Money Management

Want to become rich in 2024? Learn how a few key moves can help you get there. [[{“value”:”

Building wealth requires you to save money, and that can be harder than it seems. In fact, the Bureau of Economic Analysis reported that Americans had a personal savings rate of just 3.7% as of December 2023.

The good news is that there are a few simple techniques you can implement to make saving money and growing your net worth easier. Here are three of them.

1. Cut your fixed expenses

When many people try to save, they aim to do so by reducing discretionary expenses. These are the things you can choose to spend money on every month, like getting a coffee at Starbucks, eating out, or buying yourself some new shoes or comic books.

The problem is, when you cut these costs, you have to force yourself to sacrifice time and again — often, for not that much gain. If you save $4 a day on your coffee, for example, you’ll end up with a maximum of $124 extra a month to save. That’s not bad, but a lot of sacrifice went into saving that.

Instead of trying to constantly deprive yourself of things you enjoy, it’s a lot easier and more effective to try to cut a big fixed expense. That way, you can make one cut and adjust once. You could, for example, save an average of $193 a month by borrowing for a used car instead of a new one.

Opting for a cheaper vehicle or cheaper housing are just two possible ways to cut a fixed expense. You could also drop a gym membership, refinance your debt, shop for cheaper insurance, or cancel your cable. The key is to look for as many big recurring expenses as possible and find a way to make a change to those costs rather than chipping away at your fun spending.

2. Automate your savings

Making savings automatic is another savvy saving hack. See, you don’t want to have to force yourself to always move money to savings, because it will often be too tempting to just spend the money instead. If you have a set amount moving automatically over to your savings accounts, on the other hand, you won’t have to worry about making the choice to save — the money will just go where it needs to.

You can sign up for an automatic transfer of money to savings on the day you get paid. Most banks make it easy to do. Once you’ve done that, you’re a lot less likely to go back and undo it, and you can quickly adjust to living on what’s left over in your checking account.

3. Pick the right account for your money

Finally, you’ll want to make sure you’re putting your saved money in the right place. The average interest rate on a traditional savings account, for example, is just 0.47% while high-yield savings accounts offer the chance to earn upward of 5.00% right now in today’s market. If you know you won’t need the money for a while, you can do better by investing in a certificate of deposit or even a brokerage account, depending on your investing timeline.

CDs can lock in today’s high rates for you, and often provide better yields than savings accounts, but you need to be OK locking up your money in the bank for the duration of the CD term (this could be months or years, depending on the CD you choose). And investing with a brokerage account could allow you to earn even higher returns, with the S&P 500 providing an average 10% annual return over the long haul. Of course, you would only want to invest if you won’t need the money you’re saving for at least five years, because otherwise you face a big risk of losses if you buy and sell at a bad time.

By taking these steps, you may be able to save a good amount in 2024 and make real progress in your wealth-building journey.

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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.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Starbucks. The Motley Fool has a disclosure policy.

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Medication costs could really eat into your budget. Read on for ways to combat them. [[{“value”:”

One of the reasons it’s important to have health insurance is that you may need financial help covering the cost of medication. It’s estimated that pharmaceutical companies are raising prices on more than 700 medications this year, so if your bills start to rise, you won’t be alone.

But that won’t necessarily ease the blow to your wallet. So if you’ve already found that you’re looking at higher medication costs in 2024, here are a few underrated strategies that could help you save money.

1. Make sure your pharmacy has the right information on file

Maybe you’ve gotten a new insurance ID card this year, only you’ve yet to present that at your local pharmacy. If you go to fill a prescription, you might end up paying more if your pharmacist doesn’t have the right information on file.

In that case, what might happen is that your insurance is billed but your claim is rejected, leaving you to pay the full price of whatever medication you’re taking. So if you see a jump in your prescription costs, the first thing it pays to do is make sure your pharmacy used the correct information to submit its claim in the first place.

2. Switch your medications

Some medications simply do not have a generic version available. And that’s a shame, because often, switching over to generics will result in big savings. But that doesn’t mean you can’t make a switch, period.

If your medication costs are rising this year, talk to your doctor about alternative drugs that might work to address your condition(s). Perhaps there are two equally good formulas on the market that work for your situation. If one results in a $25 monthly copay while the other costs you $90, then the former clearly makes more sense if you’re not compromising on effectiveness. And your doctor should be able to confirm that’s not the case.

To put it another way, your doctor probably isn’t going to suggest an alternative medication that isn’t going to get the job done just to save you money. If anything, at that point, they may try to help by providing you with free samples or appealing claims your insurance company may have rejected.

3. Look into assistance programs

Many pharmaceutical companies run patient assistance programs that provide discounted or even free medication to those who can’t afford the cost of their pills. You can use this database to see if the medications you take qualify for one of these programs.

From there, expect to have to meet certain eligibility requirements. You may, for instance, have to provide proof of income. But do know that while pharmaceutical companies are clearly in the business of making money, they’re not always completely devoid of compassion. And you never know when you might qualify for a break on the pills you need to take.

Rising medication costs could end up wreaking serious havoc on your budget. But if you follow these tips, you may find that you’re able to lower your costs and avoid a scenario where you even have to think about skipping medications or dosages due to financial constraints.

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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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Taxes can be stressful, especially if you make mistakes on your return. Here are three you want to avoid. [[{“value”:”

One of the worst parts about doing your taxes is that there are so many ways to mess them up. Missed a deduction you qualified for? You just cost yourself money. Forgot to report some of your income to the IRS? Have fun filing that amended return.

Most mistakes are fixable, but they can still be costly. Here are three of the worst mistakes you definitely want to avoid this tax season.

1. Not filing a return when you owe taxes

Not filing your tax return is a big mistake most of the time, even if you’ve already paid your taxes during the year. Many Americans qualify for a refund and some also earn refundable tax credits that can shrink your tax liability below zero. That could mean an even bigger refund for you. But you’ll never see a dime if you don’t file your return to prove what you paid and what you actually owed.

Things are even worse for those who owe the IRS and fail to file a return. These individuals get slapped with a failure-to-file penalty worth 5% of their unpaid taxes per month for every month their return is late. This maxes out at 25% of their unpaid taxes. They’ll also pay a failure-to-pay penalty worth 0.5% of the unpaid taxes per month, also with a cap of 25% of the unpaid taxes.

Bottom line, it makes sense to file a return whether you expect to owe the IRS or not. If you don’t think you can submit yours by the April 15 deadline, request an extension for free. This will give you an additional six months to file your return. However, it doesn’t give you additional time to pay what you owe, so you could still face failure-to-pay penalties if the amount you paid in taxes throughout 2023 wasn’t enough to cover your full tax liability.

2. Not paying what you owe

Receiving a surprise tax bill is stressful, especially if you don’t have the cash on hand to pay for it. But the worst thing you can do is avoid it. You’ll incur the failure-to-pay penalties mentioned above, and the IRS could pursue you for tax evasion. That could lead to even steeper fines, plus jail time.

Instead, explore the IRS’s payment plan options to find a method that works for you. There are short-term payment plans with terms of 180 days or less. There are also longer-term plans that require monthly payments. However, you’ll still rack up penalties on your unpaid taxes while using these plans.

You could also try an offer in compromise. This is where you tell the IRS what you can afford to pay toward your tax bill. It will evaluate your offer and consider your income, assets, expenses, and ability to pay. If it accepts, you make your payments as agreed and you’re off the hook for the rest.

3. Not keeping proof of your tax breaks

Tax deductions and credits reduce your taxable income and tax bill, respectively, so you can keep more of your money. But you can only claim them if you’ve met all the eligibility criteria and you have all the necessary documentation to prove it. For example, if you claim that you purchased a laptop for your small business, you need the receipt for that purchase to write it off as a business expense.

You don’t have to submit your documentation when you file your taxes. But you could find yourself in serious hot water if the IRS audits you. No paperwork means no tax break, and that could lead to a massive bill.

Make sure you hold onto your paperwork even after submitting your return. Ideally, you’d keep all your tax-related documents for at least three years after filing or even longer. When in doubt, it’s best to hold onto them.

This is far from an exhaustive list of tax mistakes, but if you avoid the three above, you should be off to a good start. And if you have any questions, don’t hesitate to reach out to a tax professional for clarification. You could find one locally if you’d like. But many tax software now offer access to tax professionals for a fee as well. Just be sure to take your time and review everything carefully before you finally submit your return.

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Click here to learn more about our recommended credit cards

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 right moves in your 40s could make it possible to retire on time. Read on to learn more. [[{“value”:”

The average retirement age in the U.S. is 61, according to Motley Fool research. You may be aiming to retire a bit later in your 60s. But regardless of whether your target retirement age is 61, 63, 65, or 69, that decade of life is a popular time to retire. And if you want to be able to pull that off, here are three things you ought to do during your 40s.

1. Pay off high-interest debt

Your 40s can be a tricky time, financially speaking. You might still be grappling with some child care costs, while trying to keep up with your mortgage and save money for your kids’ college.

But one thing you should really focus on doing during your 40s is paying off credit card balances. That’s because carrying a balance on a credit card could cost you a lot of money in interest. So if you shed that debt, instead of paying interest to a credit card company, you can put more money into your IRA or 401(k).

2. Maintain a solid emergency fund

It’s important to have money in savings in case unplanned bills pop up. If you don’t maintain a solid emergency fund, you might end up having to take on costly debt that eats up money that could otherwise go into your retirement plan.

At the very least, aim for an emergency fund that can cover three months of essential expenses. This could potentially get you through a period of unemployment without having to resort to running up a credit card balance.

3. Make sure you’re investing your savings aggressively

You probably know that the money in your IRA or 401(k) shouldn’t just sit in cash. But you may be nervous to put it into stocks for fear of taking losses during periods of market volatility.

The thing is, though, if you’re in your 40s, you might have a good 20 years until retirement arrives. And that offers plenty of time for your brokerage account to ride out the market’s ups and downs. Plus, if you don’t get aggressive in your portfolio and stick to more stable investments, like bonds, your savings may not grow as much as you’d like them to, leaving you with a lot less money down the line.

Over the past 50 years, the stock market’s average annual return has been 10%. So let’s say you’re 41 years old with the goal of retiring at 61, and you have $80,000 saved for retirement so far. Let’s also assume you’re able to save another $500 a month over the next 20 years. If your portfolio delivers a yearly 10% return, you’ll end up with a nest egg worth about $882,000. If you play it safe and score just a 5% return, you’ll be looking at about $411,000 instead.

Making the right moves in your 40s could help your retirement plans go off without a hitch. Shed costly debt, maintain emergency savings, and invest aggressively so you’re able to retire in your 60s — or at an age you’re happy with.

Our picks for 2024’s best credit cards

Our experts carefully review the most popular offers and select those that are worthy of a spot in your wallet. These standout cards come with fantastic benefits like generous sign-up bonuses, long 0% intro APR periods, and robust rewards.

Click here to learn more about our recommended credit cards

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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Getting a new credit card could be a good move for your finances. Check out a few sure signs that you should open a new card. [[{“value”:”

People often stick with the same credit cards, year after year. If you already have one, or more, you might not feel like going through the application process for another one. But it doesn’t take that long, and it could be worth your time.

There are several ways you can benefit by opening a new credit card. Here are a few of the most common reasons it’s time to start looking at card options.

1. You’ve improved your credit score

Your credit score is one of the biggest factors affecting which credit cards you can get. As your credit score goes up, you’ll be able to qualify for more cards. You won’t just have more options, either — you’ll have better options. Credit cards with higher credit score requirements also have more valuable benefits.

If you’ve been able to increase your credit score, make the most of it. Look for a credit card with a higher cash back rate, or a better introductory offer. Benefits like these can be worth hundreds of dollars every year.

Let’s say you go from a cash back card that earns 1% back on purchases to a 2% card. If you spend $30,000 on your credit card every year, that will take you from $300 to $600 in annual cash back.

2. You have big expenses coming up

When you have costly purchases to make, it could be a great time to open a new credit card. Many credit cards have sign-up bonuses that reward you for meeting a spend requirement.

For example, some cards offer $200 if you spend $500 in the first three months. If you’re going to spend that money anyway, why not turn it into $200 cash back? There are also much larger sign-up bonuses available, including some for over $500 cash back or more. Larger bonuses also normally have larger spend requirements.

It’s not a good idea to spend more just so you can earn a sign-up bonus. But if you know you’ll be spending more on a new computer, home maintenance, or any other major expense, consider opening a new credit card to get a bonus out of it.

3. You’re paying off credit card debt with a high interest rate

When you have credit card debt, the conventional wisdom is not to open any more credit cards. That’s usually correct. You don’t want to make the situation worse. But there’s a way opening a new card could be beneficial.

Balance transfer credit cards are specifically designed for paying off debt. They have a 0% intro APR on balance transfers. So, you can transfer over balances from your other cards, and then pay them down without any interest charges. Once the intro period ends, the APR goes up.

That 0% intro APR can last 18 months or longer, depending on the card. Considering the average credit card APR is 21.47%, this can save you quite a bit. At that rate, $5,000 in credit card debt could cost you over $1,000 a year in interest. At a 0% APR, it costs you nothing.

4. You’re not happy with your current card’s features

There are lots of credit cards and credit card companies. With so many options, there’s no reason to stick it out with a card you don’t like.

If you’re unhappy with your current credit card, think about what features you’d prefer. Maybe you’re tired of paying an annual fee. In that case, you could close or downgrade your current card, and start looking at no annual fee cards. Or if your spending habits have changed, you might want to look for a rewards credit card with new bonus categories.

A credit card application is a quick process. You can do it within about 10 to 15 minutes online, and many cards also offer instant approvals. If any of the reasons above apply to you, getting a new card could pay off.

Our picks for 2024’s best credit cards

Our experts carefully review the most popular offers and select those that are worthy of a spot in your wallet. These standout cards come with fantastic benefits like generous sign-up bonuses, long 0% intro APR periods, and robust rewards.

Click here to learn more about our recommended credit cards

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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Costco may be one of the most popular grocery stores in the U.S., but it’s not for everyone. Read on to learn when you shouldn’t get a membership. [[{“value”:”

Most people think that shopping at Costco will automatically save them money. And, to be fair, they’re not entirely wrong. The per-unit prices at Costco are usually lower than at traditional grocery stores, which makes buying in bulk cheaper than buying items in smaller quantities.

But every now and then, the wrong person ends up getting a Costco membership. These could be the kinds of shoppers who go once or twice a year, drop a few hundred dollars, and end up with more cans of tomatoes or jars of peanut butter than they know what to do with. If that sounds like you, here are five other signs you should probably never step foot in a Costco warehouse.

1. You give in to impulse buying

Costco is not great for impulse buyers. That’s because everything you buy is in large quantities. If you take a chance and buy something that you might like, your supply will automatically be at a level of, “I love this!” This could easily result in blowing your budget on products that make you feel guilty later when you have to throw them out.

Of course, Costco does redeem itself with its “Risk-Free 100% Satisfaction Guarantee.” Under this policy, you can return any item you don’t like for a full refund. However, you still have to revisit Costco and wait at the returns counter. If you already dread the warehouse experience, this could be more of a hassle.

2. You’re buying for one person

If you’re only buying for yourself, you’re probably going to save more by shopping at a discount grocery store. Again, Costco doesn’t sell things in small quantities, so the bulk food you buy, like milk, eggs, bread, poultry, and meat, could easily expire before you use it.

Certainly some single-person households could benefit from buying in bulk — after all, you can buy nonperishables there, too — but more likely than not, you’ll get the full benefit of a Costco membership if you’re buying for more than one person.

3. You don’t have a lot of space

Got a 500-square-foot apartment? How about a cluttered freezer or a refrigerator with limited space? If you already struggle to find room for your groceries, you’re probably going to feel overwhelmed by the bulk items from Costco.

4. You hate grocery shopping in person

Shopping at a Costco warehouse ensures you’re getting the best deals, saving on shipping, and seeing products that aren’t available on Costco’s website or mobile app. It’s also one of the most unpleasant shopping experiences. I would say “it depends on your location,” but every Costco I’ve ever been to has felt like Black Friday shopping — like, the original Black Fridays, when you had to storm the store to get the best deals.

There’s no “quick stop” at Costco. Parking is scarce, the store is crowded, the lines to checkout are long. You have to show your membership card at the entrance, show it again when you check out, then show your receipt at the exit. The process is long and often boring, and if you’re not the shopping type, you’re going to dread going to the warehouse.

5. You don’t have a Visa credit card

If you prefer using a credit card, you’ll need a Visa credit card to shop at Costco, as the warehouse only accepts Visa-issued cards. Of course, it also accepts cash, check, debit, Costco Shop Cards, and EBT cards. But if you want to charge your purchase to a credit card, you’ll need to get a Visa card first.

To be sure, shopping at Costco could help your personal finances. But not everyone is the ideal Costco shopper. If one or several of the statements above resonated with you, it might not be worth dropping the $60 for a Costco membership. You might be better off shopping at your local grocery store, where you can buy things individually and not worry about wasting food or money.

Our picks for 2024’s best credit cards

Our experts carefully review the most popular offers and select those that are worthy of a spot in your wallet. These standout cards come with fantastic benefits like generous sign-up bonuses, long 0% intro APR periods, and robust rewards.

Click here to learn more about our recommended credit cards

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 Costco Wholesale and Visa. The Motley Fool has a disclosure policy.

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