Money Management

Are you a woman looking to improve your financial situation? You can learn from other successful women. Find out what money moves successful women make. [[{“value”:”

Women of all ages are taking charge of their finances. If you’re a woman looking to make life-changing money moves, you may seek advice on managing your finances to live a more comfortable and secure life. Making small financial changes can benefit your wallet and improve your life. Here are a few ways that successful women manage their finances.

1. They make career moves that result in higher earnings

Many successful women thrive in their careers. They put time and energy into making career moves that allow them to increase their skills and gain more experience. They’re also willing to take risks that enable them to earn more money throughout their lifetimes.

One example is leaving a lower-paying job to transition to a different industry with more job opportunities and better pay. It may also look like asking for a raise or negotiating for a higher salary before accepting a new job, even if it requires an uncomfortable conversation. Change can be scary, but it can also be rewarding and allow you to reach your financial goals sooner.

2. They make strategic spending decisions

Another way successful women manage their money wisely is by making strategic spending decisions. They’re not afraid to spend money — but that doesn’t mean they overspend beyond their means or rack up costly credit card debt.

Successful women also know that spending money is OK. But they make meaningful money moves when they spend their money. Many successful women understand that it can be beneficial to pay for convenience if it frees up time to earn more money.

One example is paying for a grocery delivery service. If you can earn more in the time it would take to shop and drive to and from the store, spending money on this convenience may be well worth the cost.

3. They save for emergencies

Successful women understand the importance of saving for emergencies. Many women who are committed to making financial progress have sizable emergency funds. They continue making regular contributions if they have not reached their savings goal.

You never know when an unexpected life change could disrupt your financial situation overnight, so it’s wise to stash some emergency savings in the bank. Keeping your extra money in an interest-earning bank account like a high-yield savings account is recommended.

4. They prioritize investing

The gender pay gap is real and still exists. According to 2022 data from the Pew Research Center, women earn about 82% of what men earn. One way that women can fight the gender pay gap is by taking steps to build wealth.

Many successful women prioritize investing their money. Although investing involves risk, history has shown that it can be a powerful way to build wealth. Women who are tackling big financial goals invest their money.

One option is to contribute to an individual retirement account (IRA) or another tax-advantaged account. If you can afford to invest more, review your annual contribution limits and see if you can contribute more of your earnings. If you hope to retire someday, investing can make that possible.

5. They continue to boost their financial knowledge

Another way that thriving women successfully manage their money is by continuously increasing their financial knowledge. Many women look to social media, friends, and peers to boost their knowledge so they can continue making big money moves.

It’s up to us to learn more about money management and advocate for ourselves and others. If you want to improve your financial knowledge to make decisions that allow you to thrive financially, check out our free personal finance resources.

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Not sure how to use the money you have saved? You can make money moves to improve your life now and later. Here are some smart uses for your savings. [[{“value”:”

Setting aside extra money in savings is a wise financial decision. You never know when you may need extra cash. Many people with savings use their extra money to prepare for the future or improve their current life situation. Here are a few ways smart people use their savings.

1. Invest and let your money grow for decades

Many people assume they need to time the market or utilize sophisticated strategies to get the best results when it comes to investing in the stock market. But you can benefit from investing your savings and letting your investment grow over multiple decades.

Buying and holding investments can be worthwhile because of long-term growth. There are no guarantees when you invest your money, but when you hold your investments long-term, there will be more time for compound interest to work.

Many savvy savers invest extra money by purchasing shares of low-cost index funds. An index fund is a collection of stocks and bonds. Instead of spending your limited time trying to hand-pick individual stocks and bonds, you can buy shares of index funds.

Expect to pay management fees when buying shares of index funds. It’s wise to pay attention to these fees and prioritize low-cost funds. Investing in a low-cost index fund can help you maximize your long-term returns. Review our list of the best low-cost index funds for inspiration.

2. Stash savings in a high-yield savings account

If you’re not looking to put your savings to use yet, you can make a money move to boost your earnings. If you’re keeping your stash in a savings account with a low annual percentage yield (APY), you’re missing out on the opportunity to earn more money from interest.

Many smart people stash their savings in a high-yield savings account to earn more interest and boost their bank account balance faster. This is a simple way to earn more while your money sits in the bank. You can open a new bank account online in minutes. Review our list of the best high-yield savings accounts to compare current rates.

3. Make purchases that improve your quality of life

Another way smart people use their savings wisely is to improve their lives. Is there a purchase you can make using a portion of your savings to make your life more enjoyable? One example is using your savings for a down payment on a mortgage so you can buy a home.

Another example is to use some of your savings to take a much-needed vacation. You can decide how to use your money to make positive changes in your life. But remember that it’s OK to spend some of your savings. Spending money to improve your life is smart.

4. Pay insurance premiums yearly

Saving for upcoming purchases is a smart money move. Many people who can afford to save regularly pay their insurance premiums once a year (as opposed to monthly or bi-annually) to get a discount on their insurance bills. They save up all year until their next payment is due and pay for a year of coverage all at once.

Many auto insurance companies, for example, offer discounts to drivers who pay their insurance premium once a year rather than monthly. If you have extra savings sitting in the bank and your insurer offers discounts to customers who pay their premiums once a year, consider putting your savings to use so you pay less overall on necessary insurance coverage.

Put your savings to work

The above strategies are examples of how you can use your savings responsibly. You can use extra cash to get a better deal on everyday expenses like insurance, invest in low-cost index funds and let your money grow for decades, earn more interest from your savings, or use your money to improve your life. For additional tips, check out our personal finance resources.

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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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Many adults save for retirement with a 401(k). See the average 60-year-old’s 401(k) balance and learn what to do if you’re behind on your retirement savings. [[{“value”:”

At age 60, you’re not too far from retirement. In fact, the average retirement age is 61, although there are plenty of Americans who continue working into their late 60s and beyond.

It’s always important to know whether you’re on track with your retirement savings. That’s especially true as you reach your 60s, since you’re getting close to the end of your career. If you’re trying to figure out where you stand, you’ll find data on the average 401(k) balance below, plus some tips on what to do if you need to save more.

The average 60-year-old’s 401(k) balance

The average 60-year-old has $70,000 to $210,000 in their 401(k). Why such a wide range? There are two recent sources with a fairly large difference:

Vanguard reported that Americans ages 55 to 64 have a median 401(k) balance of $70,620 and an average balance of $232,710 in How America Saves 2023.A 2024 Empower article reported that Americans in their 60s have a median 401(k) balance of $209,382 and an average balance of $555,621.

The median balances are likely a more accurate representation of the overall average. When there’s a big difference between a median and an average, it’s because outliers are having an outsized impact on the average. In this case, people with very high 401(k) balances bring up the average quite a bit.

A popular guideline on retirement savings is to save eight times your salary by age 60 and 10 times your salary by 67. Many 60-year-olds are likely well behind that guideline, based on the recent data. To be fair, some Americans also have other forms of retirement savings, such as individual retirement accounts (IRAs).

What to do if you’re behind on your retirement savings

Even at 60, there’s still time to make significant contributions to your retirement savings. If you feel like you won’t have enough money to retire, here’s what you can do.

Max out your 401(k) contributions

The 401(k) contribution limit is $23,000 in 2024. But one of the advantages of being 50 or older is that you can also make additional catch-up contributions of up to $7,500, for a combined limit of $30,500. If you can’t contribute that much, try to at least put in enough to max out any 401(k) match your employer offers.

Contribute to an IRA, too

Just like 401(k) plans, IRAs allow you to save for retirement while saving on taxes. The contribution limit is $7,000 in 2024. When you’re 50 or older, you can make additional catch-up contributions of up to $1,000, for a combined limit of $8,000.

Retire later

There are several financial benefits to delaying your retirement. By working longer, you’ll be able to save more. You’ll start withdrawing from your retirement savings later, and you can also delay taking Social Security. If you wait until age 70, you’ll receive your maximum Social Security benefits.

Consider relocating or downsizing

Another way to make up the gap in your retirement savings is to reduce your cost of living. You could start looking into areas with a lower cost of living for after you retire — some people even choose to retire abroad. If you want to stay in your current city, you could move to a smaller, more affordable home.

If you can max out your 401(k) and IRA, that’s $38,500 in retirement savings per year, and potentially more if contribution limits increase. After five years, you’ll have added $192,500 to your retirement. That money could also grow if you invest in stocks and bonds.

Most people can’t max out all their retirement accounts, so don’t feel bad if you aren’t contributing that much. Just put in as much as you can. If you do that, combined with potentially working longer and cutting costs, you can still retire with financial security.

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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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Are you thinking of having kids but are unsure about your choice? Remember to consider your finances. Check out some financial stats that may surprise you. [[{“value”:”

Many people who aren’t parents are still deciding whether to have kids. Having children is a life-changing decision. For many, it’s part of their life goals. But it’s not for everyone, so it’s wise to consider how your life will change as a result.

If you decide to have children, your finances will be impacted, too. Let me share some financial stats that may make you reconsider not having kids.

1. It costs around $300,000 to raise a child to age 17

In 2023, The Motley Fool Ascent’s Here’s How Much It Cost to Raise a Child study examined the financial impact of raising a family. Our research highlighted various stats regarding the cost of raising a child. Let’s take a closer look.

In 2015, the U.S. Department of Agriculture (USDA) estimated that a middle-income family spends an average of $233,610 to raise one child to age 17. This figure doesn’t account for inflation.

Based on a 2022 Brookings Institution analysis of this USDA data, assuming an inflation rate of 4% for a child born in 2015 and raised until age 17, it would cost $310,605.

Many everyday living costs have continued to rise over the last few years, so raising a child born in 2024 and beyond will likely cost significantly more. Those with multiple kids will face greater financial impact. These figures may have you reconsidering whether to have kids.

2. Americans spend an average of $321 per week on daycare

In the U.S., child care costs continue to climb, and many new parents aren’t aware of how much they’ll pay for child care. Finding low-cost, reliable, and quality care can be difficult. Many affordable care solutions have long wait lists, so parents may be forced to pay more elsewhere.

According to the Care.com 2024 Cost of Care Report, families paid an average of $321 weekly for daycare in 2023. Care.com also found that 20% of respondents spent more than $36,000 on child care in 2023. For many families, that’s much more than their annual mortgage expenses.

If you decide to have kids and want to continue working, you should research how child care costs will impact your bank account. Spending thousands of dollars annually on this expense will make it more challenging to reach other financial goals.

3. The average highly skilled woman loses $230,000 in wages

Many parents, especially women, struggle to care for their children while continuing to reach career milestones. Many women reduce their working hours or take time off from work and have gaps in their resumes because they prioritize caring for their children.

It can be difficult to make career advancements after having children. Many moms earn less money during their lifetime because they have kids. The Mommy Track Divides study found that having a child costs the average highly skilled woman $230,000 in lost lifetime wages.

Consider your personal, professional, and financial goals

The above stats may surprise you. Many adults do not know how much it costs to raise a child until they become parents. Having kids can be a rewarding experience, but don’t rush into this life-changing decision without first considering how your entire family will be impacted.

When making decisions that will impact your life and the lives of those around you, consider your personal, professional, and financial goals. If you decide to have children, it’s wise to take steps to prepare financially first. For additional tips, check out our personal finance resources.

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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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Keeping your credit card issuer in the dark about your travel plans is bad news. Read on to see why. [[{“value”:”

If you’re gearing up to do your fair share of travel this year, you’re not alone. Data from IPX1031 finds that 50% of Americans plan to travel more in 2024 than in 2023.

Now, there are certain steps you might take before you head out on a big trip. Those may include researching attractions, booking reservations at popular sites, and checking your packing list twice to make sure you haven’t forgotten anything essential, like, say, your passport.

But there’s another important move you should make before heading out on a trip, whether you’re traveling domestically or going abroad. And failing to make that move could result in a world of hassle.

Inform your credit card company of your travel plans

You may not think to notify your credit card company of your plans to travel. But that’s a mistake that could result in a whole bunch of needless aggravation.

If you don’t tell your credit card issuer that you’ll be traveling to a different country or state, the company won’t anticipate you making purchases from a new location. If your credit card issuer starts seeing charges on your card from a different destination — say, a gas station 12 states away — it may flag those purchases as fraudulent as a means of protecting you.

At that point, though, you may not be able to use your credit card until you’ve called in to confirm that the charges are legitimate. And you might have to cover certain purchases with cash or a debit card on the spot until the matter gets resolved. That’s annoying.

In some cases, confirming that a given transaction isn’t fraudulent is a simple matter of calling a number or using an app to verify its legitimacy. But what if you’re traveling to a national park in a remote part of the country with poor to non-existent cell service? If you’re trying to fill up your car on the way there, you may not be able to get a signal to contact your credit card issuer and verify that the purchase is, indeed, being made by you.

Plus, what if you’re traveling internationally and don’t have a means of making calls? Once again, you’re in a jam.

That’s why it always pays to notify your credit card issuer ahead of time when you’re planning to take a vacation. You may be able to log into your credit card account and update your travel plans or dates there. Or, you may need to call the number on the back of your card. It’s a simple move that could help you avoid a world of hassle.

One other situation where it pays to reach out to your credit card company

When you fill up gas in another state that’s far away or buy groceries at a supermarket that’s 250 miles away from where you live, it can raise a red flag with your credit card company. But so can gift card purchases.

So if you’re buying multiple gift cards at once, in that situation, it also wouldn’t hurt to call your credit card company and inform it of your plans. That could prevent those transactions from being flagged as fraudulent — and save you the aggravation of having to call in at a time when you might already be at a store trying to get in and out.

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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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Is your small business missing out on thousands of dollars of tax savings? See how to avoid these massive tax mistakes that could hurt your business. [[{“value”:”

Tax season is a good time for small business owners to reflect upon their past year’s business performance, and plan ahead for next year. As part of your tax planning, it’s important to watch out for a few big tax mistakes. Small business owners work too hard to lose money to unnecessary taxes or bookkeeping mistakes. These tax mistakes could be separating you from too many of your hard-earned dollars — and undermining your long-term financial wellness — in your business and personal finances.

Let’s look at a few big tax mistakes that any freelancer, solopreneur, or small business owner should aim to avoid.

1. Not separating your business and personal finances

Even if you’re in the early days of starting a business, even if it’s just a side hustle, try to separate your business income and expenses from your personal finances. Don’t pay vendors from a personal checking account. Don’t use business bank accounts for personal expenses.

If you do not have a clear, separate financial identity for your business and personal finances, you’re making life harder for yourself. If your business and personal funds are intermingled, this makes it harder to keep track of your legitimate tax-deductible business expenses. You might forget to deduct hundreds of dollars that could’ve saved you money on taxes. Or worse — you could try to deduct something that shouldn’t be deducted, and end up making yourself vulnerable to an IRS audit.

2. Not tracking your business expenses

Too many small business owners get so excited about running the business that they get sloppy about bookkeeping. And there’s no excuse for this anymore! There’s so much great small business accounting software available now. It’s easier than ever before to keep track of your deductible business expenses all year round, month after month.

And good business bookkeeping is not just about taxes or tracking expenses: it’s a way to keep an eye on your business’s performance. Where’s your revenue coming from? Did you have a good week, month, or quarter? Who are your biggest clients, where are your biggest risks, strengths, weaknesses, and opportunities? Good bookkeeping helps you monitor the pulse of your business — not just at tax time.

3. Not forming an LLC (or other business entity)

If you’re serious about being a small business owner, and not just a hobbyist or side hustler, you should form a Limited Liability Company (LLC) or other legal business entity for your business. Make your business “official” and real in the eyes of the law by forming an LLC.

Setting up an LLC also helps you get an employer ID number (EIN) tax ID for tax purposes. It lets you open a business bank account and start to build business credit under the name of your company. Forming an LLC can also give you some other useful tax benefits — because it gives you flexibility for how to handle your business income for tax purposes.

4. Not filing taxes as an S Corporation

If you have an LLC, and you have enough business income to be worth using this strategy, you should consider filing taxes as an S Corporation. This is a tax strategy that small business owners can use to get more advantageous tax treatment for their business income.

Instead of paying self-employment taxes on your full amount of business income like a sole proprietor or LLC would do, forming an LLC and then electing to file taxes as an S Corporation lets you pay yourself a salary, and then pay yourself a “distribution” of other business income — but you don’t have to pay self-employment taxes on that distribution amount. Like an LLC, an S Corp is a pass-through entity — so the income also gets the federal 20% qualifying business income deduction.

Talk to an accountant for advice. Filing taxes as an S Corp might not be the right choice for every business owner or type of business.

5. Not hiring professional tax help

Speaking of accountants: you do have professional tax help, right? You’re not trying to run a business and file your own taxes, are you?

Small business taxes are generally way too complicated to navigate yourself. Spend the money and get some help. It’s a huge weight off your shoulders. Even if you love bookkeeping and taxes, it’s beneficial to get professional tax help so you have an extra set of eyes on your tax return — and someone you can go to for personalized advice.

6. Not getting a health savings account

If you have a high-deductible health plan (HDHP) that is eligible for a health savings account (HSA), you really should use it. Health savings accounts are versatile, powerful tax-advantaged accounts. It’s like a traditional IRA, but for healthcare. For 2024, you can deduct up to $4,150 of HSA contributions (if you have single coverage) or $8,300 for family coverage. Don’t make the mistake of missing out on this extra tax break — and there are no income limits.

7. Not using a small business retirement plan

Small business owners also get an extra tax break from the IRS when saving for retirement. There are several types of tax-advantaged small business retirement plans that your company can use, depending on whether you have employees and other aspects of your business finances. Some of these plans, like a SEP IRA, can let you save more money for retirement than you could save as an employee with a 401(k).

Bottom line

Small business owners work too hard to lose money to tax mistakes. Use tax software, bookkeeping software, professional tax help, tax-advantaged accounts, and other tools to help you maximize your tax savings and build a stronger foundation for your business.

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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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