Money Management

Many small businesses can benefit from a dedicated credit card. Learn what to consider if you’re in the market for one. [[{“value”:”

Are business credit cards on your radar? Perhaps they should be. If you’re self-employed, own a small business, or even just work a side hustle as a ride-hailing driver, you’re allowed to open one.

They’re pretty popular, especially since they are more accessible than other forms of funding to start a business (such as loans). Research from Forbes Advisor found that for 2023, 25.4% of survey respondents who opened a business credit card did so because they could not access other conventional financing. With this in mind, let’s take a closer look at business credit cards, and how to tell if one is right for you.

Does your business have a lot of bills?

Some small businesses have a lot of supplies to source and bills to pay — if you own a small cafe, for example, you likely have to pay rent on your space, cover utility bills, and buy food and other supplies. But if you’re a freelance writer, you probably don’t have a ton of bills, other than perhaps annual software licenses or a new computer every few years. Consider the expenses you pay on behalf of your business — a business credit card can give you the chance to earn rewards on them.

Do you struggle with keeping personal and business expenses separate?

I get it — you’ve got a busy life, and sometimes it’s hard to remember what you bought for your business and what you bought for yourself, especially if you’re the kind of person who likes hanging out at Staples for fun (no judgment here).

Unfortunately, mixing business and personal expenses can make things more difficult when it’s tax time and you’re scrambling to find records of everything you bought for the business last year ahead of meeting with your accountant. A business credit card can make your life a lot simpler, as you’ll already know which card to use when you’re making yet another Staples run or placing an Amazon order.

Business credit cards have sweet perks…

I mentioned rewards above, so let’s take a closer look at what perks you could enjoy with a business credit card. The best business credit cards offer a slew of benefits you might really like, such as cellphone protection, bonus rewards in useful categories (like shipping or office supply stores), and big welcome bonuses. Plus, you’ll get to earn cash back, points, or miles on your spending. And some of these cards even come without annual fees.

Also, a business credit card gives your business the chance to build its own credit score, separate from your personal score. Having a good business credit score can make it easier to qualify for loans in the future, which might really come in handy if you’re dreaming of someday expanding your operations.

…but so do personal credit cards

You don’t have to open a business credit card account to get great benefits, even if you’re eligible to do so. To simplify your life and have even more card options, you might elect to open a new personal credit card (or choose one of your existing ones) to become your “business” credit card.

Don’t use the chosen card for personal expenses, and instead put bills for your business on it, like your domain name renewal for your website, your health insurance premiums, and your supplies. This way, you’ll be able to keep your business expenses separate for an easier time filing your tax return, and you can still benefit from the perks of credit cards, like cash back and purchase protections.

Ultimately, the choice is yours. Full disclosure, I haven’t opened a business credit card, despite becoming a full-time freelancer/small business owner over a year ago. I may do so in the future, but as a writer and editor, my business expenses are pretty low and it just hasn’t felt necessary for me yet. But it might be a good move for you.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

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Funding your IRA to the greatest extent possible could do a lot of good for your future. Read on to learn more. [[{“value”:”

A lot of people are continuing to live paycheck to paycheck these days in the wake of lingering inflation. So if you’re in that boat, contributing funds to an IRA is something that may have to wait.

But let’s say you’re in a better financial position than that. Maybe your bills are manageable and don’t eat up your entire paycheck month after month. If so, it definitely pays to contribute money to an IRA for the tax benefits alone.

Traditional IRA contributions exempt a portion of your income from taxes. The limits for IRAs can change every year. In 2024, you can put up to $7,000 into an IRA if you’re under age 50 or up to $8,000 if you’re 50 or older. So if you make, say, a $5,000 contribution this year, that’s $5,000 of income the IRS won’t be able to tax you on.

But another great thing about IRAs is that they allow you to invest your money for the future. And if you’re able to max out your IRA this year, you may be amazed at how much money you have three decades from now.

Your investments could go a long way

You could choose to invest your IRA conservatively to protect your portfolio from wild swings. But if you’re investing for a far-off milestone like retirement, then it pays to go heavy on stocks. And if you have a 30-year window between now and the end of your career, then it especially pays to load your IRA with stocks for strong returns.

Over the past 50 years, the stock market has rewarded investors with an average annual 10% return. That number accounts for both good years and bad.

So, let’s say you put $7,000 into your IRA this year. If you earn a 10% yearly return on that money, in 30 years, it’ll be worth around $122,000. If you put in $8,000 and score that same return, in 30 years, it’ll be worth about $140,000.

But remember, these numbers only account for the contributions you’re making in 2024. If you already have funds in your IRA or you continue to contribute each year, your balance is apt to end up even higher down the line. The point, however, is that maxing out your IRA for even a single year could have huge results.

Northwestern Mutual reports that the average American in their 60s has $112,500 saved for retirement. But based on the calculations above, maxing out your IRA at $7,000 this year alone might leave you with a higher balance than that in 30 years.

It’s okay if you can’t max out your IRA

Maxing out an IRA in 2024 could do a lot of great things for your future. But it may be difficult, or impossible, to part with that much money — especially if you’ve been struggling lately.

If that’s the case, just do the best you can. Save $100 this year if that’s all you can swing. If you can push yourself to $200, even better.

In fact, let’s say you contribute $500 to your IRA in 2024. At a 10% return, in 30 years, that sum could grow to over $8,700. So if maxing out your contributions for the year isn’t feasible, don’t dwell on that. Instead, focus on the amount you can save, and aim to raise your contribution rate from one year to the next, or as your financial situation allows.

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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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A lot of people are now sitting on $1 million or more in their 401(k)s. Read on to see how you can join their ranks. [[{“value”:”

Plenty of people enter retirement with nowhere close to $1 million in savings. And that’s understandable. Your individual retirement account (IRA) or 401(k) contributions may end up falling by the wayside due to a host of factors, from emergency expenses to child care costs.

But if you’re convinced that it’s just a tiny percentage of people who end up becoming 401(k) millionaires, you’d be wrong. Recent data from Fidelity shows that during the fourth quarter of 2023, there was a 20% uptick in 401(k) account holders attaining balance of $1 million or more compared to the previous quarter.

Now, part of that may boil down to the fact that during the third quarter of the year, many 401(k) balances fell as a result of market conditions. And the market then soared at the end of the year.

But still, the number of 401(k) millionaires in the fourth quarter of the year was 11.5% higher than during the second quarter of 2023. And while stock market gains may be a big driver of that, it’s also important to credit the effort of savers who made a point to fund their accounts and set themselves up to take advantage of those gains.

If you’re eager to end up a 401(k) millionaire yourself, there’s a simple strategy it pays to employ. And it could leave you sitting pretty by the time retirement rolls around.

Start early and load up on stocks

Some people don’t manage to first fund a 401(k) until they’re well along in their careers. You might spend your 20s paying off debt and spend your 30s saving up for a home and grappling with sky-high daycare bills. But if you wait too long to start funding your 401(k), you might hurt your chances of attaining that prized $1 million or more balance.

Over the past 50 years, the stock market has had an average annual 10% return, as represented by the S&P 500. It’s important to note that 401(k) plans generally don’t let you invest in individual stocks (like you could with a brokerage account you open on your own). But you can usually buy index funds (including ones that mimic the S&P 500) or mutual funds with a stock-focused strategy.

So, let’s say you start contributing $500 a month to a 401(k) plan at age 40, and your portfolio gives you a yearly 10% return on average. By age 65, you’ll have about $590,000, which is pretty impressive in its own right. However, it’s not $1 million.

On the other hand, let’s say you adopt that same stock-focused strategy that rewards you with a 10% yearly return on your investments, only instead of beginning to fund your 401(k) with $500 a month at age 40, you start at age 30 instead. By age 65, in that scenario, you’ll be sitting on over $1.6 million.

Free money could help your 401(k), too

It pays to start funding your 401(k) early in your career and going heavy on stocks if you want your balance to eventually hit or exceed $1 million. But another way to help move things in a positive direction is to always snag the complete 401(k) match your employer is willing to give you.

That match might change from one year to the next. But keep tabs on it, because it really is free money for your retirement.

And remember, just as you get to invest every dollar you put into your 401(k) from your own paychecks, so too do you get to invest the money your employer contributes to that account. So all told, if you start saving from a young age and also claim your full workplace match every year, you may end up a 401(k) millionaire well ahead of retirement.

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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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Credit card debt in the United States is at a record high. Learn what you can do to ensure it doesn’t become a problem for you. [[{“value”:”

Credit card debt is one of the most common financial issues, and it has been on the rise. Total U.S. credit card debt reached an all-time high of $1.13 trillion at the end of 2023, according to data gathered by The Motley Fool Ascent.

Many people have credit card debt, and it can take years or even decades to pay off. That’s never a good thing, but especially not now, as interest rates have also skyrocketed. Here’s advice you can follow to manage credit card spending and get out of debt.

Spend what you can afford with your bank account, not your credit limit

The best credit card habit is to only charge what you can afford. To clarify, that’s what you can afford with money you already have in your bank account. Don’t use your credit limit as a guide to how much you can spend. Just because your card has a limit of $5,000 or $10,000 doesn’t mean you should spend that much.

Basically, use your credit card like a debit card. If you want to get a $1,500 computer, but you have $1,000 in your bank account, don’t buy it just because you could pay for it with your credit card.

There are a couple of reasons to manage your credit cards like this. It’s an easy way to decide what you can and can’t afford. Some people make purchases based on how much money they’ll have when it’s time to pay their credit card bill. Not only is this more complicated, it’s a bad habit to spend money you don’t have yet.

You’ll also always be able to pay your credit card bill in full. This is extremely important, because it means you won’t be charged interest on your purchases. If you carry a balance from month to month, that’s when your card issuer can charge you interest. And credit card interest is expensive — the average rate is 21.47%, according to the Federal Reserve.

If you have credit card debt, pay more than the minimum

The advice above works if you aren’t carrying around a balance on your credit card. But what if you’re in credit card debt right now? In this case, the most important step you can take is paying more than the minimum.

The minimum payment amount on a credit card keeps you current on the bill, but that’s about all it does. For many card issuers, the minimum payment amount is interest charges plus 1% of your balance. And when you’re paying that little, it takes a very long time to get out of debt.

Let’s say your credit card balance is right at the average: $6,501. Your card has a 21% APR, and you make minimum payments every month. It will take you 305 months to get out of debt, and you’ll pay $10,751 in interest. And that’s assuming you don’t charge anything else to your credit card.

Decide on an amount you can afford to pay every month toward your credit card debt. Make sure it’s more than the minimum, and ideally, pay as much as you can. By paying more, you can potentially get out of debt years earlier. If you have good credit, you may also want to look into balance transfer credit cards. These have a 0% intro APR on balance transfers, so they give you some time to pay down debt interest-free.

Getting the most out of your credit card

While credit card debt is a common issue, that doesn’t mean it needs to be an issue for you. If you’re careful about how much you spend, you can take advantage of the benefits that credit cards offer without incurring the drawbacks.

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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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A Fidelity Investments study found that 40% of women plan to contribute to an emergency fund in the coming months. Find out why you may want to do the same. [[{“value”:”

March is National Women’s History Month, and Fidelity Investments polled women to learn more about their finances. The Women’s History Month 2024 Survey found that many women feel stressed about money, but that’s not stopping them from working to meet their financial goals. Discover which financial goal many women are tackling within the next six months.

This is the top emotion women feel when thinking about money

Fidelity Investments surveyed over 3,000 U.S. adults to learn more about their financial stresses, roadblocks, and short-term and long-term personal finance goals.

Unfortunately, “stress” is the word most women use when describing their emotions about money. Of those polled, 57% of women are stressed about money, while only 41% of men feel the same. The top three stressors included monthly bills, inflation, and being able to cover an emergency.

But here’s a more encouraging finding: The second-most popular word women use to describe their emotions about money is “hopeful.” Thirty-seven percent of women feel hopeful about money, while 41% of men feel similarly. This is great news since many women are tackling financial goals in 2024.

40% of women plan to contribute to an emergency fund

The study looked at women’s financial goals for the year. The top short-term financial goal women plan to tackle within the next six months is contributing to an emergency fund. This is a fantastic goal to work on. Having extra money in a savings account is a smart way to prepare for unexpected financial expenses and life-changing events like vet bills, car repairs, and job loss.

To be more financially prepared in 2024, you may want to start building an emergency fund. Even if you can only afford to save a small amount each month, your actions will make a difference. It’s better to have some money saved rather than none at all.

Here’s a breakdown of how much you’ll have saved after a year of steady monthly contributions:

If you save $85 a month, you’ll have $1,020 in twelve months.By saving $125 a month, you’ll have $1,500 in a year.By saving $225 a month, you’ll have $2,700 in twelve months.If you save $250 a month, you’ll have $3,000 after a year.

Automating your savings can help you achieve your savings goals faster. You can set up automatic transfers through your bank so money is regularly transferred from your checking account to your savings account.

This way, you no longer have to rely on manual transfers. It’s easy to get forgetful if you manually transfer funds to your emergency fund.

Many people fall behind on their savings goals because they forget to save or spend the money they intend to stash away. This savings technique can help you avoid situations like that.

Do this to earn interest while your money sits in the bank

Make sure you’re stashing your emergency fund in the right place. If you keep it in your checking account, you may accidentally spend the funds you intended to use as emergency savings. And since most checking accounts don’t pay interest, you won’t be rewarded for saving.

Keeping your savings in a high-yield savings account is a great money move. As your cash sits in the bank, you’ll earn interest. The money you earn from interest can help you reach your savings goals sooner. Check out our list of the best high-yield savings accounts to learn more.

No matter what financial goals you’re tackling, don’t give up. Any progress, no matter how small, is a win for your wallet. It’s never too late to make changes to improve your financial situation.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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Why pay the IRS any more than you have to? Read on for ways to shield your income from the agency without breaking the law one bit. [[{“value”:”

When you earn money, whether it’s from a job, a savings account, or investments, you have to pay the IRS a portion of your income. That’s pretty much unavoidable.

But that doesn’t mean you’re doomed to an exorbitant tax bill. One strategy that could leave you paying less money in taxes is to contribute to accounts that allow you to legally shield income from the IRS. Here are three you can use to your advantage this year.

1. 401(k) plans

If your employer offers a 401(k), you have a prime opportunity to not only build up a nice-sized retirement nest egg, but also keep the IRS away from a large chunk of your 2024 earnings. This year, 401(k) contributions max out at $23,000 for savers under age 50 and $30,500 for those 50 and over.

It’s common for employers to offer some sort of 401(k) match to employees. But any matching dollars you receive from your company won’t count toward the aforementioned contribution limits. So if you’re 40 years old and get a $5,000 employer match in your 401(k) this year, you can still put in $23,000 from your own earnings.

2. IRAs

Like 401(k)s, IRAs are designed to help people save for retirement. But the annual contribution limits for IRAs are much lower than 401(k)s — $7,000 if you’re under 50, and $8,000 if you’re 50 or older. With a traditional IRA, your contributions reduce your taxable income (as long as you’re below the income thresholds set by the IRS).

You should also know that while there are plenty of benefits to saving for retirement in a Roth IRA, contributions to one of these accounts won’t shield your income from taxes. You will, however, get to enjoy tax-free withdrawals later in life, whereas with a traditional IRA, those withdrawals will be taxable.

3. HSAs

If you’re enrolled in a high-deductible health insurance plan — defined as having a deductible of $1,600 or more for self-only coverage or $3,200 or more for family coverage — you may be eligible to fund an HSA, or health savings account, this year. To participate in an HSA in 2024, your health plan also needs to have an out-of-pocket maximum of $8,050 for self-only coverage or $16,100 for individual coverage.

From there, your HSA contribution limit will depend on your plan type and age. For self-only coverage, the limit is $4,150 if you’re under 55, or $5,150 if you’re 55 and older. For family coverage, the limit is $8,300 if you’re under 55, or $9,300 if you’re 55 and older.

Keep the IRS away

Since contributions to traditional IRAs, 401(k)s, and HSAs are all made on a pre-tax basis, participating in these accounts allows you to lower your tax burden substantially. For example, if you put $12,000 into a 401(k) this year plus another $3,000 into an HSA, the IRS won’t tax you on $15,000 worth of income.

Plus, having money in any of these accounts could be very beneficial. Retiring with a nice IRA or 401(k) balance could help ensure you’re able to live comfortably as a senior. And having a nice HSA balance could make your next large medical bill a lot less stressful to cover.

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This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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