Markus Andrews

YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

Americans’ “magic number” savings goal for retirement has increased by over 50% since 2020.
But experts say the secret to building true wealth is having a high savings rate.

Aleksandarnakic | E+ | Getty Images

When it comes to retirement, Americans have a new number in mind — $1.46 million — for how much they think they will need to live comfortably, according to new research from Northwestern Mutual.
That estimate is up 53% since 2020, when Americans said they would need $951,000, as the cost of living has surged in recent years. It is also up 15% from last year, when respondents said they would need $1.27 million.

For many savers, that goal may sound daunting, particularly as U.S. adults have an average of $88,400 currently saved toward retirement, the study found. Likewise, a recent CNBC survey showed that 53% of Americans feel like they are behind on their retirement savings.
However, experts say having a “magic number” in mind should not be a priority when planning for your retirement.
“The number isn’t the emphasis,” said John Roland, a certified financial planner and private wealth advisor at Northwestern Mutual’s Beyond Financial Advisors.
“That retirement number is really just a starting point for a broader conversation on how to make clear, competent decisions in that phase of your financial life when you’re distributing money versus when you’re accumulating money,” he said.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

Fidelity Investments, the nation’s largest provider of 401(k) savings plans, has moved away from providing broad estimates for what is needed to retire, said Rita Assaf, vice president of retirement products at Fidelity.

“There is no one size fits all,” Assaf said.
She said your income likely differs from other people’s. Other factors — such as how much of your income you hope to replace in retirement, where you plan to live, the lifestyle you plan to have, your health-care costs, and longevity — will all impact the actual number you will need.
“It really depends on your personal situation,” Assaf said. “We do think having a retirement plan helps with that, but it’s got to be a personal retirement plan.”

The number experts say to focus on

Financial advisors agree that having a high savings rate, along with appropriate asset allocations, is one of the most significant components of building wealth. That’s the number to focus on, they say.
Fidelity provides a framework for evaluating your retirement savings progress based on your age.
The framework includes saving your salary by age 30, which then increases to twice your salary by age 35, three times by 40 and continues to go up until the goal of 10 times by age 67.
“That may or may not be feasible depending on where you’re at,” Assaf said of the savings goals. “But it just gives an easier view of what to do.”
The framework assumes that the investor will start saving at age 25 and save 15% annually.

Recent retirement research from Vanguard recommends that workers ramp up their annual retirement savings rate to 12% to 15% of their incomes and invest in an appropriate asset mix for their ages. Doing so can help improve their sustainable investment rate — the highest level of pre-retirement income they can replace.
“I would much rather have clients that save 15% of their income and get a 5% rate of return than save 1% of their income and get a 15% rate of return,” Roland said.

He said that to save money, you need not spend it, a concept emphasized in the book “The Millionaire Next Door.”
“Many people who have significant wealth, you would never know because they don’t look visibly wealthy,” Roland said.
“Those are the people that, as they save and accumulate wealth, oftentimes have accumulated more than they ever anticipated,” he said.
If setting your retirement savings deferral rate to 15% now feels like too much of a financial stretch, you may instead try to boost your contributions by 1% per year. Experts say incremental increases can make a big difference in the long run.

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In ordinary years, students have several weeks to compare financial aid offers ahead of National College Decision Day on May 1, the deadline to decide on a college.
Amid this year’s FAFSA delays, many colleges and universities have changed their enrollment deadlines for students waiting on award letters before the fall semester.
All eight schools in the Ivy League are sticking with May 1.

Few college admission cycles have been as hard on students as this one.
National College Decision Day — the deadline most schools set to decide on a college — is just two weeks away. But many college hopefuls are still unsure of where they stand financially, as problems persist with the new Free Application for Federal Student Aid.

“This is make or break for students,” said Ellie Bruecker, interim director of research at the Institute for College Access and Success. “We are really concerned about high school seniors having to make decisions about where to go to college — or whether to go to college — with such limited information.”
More from Personal Finance:FAFSA ‘fiasco’ could cause decline in college enrollmentHarvard is back on top as the ultimate ‘dream’ schoolMore of the nation’s top colleges roll out no-loan policies
In ordinary years, financial aid award letters are sent around the same time as offers of admission in early spring, giving students a month or more to make informed enrollment decisions ahead of National College Decision Day on May 1.
For most students and their families, the college they choose hinges on the amount of financial aid offered and the breakdown between grants, scholarships, work-study opportunities and student loans.
However, this year, those award letters have been significantly delayed, as the Department of Education works to resolve ongoing issues with the new form. Even some applications submitted early now have to be reprocessed due to problems with applicants’ tax data. 

Decision deadlines pushed to May 15 or later

To that end, many colleges and universities have postponed their enrollment commitment deadlines to May 15 or later, according to the National Association for College Admission Counseling.
Amherst College, Purdue University and Pepperdine University are among the colleges and universities with a May 15 decision deadline this year.
“It’s my hope that, given a response date of May 15, students will be able to make informed decisions about where they will enroll,” Matthew McGann, Amherst’s dean of admission and financial aid, said in a statement. “It is also my hope that this extension will relieve a little bit of stress students are feeling as they head into the final stages of this year’s college admission process.” 
Some schools are also factoring in added flexibility. At Widener University in Chester, Pennsylvania, for example, students who confirm their enrollments by May 15 will have a period to reconsider once they receive their financial aid offer, allowing for a full refund of their deposit.
Other colleges, including Colorado State, Oklahoma State and Fairleigh Dickinson University in New Jersey, are pushing the deadline back to June 1.
“We are really just trying to encourage our campuses to be as flexible as possible,” said Charles Welch, president and CEO of the American Association of State Colleges and Universities. “Our No. 1 concern is making sure we give students every opportunity they can to make determinations about financial eligibility.”
A few institutions, like Fisher College in Boston, even delayed deadlines into July.
But all eight private colleges that comprise the Ivy League are sticking with May 1.
Most elite institutions are likely “not as worried about their enrollment management,” said Bruecker of the Institute for College Access and Success.
“I would wager those institutions have fewer students with financial need or they can offer institutional aid,” she said.
The National Association for College Admission Counseling created a directory of where most enrollment deadlines stand now. Here is the list.

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April 15 is the federal tax deadline for most filers and could be the last chance to avoid a penalty.
There’s still time to file an extension, which pushes the filing deadline to Oct. 15. But you still must pay taxes owed by the due date.
Many taxpayers can still file for free with IRS Free File or Direct File.

File by the deadline to avoid penalties, interest

While April 15 is the federal deadline for most taxpayers, filers in Maine and Massachusetts have until April 17. There are also automatic extensions for some taxpayers impacted by natural disasters.
But if you skip the tax filing deadline and owe a balance, you can expect IRS penalties and interest.
For failure to file, the IRS charges 5% of your unpaid taxes per month or partial month, capped at 25% of your balance due. The late-payment penalty is 0.5% per month or partial month, with a maximum fee of 25% of unpaid taxes. Interest is based on the current rates.

If you’re missing tax forms, the tax deadline is your last chance to file an extension, which pushes the filing deadline to Oct. 15. But the “extension to file is not an extension to pay,” warned certified financial planner Sean Lovison, founder of Philadelphia-area Purpose Built Financial Services.

Extension to file is not an extension to pay.

Sean Lovison
Founder of Purpose Built Financial Services

According to the IRS, those who can’t pay taxes by the deadline have options. They can apply for a payment plan, or “installment agreement,” to pay their balance over time.

Two-thirds of taxpayers can expect a refund

If you don’t file, you could be giving up a refund, Werfel said on “Squawk Box.”
“Two out of every 3 taxpayers that are going to file by tonight’s deadline are actually owed a refund,” he said. “So it’s in your interest to get your taxes done.”
As of April 5, the IRS processed nearly 67 million refunds, with an average payment of $3,011, a 4.6% increase from last April’s refund, the agency reported Friday.
“Don’t walk down to the post office,” Werfel said. “File electronically, select direct deposit and we will get you your refund in under 21 days.”

How to file your taxes for free

This season, taxpayers have several ways to file federal taxes for free and there’s still time to use a couple of digital options.
Most Americans qualify for IRS Free File, which offers free guided tax prep software from several partners. The adjusted gross income limit is $79,000, but each partner has different eligibility requirements.
“It’s a product that we’re very proud of,” Tim Hugo, executive director of the Free File Alliance previously told CNBC. “We just wish more people knew about it.”
This season, millions of taxpayers also qualify for IRS Direct File, a free tax filing pilot program from the agency. Currently, Direct File is open to certain filers in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.
Some 100,000 taxpayers successfully filed returns with Direct File, as of April 15, according to a Treasury official. Werfel said an announcement about the program’s future is coming “later this spring” but the “results so far have been encouraging.”

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Wage growth has cooled nationally from its pandemic-era peak.
However, there are still certain occupational sectors — like legal, dental, child care, cleaning and sanitation, and medical information — with relatively high earnings growth, according to Indeed.
The labor market remains healthy despite a broad decline in wage growth, economists said.

Maskot | Maskot | Getty Images

Wage growth has cooled from its scorching pandemic-era pace. But there are still pockets of heat.
Workers are getting relatively big annual raises in occupational sectors like legal, dental, child care, cleaning and sanitation, and medical information, for example, according to a new analysis by job site Indeed.

Nationally, wages grew at 3.1% a year in March, well below the recent 9.3% peak in January 2022, according to Indeed, which tracks average pay advertised in its online job listings.
However, there’s “massive variation across industries,” according to Julia Pollak, chief economist at career site ZipRecruiter.
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At a high level, wage growth in 2024 is above average in 47% of job sectors compared with 2019, the year before the pandemic hit, according to the Indeed analysis.
Among them, it’s highest in the legal profession: Indeed found that average workers saw their paychecks grow at a 5.7% pace in March 2024 versus a year earlier. That’s down just 0.1 percentage points from six months ago.

The analysis found that the dental and child care sectors ranked just behind, each at 4.8% annual growth; medical information and cleaning and sanitation jobs placed just behind, both at 3.9%, according to the analysis.
By comparison, software developers have seen the lowest annual growth since March 2023, at 0.4%, according to data provided to CNBC by Indeed. That’s down from a recent 9% peak in April 2022.
Strong wage growth doesn’t necessarily translate to a high salary, though.
“I don’t think someone will leave their software development job to work in child care because wage growth is higher,” said Allison Shrivastava, a labor economist and author of the Indeed report. “But if you were working in [similar-paying jobs like] retail or food prep and you wanted higher wages, that might be worth looking at,” she said.

The average child care worker earns $15.42 an hour and $32,070 a year, according to data for May 2023 compiled by the U.S. Bureau of Labor Statistics. By comparison, software developers make $66.40 an hour and $138,110 annually on average, according to BLS data. Dentists make $96.57 an hour and $200,870 a year, on average, BLS data says.
Wage growth surged in 2021 and into 2022 as employers had to “roll out the red carpet” for workers at a time when labor was scarce and workers were “demanding to be made whole for inflation,” Pollak said.

She said it also “peaked at different times for different industries” during the Covid-19 pandemic due to a “complex web” of factors like labor supply and demand.
Some roles, such as face-to-face jobs in food services, became less attractive overnight after the pandemic led to a big shift in remote work. Turnover rose quickly among in-person occupations compared with turnover across remote ones, Pollak said.
For example, workers in accommodation and food services saw annual earnings growth peak at 16.1% in December 2021, according to ZipRecruiter data. By comparison, it found that those in the information sector saw growth peak at 7.8% in September 2022.

Current national wage growth is in line with the 2019 pre-pandemic average, indicating a labor market that is widely viewed as healthy.
While the average worker enjoyed historically rapid wage growth in the recent past, their pay wasn’t keeping pace with inflation. As inflation has fallen, buying power has risen again on average.
Shrivastava of Indeed said the job market “has cooled down from a really, really feverish pace.” However, she said, it has cooled to a place that “seems more sustainable” for workers and businesses.

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It is common folklore, a fairy tale of sorts, that middle-class Americans received perpetual relief in the Tax Cuts and Jobs Act of 2017.
If a divided Congress fails to make amendments, the old tax brackets will return after years of wage growth — which means more of your income may hit the older and more onerous brackets sooner.
It is currently unclear if other provisions cut in the TCJA will be returned to taxpayers.

Eva-katalin | E+ | Getty Images

It is common folklore, a fairy tale of sorts, that middle-class Americans received perpetual relief in the Tax Cuts and Jobs Act of 2017.
First, property taxes generate 32% of state and local income, and U.S. median single-family home property taxes have risen by more than 25% since 2019. There are also under-the-radar excise taxes imposed on the sale of things like fuel, airline tickets, tires, tobacco and other goods and services that can mitigate some of the savings from many of the federal tax cuts that are temporary and may disappear after 2025.

The devil is usually in the details, and by all accounts he’s been busy.
The provision that reduced the corporate tax rates to 21% is permanent, but the qualified business income deduction enjoyed by many small businesses, as well as the increased standard deduction and favorable tax brackets, will expire unless Congress extends these deliverables.

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Capitol Hill might very well grandfather in these tax cuts, although it’s worth noting that doing so would cost $288 billion in 2026 alone, according to the Institute on Taxation and Economic Policy and $2.7 trillion from 2024 to 2033, per the Peter G. Peterson Foundation.
Meanwhile, Uncle Sam already has his own money problems, slated to have 31% of the debt held by the public, or $7.6 trillion, coming due in 2024 at much higher rates. To add context, the United States will spend more on interest payments than it does on the military this year.
Congress will be motivated to etch all the tax cuts in stone, but it would only add fuel to the debt bonfire.

What tax changes may be on the horizon

If a divided Congress fails to make amendments, the old tax brackets will return after years of wage growth — which means more of your income may hit the older and more onerous brackets sooner.
There is also the once-unlimited state and local tax deduction that the legislation capped at $10,000, the personal exemption which was eliminated, the deduction for unreimbursed business expenses, a deduction for moving, interest on a home equity loan, a deduction for uniforms and a deduction for theft and catastrophic damage from an environmental event that are no longer available. It is currently unclear if these provisions will be returned to taxpayers.

There is also the qualified business income deduction that offers a 20% tax break for small businesses provided they are below certain income thresholds. That deduction is set to expire, a concern that has motivated the Chamber of Commerce to lobby on behalf of its constituents. All of this is in addition to crippling cost-of-living challenges from excessive government spending, the well our Treasury would have to revisit to make these tax cuts permanent.

Hope Congress fixes the problem, or look for a solution

The easiest course of action for everyday Americans is to increase contributions to their pretax retirement plans such as a 401(k), which will reduce federal and state tax exposure dollar for dollar. Once distributions are taken, however, they will be subject to regular income taxes at a time when entitlement expenses have accelerated, and the Treasury will have fewer workers paying for more retirees.
A Roth 401(k) plan may protect against future taxes but does little for current exposure and is subject to legislative risk by both the federal and state governments saddled with unfunded liabilities and pension obligations. While political obstacles make this an unlikely outcome, the math may force officials to write legislation that taxes distributions through means testing or another measure that suits their fiscal needs.

Real estate offers some reprieves because you may be able to depreciate the property over its lifetime. For instance, the IRS allows property owners to deduct 3.64% of the original purchase price for 27 years. A property purchased for $500,000, therefore, offers an estimated $18,200 annual deduction to offset any income received.
Interest rates have made real estate much less attractive. But it’s worth noting that upon the owner’s death, whatever the property value is at the time of death becomes the new cost basis — the value used to determine how much the owner can depreciate — and the beneficiaries can begin depreciating all over again at the higher value for another 27 years.
Another option is permanent life insurance. The media and financial literacy pundits have spent years highlighting the high commissions and fees associated with whole and universal life insurance policies.
Upon closer inspection, however, these vehicles offer more than a death benefit with no exposure to income taxes and have a savings component that can grow tax-deferred with the market.
Moreover, the policy owner can borrow money against the savings component of the policy, known as the cash surrender value, pay zero taxes and repay the loan with the death benefit when they pass away. Think of it as a Roth individual retirement account without income or contribution limits that pays a death benefit when you die.

Suffice it to say these solutions are viable for some people, yet each household needs a strategy that fits their own unique situation. As appealing as it may sound to reduce your tax exposure, the first call should be to your tax advisor because if you recall, it was the nuances of this legislation that many of us overlooked — namely the fact that the benefits for some were permanent and for others, temporary — that got us into this hot water in the first place.
— By Ivory Johnson, certified financial planner and the founder of Delancey Wealth Management in Washington, D.C. He is also a member of the CNBC Financial Advisor Council. More

President Joe Biden rolled out the details of his Plan B for student loan forgiveness less than a year after the Supreme Court struck down his first attempt at delivering wide-scale education debt relief.
Here’s how the do-over program differs from Biden’s last aid package.

President Joe Biden delivers remarks on canceling student debt on February 21, 2024 in Culver City, California.
Mario Tama | Getty Images News | Getty Images

A more targeted forgiveness program

This time, the Biden administration has narrowed its aid by targeting specific groups of borrowers. It hopes that move will help the new plan survive legal challenges.
“I think it would be easier to justify in front of a court that is skeptical of broad authority,” said Luke Herrine, an assistant professor of law at the University of Alabama, in an earlier interview with CNBC.
Tens of millions of borrowers may still benefit if the program endures.
The plan would forgive the debt of borrowers who:

Are already eligible for debt cancellation under an existing government program but haven’t yet applied
Have been in repayment for 20 years or longer on their undergraduate loans, or more than 25 years on their graduate loans
Attended schools of questionable value
Are experiencing financial hardship

It’s not entirely clear yet how financial hardship will be defined, but it could include those burdened by medical debt or high child-care expenses, the Biden administration said.
The new plan also calls for borrowers to get up to $20,000 of unpaid interest on their federal student debt forgiven, regardless of their income.

For critics, deja vu

For critics of broad student loan forgiveness, Biden’s new plan looks a great deal like his first.
After Biden touted his revised relief program, Missouri Attorney General Andrew Bailey, a Republican, wrote on X that the president “is trying to unabashedly eclipse the Constitution.”
“See you in court,” Bailey wrote.
Missouri was one of the six Republican-led states — along with Arkansas, Iowa, Kansas, Nebraska and South Carolina — who brought a lawsuit against Biden’s last debt relief effort.
The red states argued that the president overstepped his authority, and that debt cancellation would hurt the bottom lines of lenders. The conservative justices agreed with them.
Once the Biden administration formally releases its new student loan forgiveness plan, more legal challenges are inevitable, said higher education expert Mark Kantrowitz.
“Lawsuits will likely follow within days,” Kantrowitz added.

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A hotter-than-expected consumer inflation reading spooked investors last week, but investors may want to adopt a long-term mindset as they seek buying opportunities.
Top Wall Street analysts are calling out their favorite stocks with a focus on their long-term growth prospects.

To that end, here are three stocks favored by the Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
Amazon
This week’s first pick is e-commerce and cloud computing giant Amazon (AMZN). Ahead of the company’s quarterly results, several analysts have been reaffirming their bullish views on the stock.
Mizuho analyst James Lee reiterated a buy rating on AMZN stock with a price target of $230. The analyst is incrementally optimistic that the revenue of Amazon’s cloud computing unit, Amazon Web Services (AWS), will accelerate in 2024. He stated that AMZN remains his firm’s top pick.
Based on Mizuho’s recently completed quarterly AWS customer survey with a leading channel partner, the analyst made some key observations. He said that there are signs of an accelerating sales cycle, given that AWS customers are seeking more executive business center meetings.
Further, the survey indicated that AWS clients are ending their on-premise data center contracts at a faster pace than previously noted, indicating accelerated migration of workloads into the cloud.

“We see accelerated budget trends as the channel partner that commissioned the survey estimated AWS spending growth of 20% YoY growth, consistent with our forecast, and above consensus at 15%,” noted Lee.
Lee ranks No. 428 among more than 8,700 analysts tracked by TipRanks. His ratings have been successful 59% of the time, with each delivering an average return of 11.5%. (See Amazon Stock Buybacks on TipRanks)  
Acushnet Holdings
We move to golf products maker Acushnet Holdings (GOLF). The company generated net sales of $2.4 billion in 2023, reflecting a 4.9% year-over-year growth. The top line gained from increased sales volumes of golf balls, clubs and golf gear under the company’s Titleist brand. 
Tigress Financial analyst Ivan Feinseth reaffirmed a buy rating on GOLF stock and increased the price target to $74 from $68. The analyst expects the company’s business to be boosted by new players entering the sport, a rise in rounds played and product launches across its industry-leading brands.
Highlighting favorable trends that would benefit Acushnet, Feinseth said that the golf industry has witnessed a continued increase in the number of new golfers over the past six years. Also, total rounds played surged to 950 million in 2023 from 800 million in 2019, with the momentum expected to continue.
“GOLF’s strong brand equity, driven by its best-in-class and industry-leading product lines, including FootJoy and Titleist, are major assets and the primary drivers of its premium market valuation,” said Feinseth.
The analyst also noted that Acushnet continues to boost shareholder returns with dividend hikes and share repurchases. The company recently increased its quarterly dividend by 10.3% and announced an additional share repurchase authorization of $300 million.
Feinseth holds the 243rd position among more than 8,700 analysts tracked by TipRanks. His ratings have been profitable 61% of the time, with each delivering an average return of 12.4%. (See Acushnet Holdings Hedge Fund Trading Activity on TipRanks) 
BJ’s Wholesale Club
Finally, there is BJ’s Wholesale Club (BJ), a membership-only warehouse club chain. Goldman Sachs analyst Kate McShane upgraded BJ stock to buy from hold and increased the price target to $87 from $81.The analyst expects increased market share and improving industry trends to drive strong revenue growth.
McShane highlighted that the grocery category accounted for 86% of BJ’s merchandise sales in fiscal 2023. She expects better revenue outlook, given the return of volume growth in the grocery business and enhanced customer engagement in the general merchandise category.
The analyst anticipates that the general merchandise category will gain from the company’s efforts to refresh its assortment by adding new brands and higher quality merchandise as well as implementing initiatives to improve presentation and the timing of deals.
Additionally, McShane expects BJ to benefit from a potential increase in membership fees. The company has a membership base of more than 7 million accounts, backed by an impressive renewal rate of 90% in fiscal 2023.
“Ultimately, BJ is an attractive club model with a compelling value proposition and long runway for new club growth that should continue to gain market share over the long term,” said McShane.
McShane ranks No. 959 among more than 8,700 analysts tracked by TipRanks. Her ratings have been profitable 62% of the time, with each delivering an average return of 5.1%. (See BJ’s Ownership Structure on TipRanks)  More

YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

The term “allowance” often alludes to money a parent gives to a child. But it sometimes comes up between romantic partners, too.
Most people don’t really intend to create a disparate weight of power and control in their relationship — what they want is guardrails.
A better approach may be to set a check-in number, or a dollar amount both partners are comfortable with each other spending before discussing it together.

Simpleimages | Moment | Getty Images

You don’t have to scroll far to find the #tradwives and #SAHGs (stay-at-home girlfriends) of social media who glamorize the extremes of domesticity, or the wives in Dubai who film their extravagant errands, such as picking up a Cartier bracelet and stopping for a facial on the way home.
At all ends of the wealth spectrum, there’s a common thread tying these women together: permission. Someone, usually a man, is giving it to them.

The term “allowance” should make you think of money a parent gives to a child. Yet, it arises in the financial arrangements of these partnerships, too. The allusion is right in our faces, infantilizing women by placing their freedom to spend under the thumb of their partner’s permission.
Most financial experts and professionals cringe at the concept, and it should come as no surprise that the topic has been covered far and wide.

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But there’s also the fact that social media’s going to social media — so much is put on for show. The most extreme content often receives the most attention, leaving open the question of how real and commonplace “allowances” actually are among couples.
Do people really operate like this?
Until recently, we thought, no. But turns out, we were wrong.

While interviewing couples for our forthcoming book on love and money, a few have used that word. Typically, the dynamic involves a male partner who earns an income and a female who cares for their children at home.
Hearing it via Zoom during real conversations about real people’s money felt worse than the sensationalized snippets on TikTok. The sense of permission took on a broader meaning with dual negative implications: These women need permission from their partners to spend money, and they have permission to not engage around the important decisions in their financial lives as a couple.
It’s disappointing, for sure, but we think there’s something to salvage beneath the surface.

Why ‘allowance’ is a problematic term

Most people who adopt this antiquated terminology don’t really intend to create a disparate weight of power and control in their relationship — at least that’s what we’ve observed.
What they actually want is to feel safe knowing that guardrails exist.
They are not trying to remove anyone’s sense of agency. They just want to know their partner is not heading to Cartier for a bracelet and stopping for a facial on the way home (figuratively speaking, of course). However, they might also be a bit lazy for embracing the easiest word, one already familiar to them from their own lives and the lives we observe online. 
Just because it’s easy doesn’t make it right. There’s harm in “allowances,” which perpetuate gender-based stereotypes and widen the wealth gap and knowledge gap around personal finance.  

What’s worse, they diminish the work being done at home. We do a terrible job as a society of assigning value to a spouse’s nonmonetary contributions, and they are just as crucial to maintaining household stability as the income flowing in.
Not to mention, restricting funds for the person who likely purchases most of the household’s needs adds a whole other layer of strain when their partner has a different viewpoint of what’s considered a “want” versus a “need.” This is a setup for constant conflict and a relationship dynamic that’s just plain unfair.
There’s an element of trust at play, too. Creating one-sided restrictions around spending can easily lead to lies. The leading method of financial infidelity among couples, 30%, is spending more than your partner would be okay with, according to a Bankrate survey.

Set a ‘check-in number’ instead

Mtstock Studio | E+ | Getty Images

A better way to build trust while establishing reasonable guardrails around spending isn’t through permission, but through communication. Couples can set a check-in number, which is a dollar amount they are both comfortable with each other spending before discussing it together.
There’s no one right number. We’ve spoken to couples who’ve picked $100 and couples who’ve chosen $1,000 based on their personal circumstances and comfort levels.
Consider carefully what the number should be, though. Selecting a number that’s too high could risk running afoul of your budget, which would defeat the purpose. But choosing a number that’s too low could lessen your partner’s agency to spend, which might not reflect the reality of costs to effectively perform his or her responsibilities of everyday life.
For example, setting a check-in number at $50 when your spouse purchases all the home goods, school supplies and clothing for your growing children probably doesn’t make sense. She might even grow resentful if she feels her judgment carries no weight, which, based on the data, can clearly erode trust over time.

But most importantly, the check-in number should be the same for both partners, irrespective of who earns more income.
Our idea of contribution shouldn’t be affixed to a salary and shouldn’t dictate who has more financial freedom. We all contribute in our own ways, and every contribution matters. Your husband shouldn’t be able to buy $2,000 golf clubs while you’ve got to check in for a $110 pair of sneakers. These are inequities that metastasize. They don’t just go away.
Remember, setting a check-in number isn’t an “allowance” by another name. It’s an amount up to which you and your partner are free to spend without having a conversation every time. It replaces permission with communication. It builds a team playing by the same set of rules and fostering an environment of mutual respect.
— By Douglas and Heather Boneparth of The Joint Account, a money newsletter for couples. Douglas is a certified financial planner and the president of Bone Fide Wealth in New York City. Heather, an attorney, is the firm’s director of business and legal affairs. Douglas is also a member of the CNBC Financial Advisor Council. More