Money Management

Saving money can be a challenge. Keep reading to learn about one simple way to make saving fun. [[{“value”:”

A survey by The Motley Fool Ascent from July 2023 found that the typical American has $1,200 in their savings account. While having any money saved is a good thing, there’s no denying that it can be hard, especially when there are so many other financial obligations to consider. If you haven’t heard of it, the 100 Envelope Savings Challenge is one way to slip into the habit of saving one dollar at a time.

Introduced to the challenge

We all have that one person in our lives, the one who approaches personal finances like a surgeon preparing for an intricate operation. For me, it’s my niece. I’m pretty sure she began worrying about retirement when she was in middle school, which may be a bit much. However, that focus on finances has also made her hyper aware of how she handles money.

A few months ago, she mentioned that she and her husband are building up a fund for projects around the house, but they’re trying something new. They’re not depositing extra funds into a savings account. Instead, they’re participating in the 100 Envelope Savings Challenge.

They have money in their checking account to pay bills, participate in employer-sponsored retirement plans, and save regularly. However, they feel as if the money in each account is already earmarked for other purposes and won’t dip into one of them to make cosmetic changes to their home.

My niece is also pretty allergic to debt, which makes me happy. However, that means she won’t put a non-necessity on a credit card or take out a personal loan for something she can live without. Enter, the 100 Envelope Savings Challenge.

How it works

The 100 Envelope Savings Challenge can be adjusted to work for you. My niece purchased an inexpensive notebook designed specifically for the challenge.

The notebook has 25 plastic pages, each with four small pockets (or envelopes). Each pocket is numbered from 1 to 100. On the first day, you slide $1 in pocket No. 1. On the second day, you place $2 in pocket No. 2, and so on, until all the pockets are filled. By the time you’ve filled them all, you have saved a total of $5,050.

Adjusting the challenge to fit your needs

I was curious enough to buy a challenge notebook. My husband and I have a wish list of projects we want to do with our yard this spring and summer, and like my niece, I won’t take money from another account. I’ve been adding bills for a few weeks now and have come up with a few insights:

If you’d rather not use a notebook, you can take on the same challenge using 100 separate envelopes. I considered going that route, but realized that using the notebook would keep things tidier.You don’t have to add money every day. I don’t always have spare cash lying around, and taking money out of my checking account to feed the notebook defeats the purpose. The idea (for us) is to build up a fund without disrupting our normal monthly budget. We went out of town last weekend, and as is often the case, we returned home with a small pile of bills. I used some of those bills to fill a few empty pockets.My niece tells me that using the notebook challenges her to stick with a household budget. She says when she comes in under budget in a specific category (like food or a utility bill), she uses that money to fill pockets.It may be called the 100 Envelope Savings Challenge, but that doesn’t mean you’re expected to have all the pockets filled within 100 days. For some of us, it may take much longer, especially when we get past the No. 20 pocket.You don’t have to go in order. For example, it’s okay to put a $5 bill into the No. 5 pocket before ever putting a $1 bill in the No. 1 pocket. It’s all about what cash you have available.You can set your own goal. I know that once it’s filled, the notebook will hold $5,050, but I have no plans to save that much for yard projects. I would rather put the money into a high-yield savings account and earn interest. The only reason I don’t feel bad about putting cash for our yard projects into plastic pockets is that it will all be spent in a matter of weeks, and wouldn’t have had time to earn much interest anyway.

This challenge could be great for kids

On Monday, as I sat on the family room floor, neatly folding small bills and sliding them into pockets, I thought about how much fun my kids would have had with this when they were young. We could decide together what we should save for and keep careful track of our progress. It wouldn’t teach them anything about the importance of compound interest, but it would have helped get them into the habit of tucking extra money away.

If you’re looking for a way to meet a savings goal, doing it $1 at a time really can work.

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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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This writer intends to stick with Costco even though there’s a less expensive option for joining a warehouse club store. Read on to learn more. [[{“value”:”

Joining a warehouse club was a smart financial move on my part. I need access to bulk grocery discounts because I have a larger family to feed. If I were to stick to a regular supermarket, I’d spend hundreds more each year on things like dairy products, meat, and produce.

When it comes to joining a warehouse club, there are choices in my area. I could opt for a Sam’s Club membership for $50 a year for a basic one or $110 for a Plus membership. But instead, I pay for Costco, even though a basic membership there costs $60 a year and an Executive membership costs $120. Here’s why.

1. Costco is closer

Where I live, Costco is about five to 10 minutes closer to my house than Sam’s Club. And while you may not think that’s a big deal, to me, it is.

I shop at Costco weekly. I need to based on the rate my fridge contents get depleted.

Saving 15 minutes on the road every week can add up to more working hours for me during the year. Since I’m self-employed, the more time I have to work, the more I might potentially earn. Plus, nobody enjoys sitting in traffic — or at least nobody I know.

2. Costco’s customer service is top notch

Sam’s Club may have excellent customer service in its own right. But the things Costco has done for me through the years have been downright impressive.

Just recently, I was refunded for spoiled food based on a picture I took of it — no questions asked. And the people at the customer service desk — at least at my local store — are just plain nice and pleasant to deal with.

When you shop somewhere on a regular basis, sometimes, it’s worth paying a little extra for a membership in exchange for a positive experience. And while I can’t say I wouldn’t have that at Sam’s Club, it’s hard to give up a good thing.

3. Costco’s bakery is my favorite in town

Costco’s bakery isn’t just cost efficient. It’s actually really, really good.

My family and I all love Costco’s muffins, and we’ve made a “Saturday morning muffin” tradition out of that love. We also routinely outsource our baking to Costco for events like birthdays and holidays because the cakes are tasty and affordable — a winning combination.

Which warehouse club store is right for you?

If you’re new to the world of joining a warehouse club store, you may be torn between Costco and Sam’s Club. The one thing you may want to consider first is location, because if one store is convenient to you and the other isn’t, the former should win out. Also, check to see what hours each store is open and determine which set of hours better suits your schedule.

But if both stores are equally convenient from a distance and operating hour standpoint, and money is a bit tight, then you may find that Sam’s Club is a better choice for you than Costco. Your best bet, though, is to tag along with a member of each warehouse club at least once and get a sense of the inventory and prices each one offers. From there, you can make a more informed decision.

I’ll admit that I haven’t had a lot of Sam’s Club experience, as I’ve been there sparingly. But because I’m so happy with Costco, I intend to remain loyal. Besides, saving myself time on the road during my weekly shopping is reason enough to spend an extra $10 a year on my membership.

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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Balance transfer cards can reduce the cost of credit card debt. Keep reading for your to-do list before applying for one of these credit cards. [[{“value”:”

If you have credit card debt, repaying it can be a challenge thanks to the high interest rate your cards are most likely charging you. The average interest rate on credit cards is 21.47%, and with such a high rate, a lot of money has to go toward covering interest each month before you even make a dent in your principal.

That’s why a balance transfer can be a great way to make repayment easier. A balance transfer literally involves transferring your balance from one card to another (hence the name).

Typically, you’ll get a new balance transfer credit card that offers a temporary 0% APR on transferred balances within a limited time after opening your card. You’ll be able to move the balance of your current debt over — often by paying a small transfer fee of around 3% to 5% — and then get to keep that 0% rate for around 12 to 15 months. During that time, every dollar of your payment will go toward reducing the amount owed. This should make it much easier to free yourself of credit card debt for good.

However, while balance transfers can make payoff easier, they aren’t always the right financial move for everyone. If you’re considering one, don’t even think about moving forward until you’ve accomplished a few key tasks first.

1. Confirm you can live within your means and handle credit responsibly

When you transfer a balance, you typically open a new card account and move the debt from your existing card over. This means you are freeing up credit on those cards and you have a larger total credit line to work with between the new card and the old ones.

This can be a huge problem if you aren’t confident you can live within your means, since you now have access to even more credit and could run up a bigger balance. Say, for example, you open a balance transfer card with a $5,000 limit and transfer over a $2,000 balance and a $3,000 balance, both of which were on cards you’d maxed out. Since you’ve freed up those credit lines, if you aren’t living within your means, there’s a risk you’d max them out again and end up owing a total of $10,000.

Consider whether you are currently living on a budget, have an emergency fund, and can keep your spending below your income. If not, try to work on those things before getting a balance transfer so you can be confident you can trust yourself with new access to credit.

2. Calculate how much you’ll have to pay to bring your transferred balance to $0

The next key step is to make sure that you have an idea of how much your payments will be each month to pay off the transferred balance before the 0% rate expires. For example, if you’re transferring over $5,000 to a balance transfer card with a 0% APR for 15 months, you’d need to pay about $333.33 per month.

If you can’t pay off the full amount in time, you’ll have to start paying interest at the standard rate on the balance transfer card once the promotional rate has expired. This may not be a big deal if the rate is the same or lower than the interest you were being charged on your current cards. But if it’s a lot higher and a big balance remains at the end of the 0% time period, then you could end up worse off over time.

It’s easy to calculate how much you have to repay each month — just divide the balance you’re transferring by the number of months the 0% rate is offered. If you don’t think you can pay back that amount before the promotional period ends, then see if your projected go-to rate will be higher than on your current cards. If so, you may not want to move forward if you still expect to owe a lot once you get to that higher rate.

3. Shop around for balance transfer card offers

Finally, the last step is to shop around for the right balance transfer card. You can do this by checking out our list of best balance transfer cards and seeing what each offers. Pay attention to the transfer fees as well as the number of months you have before interest starts being charged, so you can decide which card is right for you.

By taking care of these tasks, you can get a balance transfer card at a great rate and ideally use this tool to make real progress toward paying off your debt for good.

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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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Taking early retirement plan withdrawals is bad news. Read on to see why. [[{“value”:”

The whole purpose of building retirement savings is to have money to fall back on later in life, when you’re no longer working and bringing a steady paycheck home. But recent data from the Transamerica Center for Retirement Studies finds that 36% of women have taken a loan, an early withdrawal, or a hardship withdrawal from their 401(k) or IRA. Going that route, however, could cost you in more ways than one.

It’s not just a matter of being penalized

Generally speaking, taking an IRA or 401(k) withdrawal before age 59 1/2 means losing 10% of the sum you remove to a penalty. So if you withdraw $10,000 to fix your HVAC system or make big repairs to your car, you lose $1,000 of that automatically.

Now, there are some exceptions to this rule. Early IRA withdrawals of up to $10,000 are allowed penalty free to buy a first-time home. You can similarly tap an IRA early without a penalty to pay for college.

But the problem with raiding an IRA or 401(k) ahead of retirement extends far beyond a 10% penalty. The more money you remove ahead of retirement, the less you’ll have in retirement.

And remember, any sum you take out of your IRA or 401(k) plan is money you no longer get to invest. Over time, lost investment gains could far exceed any penalty you’re hit with.

The stock market has returned an average annual 10% over the past 50 years. So let’s say you remove $10,000 from your 401(k) at age 30 to fix up your home or car. You’ll lose $1,000 to a penalty, which isn’t great.

But imagine you could’ve invested that $10,000 at 10% a year through age 65. When you think about it that way, your $10,000 withdrawal could mean retiring with about $281,000 less. In that context, the $1,000 penalty you’re looking at is negligible. The bigger problem is the shortfall you’re left with for losing out on years of growth.

Build an emergency fund so you don’t need to tap your retirement savings

Many people end up raiding their IRAs or 401(k)s prematurely because they don’t have emergency savings to fall back on. In fact, the aforementioned survey found that women only have a median of $2,400 in emergency savings. That may be enough to cover a modest home or car repair in some cases — but not a major one.

Also, a sum of $2,400 probably isn’t enough to pay all of your essential bills during a months-long period of unemployment. So if you want to keep your nest egg intact and avoid a financial shortfall later in life, it’s a good idea to focus on building up your emergency cash reserves. At a minimum, you should aim for a large enough balance to cover three full months of essential living expenses.

Once you’ve done that, you can then focus on finding ways to add to your IRA or 401(k). But your goal should really be to set yourself up to not have to raid the long-term savings you’ve worked hard to build to date.

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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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The earlier you start planning, the easier it is to unlock your dream wedding on a budget. See how to start planning your magical day now. [[{“value”:”

Weddings are magical, but let’s face it — they can also be quite expensive. The average wedding cost is now topping $33,000. This figure can be pretty daunting for couples dreaming of their perfect day. But don’t let the numbers scare you. With a strategic approach and a keen eye for deals, you can create a luxurious and friendly wedding for your personal finances.

Use credit card sign-up bonus for your honeymoon

When every penny counts, making smart financial decisions can lead to big rewards. Enter rewards credit cards — a potential game-changer for your wedding and honeymoon planning.

Let’s say you sign up for a card that offers an attractive 75,000-point welcome bonus when you spend $4,000 in the first three months. These points can significantly subsidize your honeymoon expenses, allowing you to indulge in that extra bit of luxury or extend your stay without the financial strain.

But it’s not just about the points; using this credit card wisely means you can track wedding expenses, earn rewards, and manage payments in one place.

Book a hotel package for a destination wedding

For those dreaming of a destination wedding, Dreams Tulum Resort & Spa in Mexico offers an alluring package that blends affordability with elegance. The Dreams Ultimate Wedding Package is more than just a cost-effective option. At $3,599 for 20 guests during the off-peak season and $3,799 during peak times, this package includes several luxurious features that would typically add up to much more if priced separately. The service of an experienced onsite wedding coordinator ensures your special day is seamless and stress-free. The inclusion of a judge or minister, preparation and ironing of the couple’s attire, and a beautifully decorated ceremony space set the stage for a picturesque wedding.

The package goes above and beyond with a 30-minute ceremony video, sound system, and live music trio, ensuring every moment is captured and celebrated. After the ceremony, enjoy a private cocktail hour and dinner reception, complete with sparkling wine, a wedding cake, and floral centerpieces. The romantic touches continue with a complimentary room for one member of the wedding couple on the eve of the wedding, late checkout, and special turndown service. For a complete overview of what Dreams Tulum offers, including stunning Caribbean views and all-inclusive luxury, visit its wedding guide online.

Create a free wedding website

Need a wedding website? Well, Minted is offering a free one. A wedding website is a central hub for all your wedding information. It allows you to manage RSVPs, provide updates, and even share photos and stories with your guests. It’s a fantastic way to keep everyone connected and informed as you count down to your big day.

Minted offers customizable designs to match your wedding theme, ensuring that your website is useful and a beautiful extension of your wedding aesthetic.

Get discounted wedding invitations

Your wedding invitations are the first glimpse your guests have into the style and theme of your wedding. Etsy’s Someday Paper Co offers a delightful array of invitations at a 30% discount, allowing you to make a stunning first impression without overspending.

This deal is perfect for couples looking for unique, personalized invitations that capture their personality and set the tone for their special day. From elegant and classic to modern and quirky, there’s something for every style.

Buy bridesmaid dresses for under $150

Dressing your bridal party shouldn’t mean compromising on style or breaking the bank. Dessy offers an extensive collection of bridesmaid dresses under $150. This collection is not just about affordability; it provides a range of styles, colors, and sizes to suit every bridesmaid’s taste and body type. The additional 15% off for email sign-ups is the cherry on top, making Dessy a go-to destination for stylish, budget-friendly bridesmaid attire.

These are just some incredible deals available to future brides and grooms. With a bit of research and the right credit cards, you can find discounts for everything from flowers and makeup to wedding albums and gowns. The result? A beautiful, budget-conscious wedding day.

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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 positions in and recommends Etsy. The Motley Fool recommends Flow. The Motley Fool has a disclosure policy.

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