Here’s why:
Most software is keyed off the IRS tax filing status.  This filing status is used to generate future tax projections.  Let’s say you are in a newly minted Civil Union here in Illinois which is not recognized by the Federal Government.  The planner has two options.

Option 1:  Plan jointly but get the taxes wrong
In this scenario the planner enters in the information for both partners together.  This allows for sharing of household expenses, and joint purchases, or liabilities.  That’s great but in order to do that the software only allows the planner to check the “married” box, which means that all of the federal tax calculations will be incorrect leading to possible misleading projections.

Option 2: Get the taxes right but no joint planning
In this scenario the planner enters information for each partner separately.  This means that the Federal tax calculations will be correct, but the couple will have two separate plans, vs. a joint plan.

Luckily a few software programs, including the one I use, do allow for joint planning with a “single” federal tax status.   If you are part of a couple that is not considered married under Federal law make sure to ask your planner if their software can handle that.  You may be surprised by the answer.

We may be on the cusp on the most severe recession since 1980-1982 when unemployment hit 10%. Although most of you will keep your jobs during a recession it is important to be prepared for the worst. If you do lose your job finding a new one will take longer, and other sources of credit (Home Equity, Credit Cards) are reduced due to the financial crisis.

How do you get there? If you already have three months stashed away then start cutting back on some of your extras (entertainment, vacations, dining out) with the goal of saving an additional one week’s worth of living expenses each month. Over the course of a year you will have six months of living expenses saved. If your living expenses are $6,000 per month then you would need to save an additional $1,400 per month.

If this seems to daunting to you, you could save ½ that amount each month and then add any “extra” money you receive to your cash stash. (e.g. tax refunds, bonuses, etc.)

This exercise will also prepare you for living on less should you lose your job. (See “Could you live on less”).