take it away.

Speaker 4: I’m here to argue for the idea that distance makes the heart grow fonder and it also makes the money ties stronger between the two spouses. Think about married couples, maybe it’s your own marriage, maybe it’s the married couples you know. There’s this division of labor between who does what in the relationship. There’s the person who does the groceries. There’s the person who runs point on family trips. There is the money person. This is the person who knows how much that mortgage is, knows how much the rent is, who knows what usually is paid in utilities and so on and so forth, and got to get heavy here, sorry. We also know those stories when the money person either dies or is incapacitated or something happens. And then the non-money spouse is at a loss, not to mention so many other things going on in their life.
They’re at a loss on where to pay this, where to pay that, how much this that. If you have two separate accounts and everyone’s chipping in each month, everyone by necessity is clued in on those costs and knows where the money goes and knows how it all works. There’s another argument to be made about the fact that this is like a built-in prenup. And if you have separate accounts, there’s cash beyond the reach of someone who, I hope it doesn’t happen, but maybe it’s not going to work out and that’s your money, that’s not theirs. Now I’m going to go a little bit lighter. The judgment factor I call this. These are the things like, “What was that charge to the bike store?” There’s a little bit of ignorance being bliss in this case. You don’t have to judge me on what I spend with our disposable play money.
I don’t have to judge you. And that’s important because we have money personalities. There’s money avoidance. There’s the person who has the money vigilance, and these people don’t always jive even though they have shared those vows. And lastly, in the name of surprise and romance, I ask you, “Where’s the surprise in a joint bank account where someone can see that you already bought them a birthday gift, a surprise gift, an I love you gift?” It’s like sharing an Amazon account and you already know what’s going to happen here. In the name of strengthening those bonds keep it separate.

Speaker 1: There’s the argument from Andrew on keeping your heart and your wallet in completely different places. Now for the other side of this argument, we bring in MarketWatch’s retirement editor, Angela Moore. Angela, let’s hear your argument.

Speaker 3: Look, call me a romantic but when you get married, you’re becoming a team, you’re sharing a life together and money is a really important part of life. I think that being aligned and open about money is crucial throughout the span of a relationship. Jeremy, I know that study that you referenced in the beginning about people who don’t talk about money before they get married, not talking about money is a huge red flag in a relationship. Additionally, in that same study, only 41% of people tell their salaries to each other and just 36% say how much debt they have. This is such important information. Now let’s talk about the mindset of having joint account versus having separate. Recent research from Indiana University shows that married couples who manage finances together may love each other longer. In the research, couples with joint bank accounts reported substantially higher relationship quality two years later versus those who maintain separate accounts.
You can’t put a price on happiness. You could try, but merging money promotes greater financial goal alignment and transparency and a communal understanding of marriage. Now, another thing that happens as, Andy, you’re talking about one person does this, one person does that. To me, that smells like score keeping. And let me tell you, as a married woman, I don’t like that. Building a life together isn’t just about money. There’s the whole household, again, as a team.
Let’s say one person earns 150,000, another earns 40,000, maybe that person works part-time and they do more child care or elder care or household management. The person who earns less is still an equal contributor to the family. Even if those contributions aren’t financial, that person shouldn’t have to ask the higher earner for money. Just because the market doesn’t value that labor, doesn’t mean that labor isn’t worth anything. By pooling resources, it promotes shared goals and helps you plan better in the present and for the future. Also, having joint finances has financial benefits, with higher balances you can get better deals at banks, avoid minimum account balance fees, and you may be eligible for a higher tier of customer rewards. Those are my reasons that I think accounts should be joint.

Speaker 1: Angela, I will call you a romantic and now I’ll jump in as a realist. What about an imbalanced relationship where one part of the couple comes in with much more money than the other, how do you approach a situation like that that can cause issues with a joint account and could agitate within the relationship, shall we say?

Speaker 3: I really think that our money is our money, but maybe each person should have a little fun money. You have your joint account and then separate fun accounts where you get maybe an allowance where you can spend that money the way you please. Whatever, like Andy with his bike addiction, he could feel free to save up as much as he wanted to and then spend. And me with my expensive haircare, I could spend that money from my own personal account and not upset my husband.

Speaker 1: And now to Andy, I would like to hear you answer a very strong point that Angela made about the strength of two incomes in the account and the amount of preference you receive from banks and credit cards and others who appreciate a higher balance and the advantages you can get from pooling that money. Tell me how you would answer that.

Speaker 4: I guess I’d reply by saying, “Meh,” as in how much more interest are you really going to get on this bank account with… Let’s suppose it has a thousand dollars in this shared bank account on average versus your single bank account with 500. The APY that you’d get on this fabulous shared account, let’s say it’s 5%. Let’s say the one on your single account is 3%. You’re getting more interest big whoop, it’s money, but is it really that much more money? I don’t know.

Speaker 1: It is more money. And for that reason I am going to say that you should have a joint account. But notice I said a joint account. I like what Angela said there at the end about you don’t have to have all your money pooled into the same account. This is why it’s important for couples to discuss these things before, so you can figure this out. It is a very important decision to make and I really do thank you both for coming on to help those make it.

Speaker 4: Thanks, Jeremy, even though I lost.

Speaker 3: Thanks Jeremy.

Speaker 1: Before we go, it’s time for What We Are Watching, a look at the news you need to know for the rest of the week and beyond. TikTok has been banned by the US, thanks to a bill that passed both Houses of Congress and was signed yesterday by President Joe Biden. The bill gives the Chinese parent company, ByteDance, one year to sell the popular video platform to an American owner. The company expects to file suit challenging the law, but if it’s unsuccessful, millions of Americans who have used TikTok to make money and find entertainment will lose that outlet.
Plenty more market drama is expected this week. On Friday, the Federal Reserve’s favorite inflation gauge, the Personal Consumption Expenditure price index or PCE will be announced. Ahead of that information, two of the most prominent big tech companies, Google and Microsoft, will detail their first quarter earnings. Expect the market to move on the developments and artificial intelligence from those two big names on Friday as traders also digest new inflation figures.
The first trillionaire company to announce first quarter earnings was Tesla. The electric vehicle maker posted disappointing declines in profit and revenue, but Elon Musk’s promises of robo-taxis, and advanced timelines to a new Tesla model helped shares recover after a prolonged slide. We’ll talk more about that next week.
And that’s it for this episode. Thanks to Quentin Fottrell, Angela Moore and Andrew Keshner For more Moneyist and financial fitness advice, head to MarketWatch.com. You can subscribe to the show wherever you get your podcasts, and please do. If you like what you heard, please leave us a rating or review, it really helps others discover the show. And let us know what you want to hear from us. You can reach us at On Watch at MarketWatch.com. The show is hosted by me, Jeremy Owens, and produced by Mette Lützhøft and Jackson Cantrell. Isaac Gaines mixed this episode. Melissa Haggerty is the executive producer. We’ll be back next week with a new episode and until then we’ll be watching.