Money Management

One simple step could pave the way to added savings. Read on to see what it is. [[{“value”:”

For some people, January is a happy time from a financial standpoint. That’s because their paychecks go up once their annual raise has come through.

But once your raise arrives each year, a really smart thing to do is set up an automatic transfer to your savings account so that your extra money lands there automatically. And if you didn’t make that move in January, it’s certainly not too late to make it in February.

The importance of automating savings

A big reason so many people struggle with savings is that they spend their money during the month and hope that by the end of it, they’ll have some cash left over. But when you take that approach, you often set yourself up to fail.

That’s because you’re apt to be tempted by different purchases during the month. And while giving in is the natural thing to do, it’s also the thing that could be hurting your savings goals.

That’s why automating your savings is a better bet. If you arrange for some amount of money to leave your checking account each month and land in your savings account, you may be more likely to stay on track.

Now the reason it’s a good idea to set up an automatic bank transfer at the start of the year is that typically, that’s when raises come in. And it’s smart to send your raise to savings before you get used to having the extra money available.

But at this point, we’re still early in the year. So it’s definitely not too late to send your raise into savings if you can afford to do so.

Of course, not everyone gets a raise. So if you’re in that boat, you may find it more difficult to part with a portion of your paycheck. But if you’re able to automatically transfer even a tiny amount — say, $20 or $25 a month — it could go a long way in the course of a year.

Prioritize your savings if your emergency fund isn’t complete

It’s one thing to automate your savings to meet a goal like buying a new car or purchasing new furniture. But if you don’t have a complete emergency fund, then it’s especially important to put your savings on autopilot. Without a solid emergency fund, you might instantly land in debt the moment an unplanned expense arises.

Of course, you wouldn’t be alone there. Recent data from SecureSave finds that 63% of Americans are not able to cover an unplanned $500 expense from savings. But the reality is that anyone in that boat is extremely vulnerable to taking on costly debt, and that’s not where you want to be.

At a minimum, you should aim for enough emergency savings to cover three months of essential bills. If you’re not close yet, don’t panic. Having some savings is better than having none.

But still, in that situation, it’s really important to get yourself on a solid savings path. And automating your savings could be your ticket to doing just that.

So if you didn’t take that step in January, take it now. The sooner you do, the sooner you can improve your financial situation in a very meaningful way.

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Are you thinking of booking an incredible cruise deal? Don’t forget to review the added fees. Find out what extra costs could creep up on your next cruise. [[{“value”:”

Cruising might be for you if you want to check off multiple travel destinations during your next vacation and like having a pre-planned itinerary. A cruise may also be well within your budget even if you’re working hard to improve your finances.

Booking a cruise deal is an excellent way to experience the cruising lifestyle without draining your bank account. But there’s one surprise to watch out for before booking a discount cruise. Find out what you need to consider before you set sail.

Research all cruise costs

Cruises offer a value-packed way to vacation, and cruise deals can help you save big. But before booking a cruise, be sure you understand all the costs involved so there are no expensive surprises. The advertised price for a cruise is likely different from what you’ll end up paying.

There may be extra fees, some of which can be avoided and some that you can’t. We’ll outline some extra costs below so you can enjoy your trip without financial stress.

Taxes and port fees

Taxes and port fees impact all passengers. Many cruise lines advertise the price of their cruises exclusive of these fees. If they’re not included in the advertised cruise prices, you’ll see them tacked on to your bill during the booking process. Don’t be caught off guard.

Excursions

You’ll want to budget for excursions unless you’re booking a luxury or specialty cruise that includes free excursions. These are activities and experiences that you can take part in while at port. You’re not required to book shore excursions, but they can add to your travel experience. You’ll want to review options and check prices before your trip to plan accordingly.

Laundry

Laundry costs on a cruise are avoidable if you pack enough clothing. But if you’re taking a lengthy cruise adventure, you’ll likely want to prepare for this additional cost. Cruise ships offer professional laundry service, which can come at a steep price. But most cruise ships have self-service laundry facilities, which can be a more affordable way to wash and dry your clothes.

Drinks

Drinks are another expense that can make a discount cruise more expensive than anticipated. Cruises provide basic beverages like water, coffee, and tea for free. But if you want anything else, like specialty coffees, alcoholic beverages, and sometimes even just soda, you’ll need to pay up.

If you plan to drink a lot of booze during the cruise, you’ll likely want to buy an alcoholic drink package. You should know that when buying a drink package, you’ll be charged a per-day fee and must pay for each day of the cruise — whether you drink or not. You can save some money by booking these packages before you set sail. If you delay, you’ll pay more.

Internet access

You’ll likely need to pay for internet access if you want to get online while onboard. Most cruise lines charge wifi fees and offer multiple package options. The best way to keep your cruise affordable is to avoid this extra expense altogether by unplugging during your travels.

Gratuities

It would also be wise to research the cruise line’s gratuity policy ahead of your trip. Some cruise lines include gratuity in the advertised price, but others don’t. Many companies charge each passenger a daily fee to cover these costs. A gratuity charge of $15 or more per day is common. You can charge these fees to your credit card during the booking process or pay later.

If you don’t pre-pay, your onboard account will be billed daily throughout the cruise. Keep in mind that some cruisers may be required to pay additional gratuities while onboard. You’ll likely be charged an automatic gratuity charge if you book extra services like spa treatments.

Avoid surprise cruise costs

Extra fees can add up fast. Cruise discounts exist and these deals offer a great way to pay less for your next adventure. But make sure you understand how much you’ll pay for your ideal cruise experience before setting sail. Otherwise, your wallet may be negatively impacted. Check out our personal finance resources for additional financial tips.

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Could falling behind on rent damage your credit? Read on to find out. [[{“value”:”

There may come a time when you find that you’re unable to pay your rent. Maybe you just lost your job and don’t have cash in a savings account to fall back on. Or maybe you had to fix your car out of nowhere, and that drained your bank account.

Often, if you need a little extra time to make a rent payment, it’s not such a big deal. First of all, many lease agreements include a grace period that gives you built-in leeway for paying your rent a bit after it’s due.

But if not, and you’re a tenant with a history of paying on time, a talk with your landlord might buy you some more wiggle room. Your landlord might, for example, agree to give you an extra few weeks to hand over your rent check if you explain that you recently experienced a financial crisis.

But as a general rule, a late rent payment has the potential to hurt you financially. So it’s important to address the issue with your landlord rather than simply be tardy.

Your credit score may or may not take a hit

If you rent goes unpaid after it’s due for 30 days or more, your landlord might choose to report that late payment to the credit bureaus. From there, your credit score has the potential to drop.

Similarly, if you’re very late on your rent, your landlord might choose to turn the matter over to a collection agency. From there, you may be even more likely to have your delinquent payment reported.

In some cases, though, your landlord might choose not to take action for a single late rent payment — even if you’re very late on that bill. Ultimately, landlords can choose to report late payments or not, so it’s possible that if you’re late, you might get lucky.

If you talk to your landlord about why your payment is late, and it’s the first time, there’s a good chance that it won’t negatively affect your credit score. Chances are, if you’ve been paying your rent on time and there’s a one-off situation that prevents you from doing that one month, your landlord isn’t going to be a jerk about it and report you right away.

Remember, if there’s still time left on your lease, it’s in your landlord’s best interest to maintain a good relationship with you. So your landlord might give you some grace not just out of the goodness of their heart, but for the sake of having things run smoothly for the duration of your lease agreement.

You might suffer financially in other ways

A drop in your credit score might make it difficult to borrow money the next time you need to, whether it’s in the form of a loan or a new credit card. But even if a late rent payment doesn’t result in credit score damage, it might hurt you financially in a different way.

First, some lease agreements call for financial penalties when rent is paid after its due date and grace period. So you could be looking at additional fees.

Secondly, if you’re late with your rent payments consistently, your landlord is unlikely to renew your lease. So you could end up losing your home. Plus, when you’re applying for a new rental, it’s common for landlords to contact your former landlords as a reference. If you try to get a new place and you have a history of late rent payments, you may find that you’re denied a rental because your old landlords are quick to report your history of being late.

To be clear, this won’t necessarily happen if you’re late one time. Rather, it’s a pattern of lateness that’s more likely to get you into trouble.

All told, a single late rent payment may not do any damage to your credit score if it isn’t reported. Being upfront with your landlord might prevent that news from hitting your credit report, so get in touch once you realize you’re not going to be able to send in that check on time.

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Is your wallet feeling a bit lighter right now than you expect? It might be one of these three money traps to blame. [[{“value”:”

When it comes to money, we all have to have it, and we all have our blind spots, too. There are so many money mistakes I make in a month that it’s almost embarrassing, but if I’m making money errors, I know other people are too — and it’s about time we talked about them!

If you open your wallet and moths fly out, consider these little-known money traps and ask yourself if they’re having an effect on your cash flow.

1. Considering your budget one and done

If you’re just getting started with budgeting, or you’ve been budgeting a while and hate it, you may not realize that you’re not giving your budget the full love and attention it deserves. It’s easy to just make a budget and put it aside and never look at it again, no matter how much time has passed or how much your life and the economy has changed.

Instead, you need to treat your budget like it’s dynamic and subject to change. By keeping tabs on all your spending, tracking all your receipts, seeing what categories are getting higher, or lower, and where you might be able to rein things in a bit, you’re treating your budget like a living thing, and catching problems early before they get out of hand.

For example, Americans frequently fall into the subscription trap. It’s easy to do. You see a free trial for Hulu or HBO and you sign up, telling yourself you’ll cancel before the trial is over. But maybe you have a show that you really like, and you decide to keep it. And then you do it again and again, and before you know it, you’ve spent an average of $200 per month in subscriptions alone and don’t even realize it.

By monitoring your transactions, comparing them to your budget, and continuously updating that little contract with yourself to reflect the realities of living, you’ll avoid a lot of money pitfalls all at once.

2. Impulse. Spending.

Although impulse spending is down this year, it’s still an enormous problem in the United States. On average, people spend $151 per month on impulse purchases. That can really eat into your paycheck!

For people like me, who absolutely love to find a new snack at the market, or delight in a small purchase from an ad on social media, it’s extra important to stick to your spending plan. If you’re at the market, have a list and don’t deviate from it. If you’re at home on your computer or your phone, put that impulse buy in a shopping cart and let it sit for a week before you go back to it.

Curbing impulse spending last year really changed my entire personal finance landscape, no lies. I’ve been able to start saving again, even though my budget has been taxed by other forces that are a lot less fun than impulse buying a cute pair of shoes from Facebook.

3. Borrowing for emergencies when you have savings

Many Americans have no savings to begin with, which is understandable given all the factors that are in the way of some people’s financial health. But for those who do, many choose to not spend the money they have, even in times of massive trouble, and that’s a problem for their wallets.

What are Americans doing instead of using emergency savings for emergencies? They’re putting their problems on credit cards, which creates a whole new problem for them, frankly.

According to a recent survey, only 22% of Americans said they had no emergency savings whatsoever, but 56% said they’d not use their savings accounts for emergencies over $1,000. Instead, almost half of those non-savings users would borrow it from a lender: 21% would pay from a credit card, 4% would take out a personal loan. Another 10% would borrow from friends or family.

If you’re in the borrowing for emergencies category, that can cost you a load of money. How much will depend on your credit card or loan rate. If you have the savings to pay for a problem, there are few worlds in which your savings account interest rate is higher than your credit card interest.

Instead of making payments to the bank, treat that expense like you would if it was owed to someone else and make payments back to your savings account monthly. You’ll come out way ahead when compounding interest isn’t beating down the door.

Money traps will drain you dry

Rooting out waste in your household budget and controlling your spending is no fun. Trust me, I know all about it. It’s dullsville, man. But, if you hope to ever have any savings for fun things, or to retire one day, it’s important to watch out for these kinds of pitfalls.

We’re all drowning in a sea of commercialism, and it’s easy to just throw caution to the wind and try to wing it, but it’s more important than ever before that we don’t. If we buy every bauble, subscribe to every channel, and spend money we don’t have to on emergencies, well, it all adds up.

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I pay more than double the minimum amount I’d have to pay for auto insurance. Find out why — and see why you might want to do the same. [[{“value”:”

When I bought my auto insurance policy, I could have paid somewhere around $1,000 to $1,500 annually for coverage depending on the insurer that I chose. Instead, I pay close to four times that amount.

That’s a lot of extra money. But I made the choice to pay that extra to my auto insurer voluntarily and happily. Here’s why.

There’s a very simple reason why I pay much more for auto insurance than I’d have to

The reason I’ve opted to pay a lot more than the minimum price for auto insurance is because doing so gives me much more than the minimum amount of coverage.

See, most states only mandate liability coverage, which pays for losses for others, and sometimes personal injury protection (PIP) coverage that pays for minor medical bills and lost wages for the policyholder in any accident regardless of who was to blame. Many states set pretty low limits for the amount of liability coverage, perhaps mandating only that drivers buy $20,000 per person and $40,000 per accident in liability protection.

Buying only this minimum coverage is relatively cheap. In 2023, the average auto insurance premium across the United States for minimum auto insurance came in at just $787. But a driver with only minimum coverage is on their own for most losses, such as damage to their own vehicle as well as injury-related damages above the low policy minimums.

I don’t want to potentially get stuck having to pay for almost any accident losses out of my own pocket. So, I prefer to pay a lot more for full coverage. The nationwide average for the standard coverage options is $3,296, but drivers get a lot more for their money.

Here’s why more than minimum coverage is important

For me, and for most drivers, paying for more auto insurance coverage is well worth it. A full coverage policy will include not just liability coverage but typically also:

Collision coverage to pay for the policyholder’s own vehicle damages in the event of a crash another person’s insurance isn’t paying for.Comprehensive coverage to pay for other non-crash-related damages to the policyholder’s vehicle, such as from car theft or vandalism.Gap insurance to pay off the remaining balance on any auto loan that’s due after an insurer pays out the fair market value of a stolen or totaled car.Uninsured/underinsured motorist coverage to pay for a policyholder’s losses caused by a driver without any insurance or with too little insurance.

Buying these added protections could save drivers tens of thousands of dollars if their own car is damaged — especially beyond repair. With the average cost of new cars set at close to $50,000, very few people would be able to afford to just go out and replace their car after a crash without insurance help.

Setting policy limits higher — such as by getting $250,000 per person and $500,000 per accident in bodily injury liability — could also save drivers from being personally sued for extra damages insurance doesn’t cover beyond the standard low limits.

I want the added protection for my assets that comes with setting higher limits and paying more for extra coverage — even though my insurance costs are higher. The extra premiums give me peace of mind that a fender bender won’t destroy my finances for years to come.

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It wasn’t easy to save money in 2023. But read on to see what the typical American managed to sock away. [[{“value”:”

Saving money isn’t an easy thing to do in general. And it’s certainly not easy at a time when living costs are still higher than usual.

Such was the case in 2023. Though inflation cooled nicely compared to 2022, many consumers still found themselves racking up larger credit card bills when covering their everyday expenses.

Still, Americans managed to save nicely in 2023, according to New York Life’s latest Wealth Watch survey. The typical U.S. adult socked away $6,138.06. And while it’s worth noting that Americans were targeting an average savings total of $7,435.57 for 2023, $6,138.06 is still pretty darn impressive.

Last year’s average savings amount also surpassed the $5,011 Americans saved on average in 2022. But given that inflation was much more rampant in 2022 than in 2023, that’s not particularly surprising.

If your savings didn’t get a boost in 2023, though, that’s nothing to be ashamed of. But if it’s also something you aren’t happy with, consider these changes to your savings strategy for 2024.

1. Automate monthly savings contributions

A big reason so many people struggle to save is that they spend their money during the month and figure they’ll sock away whatever’s left at the end of the month. The problem with this approach is that often, there just isn’t anything left.

That’s why automating contributions to your savings account is both important and effective. If you transfer money over at the start of the month and work backward from there, you’ll be saving something off the bat. And if you’re tempted to spend on extra things during the month, well, that won’t be an option, since your money will have already left your checking account.

To be clear, you don’t have to commit to a large monthly transfer. You can start with $25 if that’s all you feel you can swing and see how it goes. But it’s important to start somewhere.

2. Join the gig economy

Cutting back on spending could lead to more savings, but it’s a hard thing to do. If you’d rather not give up too many things you love, get a second job.

The gig economy makes it fairly easy to boost your income because so many side jobs are flexible. You could drive a couple of hours a week for a ride-hailing service, do some grocery delivery runs, or become a freelance web designer or writer if you have the skills and take on projects with flexible deadlines. The extra money you earn could help you grow your savings nicely.

3. Practice mindful spending

You probably spend money on non-essential things all the time. And that’s OK — everyone does. But if you’re eager to boost your savings, try to put more thought into the things you’re buying.

One good rule when it comes to physical purchases (as opposed to paying for things like a meal at a restaurant) is to wait 24 hours from the time you’re tempted to make a purchase to when you actually make it. If, during that window, nothing changes, and you end up wanting the item in question just as much, buy it. If not, skip it and bank the money you would’ve otherwise spent.

Americans saved pretty nicely in 2023. But if it wasn’t your year to boost your savings, regroup and aim for solid results in 2024.

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