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An escrow account can sound foreign and complicated, especially when you’re trying to purchase a home. Some homebuyers have never even heard of an escrow account until they read through their closing documents. Dealing with it doesn’t have to be a headache, however.

This guide will not only detail what an escrow account is, how to use it, and when you can close it, but it will also go in depth about the pros and cons of having an escrow account and how to make financial goals using one with your spouse.

Finances can be a source of contention in the home, but it’s important to talk about and make sure you’re on the same page with your loved one. Doing so has a way of bringing you closer to your spouse and gives you a safe space to discuss sensitive topics.

Everything You Need to Know About Escrow Accounts

Escrow accounts are very useful for financial planning with your spouse. Below, we’ll define what an escrow account is, how to use it, when you can close it, and we’ll look at the pros and cons of this account.

What is an escrow account?

Whenever you and your spouse look to purchase a home or compare home insurance policies, keep in mind that you may be required to use an escrow account. It depends on the lender and insurance company that you work with.

What exactly is an escrow account? To put it simply, an escrow account is an account that is run by a third party and is used to complete transactions between you and another person. It is normally used for large settlements, but it can be used for small business deals as well.

How to Use Escrow Accounts

A prime example of how to use an escrow account is using it to buy a home. You can use the funds in the account to show the seller you’re serious about purchasing the home. Using this will encourage the seller to take the house off the market and help them be more inclined to make an agreement with you.

You can also use an escrow account to pay for property taxes and home insurance. A portion of the mortgage payment goes into this account and is used to pay for taxes and insurance at the end of the year.

These kinds of accounts, as stated above, can also be used for small business transactions like purchasing tires or even something as simple as grocery shopping.

When can I close my escrow account?

There’s really no good reason to close your escrow account unless it is a mortgage escrow account. If that’s the case, the only way to close that account is to make sure you have sufficient home equity. Having enough home equity means making sure you have been paying your property taxes and home insurance.

For other escrow accounts you would like to close, the process is as simple as calling the bank and having them close it for you. It’s a simple process because the account is more like a savings account in this instance.

The Pros and Cons of an Escrow Account

There are several pros and cons to having an escrow account. One pro is that this account provides a secure transaction between parties. Another is that you can pay for property taxes and home insurance monthly as opposed to annually.

This account greatly benefits the seller and the buyer with large settlements like purchasing a home. The seller has guaranteed funding and the buyer doesn’t have to pay out of pocket.

For every pro, there is a con. One disadvantage of having an escrow account is that you have to deal with higher monthly payments for your mortgage. Another is that you might end up paying more on taxes because the estimations are a little off. Escrow fees might also be higher than other services.

Whether purchasing something big or small, escrow accounts are perfect tools. You can use them for virtually anything. They’re also great for financial planning with your spouse.

Financial Planning With Your Spouse

Money can bring up a lot of emotions, especially in marriages. It’s good to talk about these things with your spouse and make sure you’re both on the same page. It’s even better to make financial goals together using your escrow account.

Talk about money in a private setting for both you and your spouse’s safety. Be open and honest about your spending habits, and don’t be judgemental or critical of yourself or your spouse.

Saving Responsibly

The first thing that should be discussed is saving responsibly. It can be easy to comfort spend and not think about spending your money wisely. In these unpredictable times, it makes sense that you would not want to save and put back.

Escrow accounts are perfect for saving responsibly because they can be used as designated savings accounts.

This pandemic has taught us that tomorrow isn’t promised. But that’s all the more reason to have self-control and save. If something happened to you, you need to be prepared and think about those you are leaving behind.

Set Financial Goals

Discuss financial goals with your spouse as well. You could talk about using your escrow account to put back and plan how much money you want to have at a certain date and time. Keeping goals specific, measurable, attainable, relevant, and time-based is a very effective way to reach them.

A perfect S.M.A.R.T. goal would be something like this: I am going to save $500 by August 30, 2021, and use my escrow account to save that money.

Create a Budget

Budgeting goes hand-in-hand with saving and setting financial goals, so it’s important to talk about. You want to set financial boundaries for yourself at the beginning of the month and keep track of where all your money is going.

It may seem tedious, but it’s a great team-building tool to do with your spouse. You can put aside money into your escrow account on the first of each month as well.

When you are educating yourself about finances and financial planning, you are placing yourself ahead of the curve. Many don’t take the time to learn and expand their knowledge, so kudos to you. Take what you’ve learned from this guide and share it with others.

Peyton Leonard writes and researches for the insurance comparison site, ExpertInsuranceReviews.com. Peyton is dedicated to helping others save money and be free from financial burdens.

There’s nothing more beautiful than seeing two people fall hopelessly in love with one another. From when they initially lock eyes from across the room, to the wonderful moment where they finally say their “I dos,” finding relationship bliss is oftentimes the goal of many people. It’s hard to put a price on love, but the unfortunate truth is, dating does come at a price.

While many people can and do develop lasting relationships without spending a single penny, it seems all but impossible in today’s expensive world. Nevertheless, if you’re looking to find your soulmate — but you’re not interested in breaking the bank in doing so — then you may need to look at alternatives. Here are five essential money-saving tips to help you court your crush, without getting crushed with debt.

Visit Your Local Farmer’s Market

When most people think of a farmer’s market, they tend to think of rows after rows of fresh produce, stacked high on a cart, while the proud farmer stands in front of it. What they don’t realize is that a farmer’s market is so much more than an affordable way to stretch your produce budget. It’s also a great way to check out local vendors and sneak in a little bit of people watching, too.

Not only are farmer’s markets oh-so-much more affordable than shopping at your grocery store, but many farmers also offer free samples of their fresh produce or baked goods. Near the end of the day, they’re all but giving away their leftovers, meaning you can walk out with pounds of delicious, organic food for an impressively low price. Helping your local economy and having a great time is just another perk of it.

Spend a Day at the Library

If there’s one underappreciated resource in your community, it would have to be your library. Your city’s library is an incredible resource for not only books, but a myriad of other things you can check out, too. Did you know that some libraries let you check out recently released movies (hello free date night!) and even tools (if you got bitten by a crafting bug)?

Plus, there’s something remarkably intimate about spending a day with your partner at your library. Sitting side by side, your shoulders touching as you turn the pages of a riveting book, is a fantastic way to destress and unwind. Even better, when you get home, you can discuss the book you were reading. And you guessed it… great conversation is always free.

Take Your Date On a Picnic

Many of your town’s parks are free to get into, making this an incredibly affordable date. If you’re strapped for cash, you can always check out your local food banks, as they are often giving away household staples such as bread, fresh produce, and protein. Simply load up a basket (or reusable canvas bag) with some of your favorite seasonal produce and finger foods, then head to the park.

Once there, all you need to do is find yourself the perfect spot, spread out your blanket, and unpack your lunch. When you finish eating, please be sure to pack up your waste and properly recycle or dispose of it. If the park has a duck pond, you can head on over and feed the ducks. But don’t feed them bread, as that can be harmful to them. Instead, throw some oats, rice, or even corn (all affordable and waterfowl safe!).

Give Back With Volunteering

Sometimes, the best way you can connect with your partner is not by doing something for yourself, but rather, for someone else. Giving back to your community is not only free, but it’s also surprisingly rewarding, too. Many communities are in great need of an extra set of helping hands, and bonding with your date over volunteering can both strengthen your relationship and your bond with your neighborhood.

There are a number of ways you can give back, too. For instance, you can spend a day at your local food bank (a wonderful way to thank them for feeding you when you were down on your luck) or working with a homeless outreach program. If you’re an animal lover, you can reach out to your local animal shelter and offer to walk dogs, or you can assist your local senior services. No matter what you do, you’ll be sure to feel incredible while doing so.

Enjoy a Nature Hike

You don’t have to be a fitness buff to take part in a nature hike. Many of your community’s trails are open to all levels of fitness, ranging from the beginner to the more intermediate and advanced. All you need is a pair of good walking shoes, some water (in a reusable bottle, of course), and enough snacks to keep your energy up. Rather than spending the time chatting, instead, focus on the beauty surrounding you.

Most local parks and trails are free to enter, as well. If you’re feeling particularly adventurous, why not pack a recyclable bag and some heavy-duty gloves, and do a little bit of clean-up while there? That way, you can make sure you’re preserving the splendor of nature for any other travelers who decide to go that route in the future. You’ll make good memories and do good at the same time.

Final Thoughts

Establishing healthy spending habits, and setting a budget, can help set you up for both relationship and financial happiness in the future. If you find you need an affordable accountant to help you do so, the small initial investment can be more than worth it. Finding a budget accountant can be a breeze, as well, as a quick search through your city’s local marketing for accounting firms can readily put you in touch with a low-cost financial expert.

Like the old adage goes, the couple that saves together stays together. By demonstrating early on that you don’t need to spend an exorbitant amount of money early on in your relationship, you can quickly learn that money doesn’t always equal happiness. And by following these five fun, easy, and affordable dating tips, you can help ensure you and your partner enjoy many long, blissful years together!