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5 Financial Rules for Women

Even though many women are starting to have a larger role in family finances and taking care of the money, there are some women who are still uncomfortable dealing with the finances. Here are five rules that can help you keep on the right financial track. (And you will find that these rules can help men, too!)

  1. Don’t let your partner control the finances: You are in a partnership. This means that you need to help make the money decisions. You need to know what sort of position you are in, and be involved in deciding where the money goes. Learn about how money works, and take an active interest. This also goes for stay at home partners: You are making a valuable contribution to the family finances by doing things for free that you would have to pay others to do. You deserve an equal say in the finances.
  2. Take care of your own needs first: To some, this may sound selfish. And for many women, the idea of taking care of themselves first seems wrong. However, you should make sure you are saving for your retirement before you take care of the college fund for your children. And you should also have access to money that you can save up — just in case something should happen to your marriage. Look into a spousal IRA for yourself, and consider a pre-nup to protect your assets.
  3. Stay away from co-signing: When you co-sign on a loan, you are assuming responsibility for it. If the person turns out to be unreliable, your credit score is lowered, and you are responsible for discharging the debt. You may feel bad, and you may want to help, but co-signing can be a bad financial move. Along the same lines, be wary about lending money to friends and family.
  4. Know your value: Whether in a salary negotiation or considering your “worth” to your family, know your value. Do research, and know how much your counterparts make in similar situations with regard to experience and education. Don’t accept less, just because you don’t want to rock the boat. (If the company really can’t afford it because of the economic times, that’s a different story.) If you know your value, don’t be afraid to be assertive. When you know your value, you are more likely to be valued. Your family should recognize your contributions is you are a stay at home partner, and value you as an integral part of the family.
  5. Take a risk or two: Many women are naturally risk averse. This shows up in money decisions, such as investments. If you want to grow your money more efficiently, you will need to take a financial risk or two. The good news is that you can use some investments, like index funds or proper diversification, to limit your exposure to risk, helping you grow your money without the emotional stress that comes with timing the market.

It might help to meet with a financial professional to discuss your finances, and set some reasonable goals. If you have a partner, this is a good thing to do together. Learning about how money works, and getting a little help with your finances can help you go a long way.

Your Options Under the Health Care Reform Bill

Caduceus on West 14th Street (New York, NY)

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Last week, Congress passed, and President Barack Obama signed, a health care reform bill that requires every American to purchase health insurance. Those who have religious beliefs against it, Native Americans and those who can prove financial hardship won’t have to purchase health insurance if they do not want to. (Of course, if you think you qualify for one of these exceptions, it will have to be proved in some manner satisfactory to the government.)

Here are some of the scenarios that many of us will face under the health care reform bill. While there are some immediate impacts to your situation from the health care reform bill, for the most part you will have until 2014 to figure out what you are going to do about insurance coverage. Premiums are still likely to increase as they have over the past few years, since health insurance companies will be allowed to set their own rates and coverage.

If You Already Have Health Insurance

If you already have health insurance through your employer, chances are that you won’t see any huge changes. The New York Times, in its rundown, points out that premiums and coverage are likely to remain as they are for those with plans from large employers. What’s new is that insurance companies won’t be able to drop you any more if you get sick, and that children can’t be excluded for pre-existing conditions. (Starting 2014, no one can be excluded for pre-existing conditions.)

If your insurance is provided by yourself (i.e. if you are self-employed, or if your company doesn’t cover you), you will be able to access state-run health insurance exchanges starting by 2014. These exchanges will provide different price levels and plans so that it is possible to compare your options and buy insurance from companies participating on the exchange (and regulated by states; there is no national plan). If you don’t want to buy through exchanges, you can still buy directly from the insurers or from insurance agents and brokers. Insurance companies will be required to offer plans comparable in coverage and price to those they are offering on exchanges.

Those with Medicare coverage will begin seeing a close in the “doughnut” hole now, phasing out this unpopular gap in coverage.

If You Don’t Have Coverage

The biggest changes come for those who don’t currently have health insurance coverage. You will be required to purchase health insurance, or pay a penalty, based on your income level. (So there is an “opt out” possibility — if you are willing to pay the penalty.) For those who are concerned about costs, there are some changes being made to aid in paying premiums:

  • Medicaid will be expanded to cover those with an income of up to 133% of the poverty level. Using current numbers, that means that households of four earning up to $29,327 would be eligible for Medicaid.
  • Subsidies for those making between $29,327 and $88,200 for a family of four would be provided on a sliding scale to help with purchase through state-run insurance exchanges.
  • Premiums will be capped at between 3% and 9.5% of income.
  • Those under 30, and those who cannot find a plan costing less than 8% of income no matter their age, will have the option to buy a special high-deductible catastrophic policy.

One thing you can do now, to prepare for the future, is to look for high-deductible plans that can be combined with Health Savings Accounts. This can provide you with a lower premium, health insurance coverage, and a tax-advantaged way to save for co-pays, deductibles and medical services and products not covered by your health insurance plan.

Whatever you think about the health care reform bill, it is important to note that now is the time to consider your options and prepare for the changes — especially if you are going to be one of those who will have to purchase health insurance.

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Why Store Credit Cards Are a Bad Idea

Your favorite department store offers its own credit card. This, you think, is a great opportunity. After all, by using your favorite store’s credit card, you can earn bonus points that you can redeem for merchandise and discounts at the retailer.

But look carefully at the fine print that comes with that store credit card. You’ll usually find that the interest rates and fees attached to store credit cards make taking them out a bad decision.

And fees and rates are just two of the problems with store credit cards. Other factors make them an unwelcome addition to your wallet. In fact, the majority of store credit cards receive poor reviews.

Don’t believe it? Just look at these four reasons why store creidt cards are usually a bad idea:

1. The interest rates: If you have good credit, you can generally qualify for a credit card with an interest rate in the range of 13 percent to 15 percent. If you have excellent credit, you might be able to nab a card that has an even lower interest rate, perhaps in the neighborhood of 11 percent.

But it usually doesn’t matter how good your credit is when you apply for a store credit card. Most times, you’ll still be paying exorbitant rates.

The sad truth is that most store credit cards come with high interest rates, often 20 percent or higher. That’s simply unacceptable. Why would you apply for a store credit card with such high rates when you can undoubtedly find a credit card that is accepted all over and comes with far lower interest rates?

2. Limited Perks: Credit card issuers today are becoming ever more creative with the types of perks that they provide with their cards. Rewards cards like the Capital One Venture Card and Chase Ink Bold (business rewards card) allow users to earn points with every purchase that they can eventually redeem for airline tickets, rental cars, hotel stays, merchandise, gift certificates or the ever-popular cash-back bonuses.

Department store credit cards, though, generally stick to the most basic of perks. When you use the cards at their namesake stores, you’ll receive rewards points that will either qualify you for discounts on store merchandise or free merchandise. But you can’t use these rewards points, in most cases, anywhere else. That’s extremely limiting when considering the generous awards programs that other credit cards are offering today.

3. Limited Use: Most store credit cards can only be used at the store that issues them. It makes little sense to clutter up your wallet with a card that has such limited use. It’s also not good for your credit score: Your score will go down if you have too many open credit card accounts. It makes sense, then, to only open accounts for credit cards that you can use at a wide variety of gas stations, supermarkets, retailers, theaters, airlines and other places of business. You will find some co-branded store cards like the Lowe’s credit card from American Express that can be used and provide rewards outside of the store, but this is something you’ll want to clarify before applying.

4. Fees: Many store credit cards come with high monthly fees. Others come with exceedingly high penalty interest rates. Miss one payment, and you may be stuck paying a penalty interest rate of 30 percent or more for as long you retain the card.

The evidence is clear: If you’re looking for a new credit card, resist the temptation of store-brand cards. The odds are that you’ll easily find a non-store-brand card that offers far more benefits at a lower interest rate.

This is a guest post by CreditShout — a personal finance blog dedicated to helping you maximize your credit card rewards and improve your credit score.

Women: Do You Have a Good Financial Education?

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One of the more interesting trends, from my point of view as a woman, is the interest that more women are taking in finances these days. However, in light of a recent I read about on Yahoo! Finance, I’m not sure they’re taking the right interest in finances. At the risk of generalizing, I’ve noticed in my (limited) experience that women are mainly interested in frugality and couponing — how to stretch the household budget each month. This isn’t a bad thing, but monthly budgeting isn’t the whole of a well-rounded financial education, either. (Clearly, men need a good financial education as well, but traditionally men are more likely to be confident in money matters than women are.)

Here is what a post, written by Laura Rowley, points out about women and finances:

The same survey, done in a partnership between Prudential Financial, the Women’s Media Center, and The Paley Center for Media, found that about four in ten women say they do not understand mutual funds or stocks, and 82% say they need help with financial decisions. I’m assuming this needed “help” isn’t just about conferring with a life partner about what to do in the future.

Financial Education for Women

Traditionally, women have been more responsible for pinching pennies than for making long-term financial plans. However, a shift is happening. Women are more involved in the workplace, and even when they aren’t, they are still becoming more interested and involved in family finances. 84% of married women say they are involved in financial decision-making, and this is a hopeful sign. Less hopeful is the stat that says 86% of women don’t know how to choose financial products.

As a financial writer and a woman, I am very interested in seeing women with a better financial education. While it is valuable to know how to pinch pennies, pay bills and reduce debt, I also think that it is important for women to know how to get money to work for them, via investing. Even if they are staying at home, and not working, it is still important for women to have a financial education, understanding what is in a retirement plan, and how to evaluate financial products. Additionally, I think it vital that women understand how credit works.

There are many places to look for a financial education online, but you have to be careful about your sources. Look for sites that offer reliable information and insights about money. You can also read some of the following books to get a handle on finances:

  • The Intelligent Investor by Benjamin Graham
  • Oblivious Investing by Mike Piper
  • Your Money: The Missing Manual by J.D. Roth
  • The Millionaire Next Door by Stanley and Danko
  • Your Credit Score by Liz Pulliam Weston
  • Stop Getting Ripped Off: Why Consumers Get Screwed, and How You Can Always Get a Fair Deal by Bob Sullivan
  • The Money Book for Freelancers, and the Self-Employed: The Only Personal Finance System for People with Not-So-Regular Jobs by Joseph D’Agnese and Denise Keirnan.

These books can provide you with a solid foundation for understanding how money works, investing, and what you can do for a better financial future. And they’re not just for women. Men who want to better understand money should read them, too.

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