Money Management

Need child care for your kids over the summer? Read on to see why you may need to start saving for camp costs ASAP. [[{“value”:”

When my kids were young and I was grappling with expensive preschool bills and babysitter fees so I could work, I kept telling myself that things would get better once they were old enough to attend school. At that point, I’d need less babysitting (or possibly no babysitting) during the week, so I was apt to come out ahead financially.

Unfortunately, I have some bad news. Child care doesn’t necessarily get less expensive when your kids are older. While you may not have to pay for care — or much care — during the school week, there’s a big chunk of time during the year when school’s not in session.

It’s called summer, and for a good eight-week stretch or so, many parents are left to scramble to find and pay for care each year. Often, when you see kids attending summer camp, it’s not because their parents have deemed the local swim club or beach unworthy. Rather, it’s because those parents aren’t available to take their kids to the beach or pool because they’re at the office earning an income. And as such, they need to secure care for their kids.

The cost of summer camp can be exorbitant and have a major impact on your personal finances. So if you expect to be paying camp tuition this summer, you may want to start saving now.

A really huge child care bill

Care.com puts the average daily cost of camp at $178.49. Assuming a 40-day, or eight-week, summer, that’s over $7,100 — for a single child. Ouch.

That’s why now’s a good time to start padding your savings account for summer camp costs. If you wait too long, you may not be in a position to pay for camp in full.

Many camps require you to be fully paid-up before the summer session begins. So if you intend for your child to start camp at the end of June, you may need to be fully paid-up by late May. That, frankly, doesn’t give you a ton of time — but you’re still better off starting to save now than waiting until spring.

In fact, one thing you may want to do ASAP is look at when tuition needs to be paid in full at your camp. Then, figure out how many weeks you have between now and then, and come up with a weekly savings goal.

Do keep in mind that many camps will let you charge your tuition on a credit card that you pay off over time. But in the course of doing that, you risk racking up loads of interest. Plus, your camp might tack on a surcharge for using a credit card. And even if it’s small, like 2% or 3%, on a $7,100 bill, that could be roughly an extra $140 to $210 on top of what you’re already paying.

One tax credit can help

If you’ll be paying for summer camp later this year so you can work, keep your receipts. You may be able to write off a portion of your costs on next year’s taxes, thanks to the Child and Dependent Care Credit.

The credit allows you to claim between 20% and 35% of up to $3,000 in child care costs for a single child of yours under age 13, or 20% to 35% of up to $6,000 for two or more children in that category. Summer camp is considered an eligible expense under the Child and Dependent Care Credit. But you should know that sleepaway camp isn’t. So if you’re toying with that option, know that you won’t get a tax break.

That said, the average cost of a sleepaway camp is a whopping $448.53 a day. So if that’s an option you’re considering, you should especially start saving for camp pronto.

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If you’re just starting your career, a Roth IRA and Roth 401(k) are the best ways to save for retirement. Keep reading to learn why. [[{“value”:”

If you’re in your early 20s, just starting your career, in your first “real job,” and starting to figure out how to save for retirement: congratulations! You have decades ahead of you to save, invest, and watch your investments grow.

You have a few good choices to maximize your retirement savings and minimize your taxes. But probably the best way to save is to open a Roth IRA and (if your job offers it) a Roth 401(k). These retirement accounts offer special advantages to help you build financial security.

Let’s look at the best way to save for the future as a young person starting your career.

Why you should open a Roth IRA

If you’re a young person starting your career, the No. 1 best way to save for retirement is to open a Roth IRA (“individual retirement arrangement”) account. This is a special type of tax-advantaged retirement account that lets you save and invest for the future with tax-free investment earnings and tax-free income when you retire. For 2024, you can put up to $7,000 into a Roth IRA.

Here are a few good reasons why people early in their careers should open a Roth IRA.

Reduce your taxes in retirement

A typical 401(k) or traditional IRA gives you a tax break for putting money in — the contributions reduce your taxable income for 2024, but you have to pay taxes on the money when you retire. These are also called “tax-deferred” retirement savings accounts, because the tax is delayed (“deferred”) into the future.

Unlike a 401(k) or traditional IRA, putting money into a Roth IRA does not give you a tax deduction on this year’s taxes. But instead, it gives you valuable tax-free investment growth and a source of tax-free withdrawals in retirement. With a Roth IRA, you pay slightly more taxes in 2024 so that “future you” doesn’t have to.

Right now, you are (probably) in the lowest tax bracket of your life

Many young people nowadays feel gloomy about their personal finances — burdened by debt and underpaid at work. You might not feel like it now, but your income is going to increase. You’re going to improve your skills and professional value, get promoted and earn pay raises, and get more marketable and in-demand for career opportunities. Maybe you’ll start a side hustle to make extra money, or launch a small business to boost your income even more.

Over the years of what’s hopefully a long and prosperous working life, you’re going to make more money than you make now. Right now, as a young person just starting out, your taxes might be as low as they’ll ever be again. You can take advantage of this low tax rate by opening a Roth IRA.

For example, if you currently are single and earn a $60,000 salary, that means (after subtracting your standard deduction), your taxable income is in the 12% tax bracket for 2024. Let’s say that in the future, when you retire, your income has doubled (in 2024 inflation-adjusted dollars) to $120,000. Assuming the same standard deduction, you’d be in the 24% tax bracket — making it much more costly to put money into a Roth IRA, or pay taxes on the (taxable) retirement income from a typical 401(k) or traditional IRA.

Paying a bit of tax today to put money into a Roth IRA when you’re young can be a much better deal for your future self. This is a smart tax-planning strategy to take advantage of your young age.

Let your money grow tax free for decades

Speaking of age, another advantage you have at this stage of your career is that you have decades to save for retirement. If you’re 25 years old, you have 42 years left until your Social Security retirement age of 67.

Maxing out your Roth IRA can let your retirement savings grow (tax free) for decades to come. For example, let’s assume you put $7,000 into a Roth IRA in 2024, and then contribute another $7,000 every year for the next 30 years. And let’s say you invest that money in a diversified portfolio of stocks and bonds that delivers an average return of 8% per year.

After 30 years, you’d have $926,860 in your Roth IRA — tax free!

Why you should open a Roth 401(k) — if your employer allows

Does your employer offer a Roth 401(k)? There’s nothing wrong with putting money into a tax-deductible 401(k) to save for retirement, especially if you get an employer match on your contributions. But if your employer offers a Roth 401(k), you should consider using that instead.

A Roth 401(k) works like a Roth IRA: the money you put into it is not tax deductible, but it grows tax free. You can still get your employer matching contributions to a Roth 401(k), and the Roth 401(k) also has higher contribution limits than a Roth IRA. For 2024, you can put up to $23,000 into a Roth 401(k). And you can use both types of accounts — a Roth 401(k) and a Roth IRA — as long as your income qualifies; some higher earners are not eligible to put money into a Roth IRA.

Bottom line

If you’re in the early stage of your career, opening a Roth IRA, Roth 401(k), or both can be the best options to save for the future. These retirement accounts let you invest for the future with tax-free growth and tax-free income in 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.The Motley Fool has a disclosure policy.

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Do you feel happy and confident when talking about your personal finances, or scrutinized and ashamed? Find out why the answer might depend on your gender. [[{“value”:”

Money is essential to our everyday lives, but many people struggle to talk about it. Lots of people have stigmas, shame, or even financial trauma around money, spending, and debt. These struggles can be especially intense for women, who are often socially conditioned to feel more cautious and less confident about managing their personal finances.

For all of these complex reasons, men and women tend to talk about money differently. A new survey from Wells Fargo and The Female Quotient (The FQ), called “Our Secret Numbers,” shows a few reasons why women and men tend to have different attitudes about their personal finances.

Let’s look at a few insights on the topic and how everyone can manage their personal finances with greater confidence.

1. Men feel happier and more confident about their personal finances

The survey from Wells Fargo and The FQ found that men are much more likely than women to have positive, confident feelings about their personal finances.

58% of men are happy with their financial situation (compared to 42% of women)65% of men are confident about their financial management (compared to 51% of women)60% of men say they have primary responsibility for financial decisions in their household (compared to 39% of women)

Men are also more likely than women to use positive, confident words to describe their financial situation and relationship with money, such as “disciplined,” “proud,” or “relaxed.” Women are more likely to use words like “stressful,” “frustrating,” and “embarrassing.” The survey shows that, along with the unfortunate gender pay gap that causes women to earn $0.83 for every dollar that men earn, there is a gender confidence gap about personal finances.

This gender confidence gap can cause additional challenges for women who are trying to save and invest for retirement. When women feel less comfortable talking about money, they’re often less likely to get professional financial help. The survey found that men are much more likely to talk to financial professionals about their financial wellness (29% of men vs. 20% of women), while women are more likely to just not talk about money at all (35% of women vs. 26% of men).

2. Women feel more stigma about personal finances

Being good with money is not just a men’s thing or a women’s thing; men and women both want to be successful with their personal finances. The survey found that 74% of women and 76% of men agreed with the statement that “financial health is important to living my life.”

However, because of social conditioning and complex cultural factors, women are more likely than men to show signs of shame, discomfort, and stigma in talking about their money. The survey found that:

62% of men were “more comfortable than they used to be” in talking about their financial health, vs. only 52% of women57% of men were more comfortable talking about their debt than they used to be, vs. 48% of women

Interestingly, as men get further into their careers, they grow more comfortable with talking about their debt, while women get less comfortable. This is a sign that senior-level women feel that they will be judged more harshly for having debt, while senior-level men feel more free to talk about the ups and downs of their personal finances.

The survey also found that men and women have different attitudes for how likely they are to talk about certain personal details of their financial lives, like credit scores, debt amounts, non-essential spending, or salary. When asked why they don’t share more details of their personal finances with friends, women are more likely than men to say:

“It makes me uncomfortable.””I don’t want to be judged.””It makes me feel insecure.””I don’t want them to think less of me.”

These are all signs that women face a higher level of social stigma, scrutiny, pressure, and even shame around money and financial management. The same financial attitudes and behaviors that men might feel comfortable sharing can often feel like a burden or a source of guilt to women.

3. Women are more likely to feel financially disadvantaged — but men don’t agree

Along with the gender pay gap and subtle-but-insidious social conditioning, women also face other financial challenges. Women tend to save less money for retirement, because they earn less than men do and their careers are more likely to be interrupted by unpaid caregiving. Even though women have made big progress in their educational attainment and earning power, there is still a significant disconnect in how men and women view their financial opportunities.

Men and women disagree on whether the playing field is level. The survey from Wells Fargo and The FQ found that 48% of women believe that men have more opportunities to be financially successful (only 39% of men felt this way). Only 44% of women believe that men and women have the same opportunities (compared to 52% of men).

Bottom line

Personal finances can be complex. Along with the simple math of numbers in the bank, everyone brings emotional, cultural, and psychological baggage to their financial lives.

Whether you’re a man or a woman, it’s important for all of us to break through the stigma and shame around money. Everyone deserves to feel confident about their personal finances. Talk to friends and financial professionals about the “secret numbers” of your financial life, and you’ll be more likely to build a foundation of financial wellness.

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.Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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