Money Management

It’s important to file your taxes on time. Read on to see what happens when you’re late by only a week. [[{“value”:”

Because tax returns are typically due on April 15, it shouldn’t really come as a surprise that this year, the same holds true. But what if you’re up against the filing deadline and you just need a bit more time?

You might think it’s no big deal to file your tax return a week late. But depending on your situation, that’s a move you might sorely regret.

You could end up with a sizable penalty

The consequences you face for being late with a tax return depend on whether you owe the IRS money or are owed a refund. If you’re eligible for a refund, being a week late means your return and refund will be processed one week late. So if you’re not bothered by the idea of seeing that money hit your bank account seven days later, then you can make your peace with the situation.

On the other hand, if you owe the IRS money from 2023 and are a week late filing your tax return, you’ll be hit with a failure-to-file penalty. And that penalty is pretty harsh. It equals 5% of your unpaid tax bill per month or partial month your return is late, up to 25%. Filing a week late therefore subjects you to a 5% hit.

Now if you only owe the IRS $500, filing your taxes a week late will mean losing $25. That’s not a fun thing, since it’s money that might pay for a streaming service for a month or a nice takeout meal. But it’s not an enormous amount of money, either, so you may not exactly be in tears over losing it.

However, if you owe the IRS $5,000 and file your tax return a week late, you’re looking at a penalty of $250. That’s a much bigger deal.

Also keep in mind that if you don’t pay your tax bill on time, you’re penalized separately for being late. There, the penalty is 0.5% per month or partial month your bill is late, up to 25%.

So let’s say you’re a week late filing a tax return where you owe the IRS $2,000, and you’re also a week late paying. The first offense will cost you $100. The second will only cost you $10.

Ask for an extension if you need more time

If you don’t think you’ll get your taxes done by April 15 this year, request an extension by that deadline. In the above example of being a week late and owing $2,000, with an extension, you’ll get out of the $100 penalty and will only be looking at the $10 penalty.

Now you should know that a tax extension will give you six extra months to file your return. But it’s best to file it as soon as possible after April 15, because you may not know how much tax you owe until you run those numbers through tax software. And the longer you wait to pay the IRS when you owe money, the higher the late payment penalty you might incur.

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Some tax-advantaged accounts could benefit you tremendously through the years. Read on to learn more about three you may want to consider. [[{“value”:”

If you invest your money in a taxable brokerage account, you’ll get complete flexibility with it. You can contribute as much to your account as you want each year, and you can cash out investments whenever you choose without risking a penalty.

Tax-advantaged savings plans don’t tend to offer the same degree of flexibility. With a traditional individual retirement account (IRA), for example, you must leave your savings untouched until age 59 1/2. Otherwise, you risk a 10% early withdrawal penalty (though there are exceptions). The same holds true for a traditional 401(k) plan.

Of course, both of these accounts give you a tax break on the funds you contribute. So there’s that benefit. But you still have to follow the IRS’s rules.

But there are certain long-term investment accounts that are loaded with tax benefits and offer a fair amount of flexibility. Here are three you may want to consider.

1. A Roth IRA

With a Roth IRA, you’ll be subject to the same annual contribution limits as a traditional IRA: $7,000 this year if you’re under age 50, or $8,000 if you’re 50 or older. However, you can withdraw your principal contributions at any time without penalty because you’re not getting a tax break on them.

Let’s say you contribute $10,000 to a Roth IRA that eventually becomes worth $25,000. If you need $10,000 to renovate your home and don’t want to take out a loan, you can tap your Roth IRA for that money. As long as you don’t touch the $15,000 gains portion, you don’t have to worry about a penalty.

Of course, tapping a retirement account like a Roth IRA ahead of retirement could have negative consequences, so it’s a move to consider with caution. But the option does exist.

You should also know that Roth IRAs offer the benefits of tax-free investment gains and tax-free withdrawals. And Roth IRAs don’t force savers to take required minimum distributions. This means you can leave your savings to grow tax-free indefinitely.

Now, one hiccup you might face with a Roth IRA is exceeding the income limits to fund one of these accounts directly. But in that case, you can contribute to a traditional IRA and convert it to a Roth.

2. A Roth 401(k)

With a Roth 401(k), you’ll get all of the benefits mentioned above with a Roth IRA. Only there’s one key difference: You can put more money into a Roth 401(k) annually. This year, the limit is $23,000 if you’re under age 50, or $30,500 if you’re 50 or older.

Another difference between Roth IRAs and Roth 401(k)s? With the latter, there are no income limits to worry about.

3. An HSA

If you’ve ever found yourself trying to quickly spend down a flexible spending account to avoid losing money, then you may be hesitant to save in an HSA, or health savings account. But HSAs work very differently.

Unlike FSAs, they don’t require you to deplete your plan balance year after year. In fact, they incentivize savers not to do that, because unused HSA funds can be invested for added growth.

What’s more, investments in an HSA get to grow tax-free, and withdrawals are tax-free when used for qualifying medical expenses. So if you contribute $10,000 to an HSA and it grows into $20,000, that $10,000 gain is yours tax-free. And you can use your $20,000 balance at any age or stage of life.

Also, once you turn 65, you won’t face a penalty for taking an HSA withdrawal for a non-medical reason. At that point, remaining funds in your HSA can be considered general, all-purpose savings.

You will need to meet certain criteria to qualify for an HSA, such as having a minimum deductible of $1,600 for self-only coverage or $3,200 for family coverage. Your out-of-pocket maximum also is limited to $8,050 for self-only coverage or $16,100 for family coverage.

From there, you can contribute up to $4,150 for self-only coverage this year or up to $8,300 for family coverage. And if you’re 55 or older, these limits rise by $1,000.

You may find it easiest to house your investments in a regular brokerage account. But consider a Roth IRA, Roth 401(k), and HSA as alternate homes for your money.

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It’s important to find the best home for your money. Here are three options to look at in April. [[{“value”:”

Given the number of Americans who live paycheck to paycheck, having to figure out where to put your extra money is a good problem to have. And this month in particular, you may have more money at your disposal once your tax refund comes in.

Of course, the right home for your money will largely depend on your financial goals and needs. But here are three options worth considering this April.

1. A savings account

Late 2023 data from SecureSave found that 63% of Americans were not equipped to cover a $500 emergency expense. But if you own a home or car, you’re probably well aware that a single surprise repair for either could easily cost twice that much money — or a lot more.

That’s why it’s so important to have a solid emergency fund — one with enough money to cover three months of essential expenses at a minimum. If your emergency fund needs work, the best place to put your extra cash this April is a savings account. And as a bonus, savings accounts are paying pretty generously these days, with many offering APYs (annual percentage yields) above the 4% mark.

Of course, that rate isn’t set in stone, and could go down as 2024 moves along. That’s especially likely given that the Federal Reserve is expected to move forward with rate cuts. But you might as well score that extra interest for now, while you can.

2. A CD

In March, the Federal Reserve opted to leave interest rates steady rather than move forward with the rate cuts it had alluded to in earlier meetings. That’s a good thing from a banking perspective, because it means that CD rates are still quite favorable today.

If you have money you don’t need for emergency savings or very near-term goals, then it could pay to put your cash into a CD. In fact, let’s say your next financial goal is to buy a house, but you know that’s not happening before early 2026.

In that case, what you may want to do is open a 12-month CD this month, while rates are up. That way, your CD money will free up in 2025. And then, you can see where you are with your down payment funds and go from there.

Now’s also a good time to open a longer-term CD, if that aligns with your financial objectives. For example, let’s say you have a child starting college in five years and you have separate investments to pay for that milestone.

You may also want to put some cash aside in case your investments lose value right when you want to start tapping them for tuition payments. A CD might be a good idea, because you can lock in a 4- or 5-year term right now at a favorable interest rate. And then, your money should free up just when you need it.

3. A brokerage account

Savings accounts are the best place for emergency cash and near-term goals, and CDs are a good option for mid-term goals. But if you’re looking to save for a far-off milestone, like retirement, or even college if your kids are really young, then investing your money is probably a better bet.

Sure, you might find a longer-term CD paying somewhere in the 4% or even 5% range now. But the stock market’s average annual return over the past 50 years has been 10%.

So let’s say you just got your tax refund and it’s $3,000. Let’s also say your oldest child is 3 years old and you want to put that money away for their college. If you were to invest it at 10% over the next 15 years, by the time your child turns 18, it’ll be worth about $12,500.

Even if you somehow manage to get a 4% return on that money for the next 15 years by sticking with CDs (which is unlikely due to anticipated interest rate cuts), in that case, your $3,000 would only be worth $5,400 by the time your child is ready for college. That’s a lot less than $12,500.

The best place to put your money this April hinges on your needs and goals. Think carefully about what those entail when making your decision.

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The age at which Americans want to retire across the board may be younger than you’d think. Read on to learn more. [[{“value”:”

When you’re in your 20s or 30s, it can be difficult to nail down a retirement age, since that milestone is so far off. But once you get into your 40s, you may start to think about when you’ll be ready to exit the workforce for good. And it’s pretty common for people to try to narrow down a retirement age during their 50s if they haven’t done so sooner.

The ideal retirement age for Americans across the board is 59.4, according to recent data from Coventry Direct. That age might sound good to you, too. But retiring before your 60th birthday could be problematic for these reasons.

1. You won’t have Social Security

It’s not a given that you’ll need Social Security to retire. And if you save enough on your own, those benefits may simply end up being extra cash you get to enjoy.

But you should know that the earliest age to sign up for Social Security is 62. And even then, you’re not getting your full monthly benefit. That won’t be available to you until full retirement age arrives, which is 67 if you were born in 1960 or later. So consider that when trying to figure out when you should retire.

2. You may not have penalty-free access to your retirement savings

The IRS offers a host of tax breaks for contributing to an individual retirement account (IRA) or 401(k) plan. So in exchange, it maintains some pretty strict rules for these accounts.

One rule is that if you take an IRA or 401(k) withdrawal before reaching age 59.5, you’ll generally face a 10% penalty on the sum of money you remove. So the problem with retiring at 59.4 is that you’re just shy of the point of being able to tap your IRA or 401(k) penalty-free.

Now, you should know that there can be exceptions for a 401(k). If you leave the employer sponsoring your 401(k) during the calendar year in which you turn 55 (or later), you can generally access your money penalty-free before turning 59.5.

If you know you’d like to retire before 59.5, consider putting some of your long-term savings into a regular brokerage account. That way, you’ll be able to take withdrawals without a penalty whenever you want.

RELATED: Best Free Stock Trading Apps

3. Your savings might need to last a really long time

The younger you are when you retire, the longer your nest egg might need to last. But that could put a lot of pressure on your savings.

If the idea of retiring in your late 50s sounds good to you, one thing you may want to consider is continuing to work on a part-time basis. You may be able to earn enough money to minimize withdrawals from your savings or even avoid them.

Another option? If you want to retire on the early side due to hating your job, find a new one. Take the opportunity to do something fun you’ve always been interested in, even if the pay is less. That way, there’s still less strain on your savings.

It’s interesting to see that Americans seem intent on retiring just shy of age 60. But there can be drawbacks to retiring at 59.4. Keep those in mind if you’re at an age where you’re ready to start firming up some of your retirement plans.

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Not all financial advice makes sense for every person. Read on for a few tips I don’t follow — and what I do instead. [[{“value”:”

There’s a lot of financial advice out there in the world — some of which is good, and some of which isn’t so good.

It’s also important to realize that some tips for managing your personal finances may work for most people, but may not necessarily work for you — which is definitely the case for me with some of the more common recommendations experts put out there.

In fact, here are three pieces of advice that you hear all the time and that I simply won’t follow — along with some tips on why they may not work for everyone.

1. Live on a budget

If you have ever read anything about finance in your life, chances are good that you’ve been told that you need to have a budget. And, in some cases, this suggestion makes good sense. After all, you must live below your means if you want to build wealth, and you often can’t do that if you’re just spending without a plan.

Unfortunately, budgeting doesn’t work for me. And I’m not the only one. In fact, research has shown that 84% of people with a budget end up spending over it. In close to half of these situations where people exceed their budget, the extra spending goes on a credit card.

The reality is, whenever I make a budget, I don’t end up sticking to it. I’ll decide I need or want to spend more in some areas than others, and I’ll end up just giving up on the entire thing. This means budgeting is a waste of time that does nothing to help me improve my situation.

Instead, I’ve automated my financial life. I keep my fixed costs below 50% of my income and have them paid automatically. I also transfer 20% of my money to savings. Then, anything left over is fair game to spend on whatever I want.

This works really well for me because I don’t have to account for every dollar. So I don’t end up getting discouraged that I’m failing. Plus, since I’ve kept my fixed costs reasonable, there’s enough money left to spend on what I want — and my long-term and short-term goals get taken care of effortlessly. The money just transfers to savings and my brokerage account without any effort on my part.

If you have a hard time living on a budget, automating your finances may work for you as well. It’s pretty easy to set up automatic payments and withdrawals to savings — the key is to get your fixed costs down, which may mean doing things like renting a cheaper place or driving a less expensive vehicle. Fortunately, these big moves only have to be made once and then you can enjoy easier money management.

2. Save 10% of your income for retirement

There’s another rule that you hear often — that you should save 10% of your income for retirement. This rule doesn’t work for me, though, because I want to be able to retire early and I want a really fun retirement where I travel and enjoy life, which means I need more money.

Instead of just following this rule, I’ve figured out how much income I want in retirement and multiplied that number by 25 since I plan to follow the 4% rule and withdraw 4% of my account balance in retirement each year. This helped me to see how big my final nest egg needed to be, and I used the calculators at Investor.gov to break my big goal down into smaller monthly goals to achieve.

Your retirement savings is too important to just follow a basic rule of thumb like saving 10% of your income. Instead, think about what you want your retirement to look like, how much money you’ll need to achieve that, and how much you need to save right now to make that happen. You can use the same process I described above that I used to set my own goals — which has resulted in my saving well over 10% for my future and which may do the same for you.

3. Avoid using credit cards

Finally, many financial experts advise steering clear of credit cards, but that’s a rule I’ll never follow. I like the credit card perks available to me, like airline lounge access and purchase protections. And I don’t want to pass up the chance to earn rewards, as getting 2% back on my spending makes my purchases cheaper.

You don’t have to avoid credit cards either, as long as you’re confident you can pay back your balance and avoid carrying it forward (and paying interest). If you keep your spending in check, you should be able to do that.

Ultimately, you don’t have to follow generic money rules set out for the masses. You can decide what works for you and implement rules of your own, as long as you have a plan that helps you achieve financial freedom in the end.

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Buyers love a good backyard. Read on to find out how to make yours the most desirable. [[{“value”:”

Spring usually ushers in the home-selling season, but this year’s kick-off may have less fanfare than in the past. High mortgage interest rates and soaring house prices over the past few years have dampened mortgage demand.

But Zillow recently released some data showing backyard trends that may make your house sell faster — and for up to 3% more than expected. Spoiler alert: Buyers want to watch TV and take showers outside.

Do this to boost your sales price

Zillow analyzed 1 million home sales last year, looking at hundreds of home features, and found that homes with these backyard trends commanded higher selling prices, and some helped the homes sell faster.

Outdoor TV: Homes with an outdoor​​ TV sold for about 3.1% more, equal to an average of $10,749.Outdoor shower: Homes with an outdoor shower command a 2.6% premium.Outdoor kitchen: Houses with an outdoor cooking space sell for up to 1.7% more.

In addition to the backyard trends, Zillow says indoor countertops made of soapstone are now the most popular and help homes well for 3% more than expected, and matte black appliances help homes command a 2.9% premium.

Tried and true ways to sell a home faster

If you didn’t make your backyard an oasis before listing your house for sale, you still have options to help make your home more desirable. Here’s what the experts recommend.

Declutter

This is an often overlooked suggestion, but Zillow says it’s one of the best ways to help your house sell faster. Buyers need to visualize themselves in your home instead of seeing your stuff everywhere. Rent a storage unit if needed, but don’t cram things in closets. Zillow notes that 64% of buyers said storage space is essential.

Price it right

Zillow says 21% of sellers say selling a home within a desired time frame was their most significant difficulty. Even in a seller’s market, it’s still important to price the house to sell and have a strategy in place for when you’ll do a price cut. Some experts recommend lowering the price as soon as two weeks after listing.

Use an agent

According to Clever Real Estate, homes sell for 30% less when listed as for-sale-by-owner (FSBO), and sellers have to pay more in buyer incentives when they sell a home themselves. Using an agent simplifies the selling process and gives you access to someone with extensive house-selling expertise.

Stage your home

Home staging may not be necessary to sell your house, but it will likely help it sell faster. National Association of Realtors data shows staged homes sell up to 10% faster. And 31% of sellers say they received a higher selling price because their house was staged.

Improve the curb appeal

A study by Virginia Tech found that homes with desirable curb appeal had a sales price up to 12.7% higher than those without. So, plant those flowers out front!

Don’t forget this important step after selling

After you sell your house, you’ll likely be on the hunt for another house. And while it can be tempting to go with the same mortgage lender you used for your previous home, it may not offer you the best rate. About one-third of buyers never shop around for a better rate.

You could save thousands of dollars simply by comparing a handful of mortgage lenders. Data from Freddie Mac found that buyers who compare mortgage lenders can save up to $1,200 annually on their mortgage payments.

With the housing market still tight for buyers, now is still a good time to sell a house. But making it more desirable than the surrounding competition could go a long way toward selling faster and for a potentially higher price.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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