Money Management

It’s certainly possible for CD rates to go even higher this year, but it isn’t the most likely scenario. Read on to find out what is. [[{“value”:”

Certificate of deposit (CD) rates are at their highest level in years. It wasn’t that long ago that a 5.00% yield on a 1-year or 2-year CD would have seemed ridiculous, but now it’s rather easy to find. Today’s CD rates are due to the Federal Reserve’s interest rate hikes and the emergence of online banking.

Having said that, since CD rates have risen rather steadily for two years, many savers are naturally wondering whether they could continue to go higher. Could we see 6.00% CD yields before the end of 2024? How about 7.00%? Here’s what we know (and don’t know).

The current state of CD rates

I mentioned that CD rates are the highest they’ve been in years, but here’s some context:

The top 1-year CDs on our radar have APYs as high as 5.50% as of Feb. 7, and 18-month CDs have similar rates.You can get a 2-year CD from a reputable, FDIC-insured bank with an APY as high as 4.75%.5-year CD yields are a bit lower right now, but some excellent banks are offering 5-year CDs with rates as high as 4.30%.

Will CD rates go higher?

Of course, nobody has a crystal ball that tells us what CD rates will do. And the rates paid by CDs don’t have a direct relationship with benchmark interest rates like the federal funds rate.

Having said that, CD rates tend to move in the same direction as the federal funds rate, which is the rate that is typically referred to when you hear that the “Fed raised rates again.” And virtually all experts expect the Fed to start lowering rates this year.

To be sure, there is some disagreement when it comes to how soon rate cuts will start and how often they will happen. The latest projections of the policy-making members of the Federal Reserve call for three 25 basis point (0.25%) rate cuts this year. And according to the CME FedWatch tool, which essentially tells us what investors expect, the median expectation is for five 25 basis point (0.25%) cuts this year.

However, the main point is that interest rates are widely expected to trend downward this year. And CD yields are likely to decline as well.

What it means to you

The short answer to the question “Could CD rates go higher in 2024?” is yes. If inflation were to unexpectedly rise, for example, the Fed might be forced to raise benchmark interest rates even further, which would likely lead to higher CD yields. And although virtually all experts predict that interest rates will fall as 2024 goes on, the experts don’t exactly have a perfect track record. After all, can you guess how many notable experts were calling for more than 500 basis points (5%) of Fed rate hikes at the beginning of 2022?

Having said all that, while it’s certainly possible for CD rates to go even higher, I wouldn’t recommend betting on it or leaving money on the sidelines in a savings account with the hope of getting an even better entry point into a CD. While the magnitude and speed are up for debate, the most likely scenario (by far) is that we’ll see lower interest rates before the end of the year. So if you’re thinking about putting money into a CD, now might be the right time to lock in a high rate.

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Finding a grocery store you enjoy can be tough, especially when prices are high. Here are three of the most popular grocery chains in the U.S. [[{“value”:”

Given the current price of groceries, it’s no surprise that Americans have flocked to grocery chains known for low(ish) prices. After all, every dollar saved is a dollar available to pay another bill or tuck away in a high-yield savings account. We recently looked into which grocery store chains are most popular in the U.S. and what makes them popular. What we found is that low prices aren’t the only thing shoppers are drawn to.

1. Walmart

Walmart has the greatest number of stores in the U.S. and its territories (4,622). As expected, the No. 1 reason Walmart shoppers say they visited Walmart — in person or online — is because they are attracted to Walmart’s low prices.

Shopper’s tip: Due to the quantities of merchandise it buys, Walmart can often offer the lowest price on everyday items. However, that’s not always the case. Before heading out (or logging onto Walmart.com), download an app like Flipp. Like other price comparison apps, Flipp allows you to type in what you’re looking for and quickly identify where the best price can be found in your area. Sometimes, Walmart will offer the lowest price, and sometimes, it will be a nearby retailer.

2. Albertsons

With a little over 1,800 Albertsons stores in the U.S, it’s less than half the size of Walmart. Still, it’s one of the most popular retailers in the country. According to the National Retail Federation (NRF), corporate leadership believes Albertsons’ faithful customer base can be traced to customers’ relationships with store employees. It’s not uncommon for an Albertsons customer to say they’ve been shopping with the retailer for decades. In that time, it’s natural that they’ve come to know and feel comfortable with store employees.

Shopper’s tip: While developing a relationship with store employees may seem like a frivolous perk, it may one day benefit you. Let’s say you have a specific medical condition requiring a new, strict diet. It doesn’t appear the store has everything you need. A familiarity with store employees means knowing which workers you’re most comfortable approaching for help. Further, an employee who knows you is more likely to go out of their way to help you track down what you’re looking for.

3. Publix

In 2023, for the sixth year in a row, Publix was ranked No. 1 in Newsweek’s “America’s Best Customer Service 2023” list, supermarket category. And this year, Publix ranked No. 49 on Fortune’s “World’s Most Admired Companies.” It’s a list Publix has been named to every year since 1996.

As we looked for why Publix rates so well, one need look no further than online customer comments. There were compliments regarding store cleanliness, top-notch bakeries, and friendly employees.

Shopper’s tip: No one wants to feel as though they need to take out a second mortgage to buy groceries. And shoppers should not have to trade customer service, clean, well-organized stores, or niceties like coffee stations for affordable prices. The goal is to find stores that we actually want to spend time in. The longer we’re willing to stay in a store, the more time we have to compare prices and make good purchase decisions.

There are plenty of reasons why the price of groceries remains high years after COVID-19 began. But elevated prices shouldn’t mean we have to lower our shopping standards or personal finance goals.

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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.Dana George has positions in Walmart. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.

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Sticking to a budget can be really difficult if you’re constantly depriving yourself. Try this technique that’s a lot more likely to be effective. [[{“value”:”

Budgeting is something most people don’t really like doing — and so they don’t do it. In fact, an older Gallup study found only 1 in 3 households actually had a detailed budget. And even for the minority who do make a plan for their spending, that plan is not necessarily always going to lead to financial success. That’s because close to 85% of budgeters indicated they’ve spent more than the limits they set for themselves.

As explained below, there’s actually some good reasons why most people have such a hard time sticking to a budget in order to increase their savings account balance — like the fact that a strict budget can feel like a deprivation diet that leads to binge eating, and the fact that constantly depriving yourself can be really hard to stick to.

Fortunately, there’s a better alternative to reduce what you spend than trying to rule over your finances with an iron fist and prevent yourself from ever doing anything fun with your money.

Cutting the fun stuff from your budget isn’t going to work in the long term

If you’re hoping to save more money for financial goals (either in a savings account or by investing in a brokerage firm), the obvious solution may seem to be making budget cuts by reducing “unnecessary” spending.

Unfortunately, the kinds of spending usually classified as “unnecessary” that most people try to reduce are often the things that bring joy to life. For example, you might decide that you’re spending too much on dining out or your daily latte or buying shoes. So, to put more in savings, you might commit to making coffee at home or eating out only on rare occasions or skipping the shoe purchases altogether.

By doing this, you end up setting yourself up for failure because you’re going to be continually forcing yourself to give up everything that you want, all the time, potentially for months on end. It’s kind of like going on an all-salad diet. Eventually (and it probably won’t take long), you’re going to cave and get a big dish of ice cream or eat that cookie.

The problem is, if you’re basing your ability to succeed in savings on giving up the cookies, this can be a huge problem that makes it a lot harder to succeed in managing your money.

Instead of stripping the fun stuff from your budget, try this

Rather than trying to save more and spend less by living on a deprivation budget and cutting out everything you do that’s fun, it’s going to be a whole lot easier to keep your fixed expenses low. These are the expenses you have to pay every single month on a recurring basis. They include bills like your rent or mortgage payment and your car payment.

You can reduce the amount you’re spending on these expenses by making one single decision just one time. For example, you could decide to buy a used car instead of a new one. With the average monthly payment for a new car coming in at $736 per month in the third quarter of 2023 compared with an average payment of $567 for a used car, this choice alone could save you $169 a month — the equivalent of giving up around 46 days worth of small lattes.

Now, what sounds easier to you? Giving up the dream of a new car one time at the car lot or passing up the morning coffee that makes you happy every single morning for life?

Obviously, if you already have a house or a car, it can be a little harder to do this. But it may be worth finding a roommate to cut that housing cost or selling the new vehicle for a cheaper new one. And going forward, you’ll want to be sure to do all you can to keep those fixed costs down since doing that is a lot easier than stripping every single fun thing from your budget to make saving possible.

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

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Building a home can be exciting, but can also come with a lot of challenges that I learned the hard way. Read on to learn about three of them. [[{“value”:”

Building a house is a dream for many, but for me, it’s been a nearly two-year rollercoaster of surprises, challenges, and learning. As I reflect on this journey, I realize there are several key insights and strategies I wish I’d known from the start that could have helped me manage my personal finances through the process. These nuggets of wisdom could have saved me time, money, and a few gray hairs. Here are three things I wish I knew before building a home that will hopefully help anyone embarking on this ambitious path.

Add at least 20% to your initial budget

The most shocking lesson I learned was about budgeting. It’s easy to underestimate the costs involved in building a house. My advice? Take your initial budget and add an extra 20%. This isn’t just a safety net; it’s a necessity. During our build, we faced numerous unforeseen expenses. From last-minute changes in materials to unexpected labor costs, these additional charges can accumulate rapidly. We had to dig into our own pockets because our construction loan only covered a predetermined amount. This kind of financial strain can be stressful, so preparing a more expansive budget from the start is vital.

Additionally, it’s essential to be meticulous in your financial planning. Keep track of every expense, no matter how small. Regularly review your spending against your budget to ensure you’re on track. This level of vigilance can help prevent financial blowouts and gives you a clearer picture of where your money is going. It also helped us when discussing changes with the contractor, as we had data to point to with overages.

Incentivize your contractor

We learned this the hard way. Our contractor, initially enthusiastic, eventually lost momentum. In hindsight, we should have structured the contract with clear incentives for meeting milestones. This isn’t about mistrust; it’s about aligning interests and keeping the project on track. If the contractor knows they’ll benefit from timely completion or high-quality work, they’re more likely to stay engaged and efficient.

One of our biggest challenges was keeping our contractor motivated and on schedule. For months, there was little to no progress. In hindsight, including incentives in the contract for meeting certain milestones could have made a significant difference. These incentives could be structured as bonuses for early completion or penalties for delays.

Make the contract state who is responsible for mistakes

You know, when you’re building a house, you’d think that a small error in the plans wouldn’t be a big deal. But let me tell you, it can lead to a world of trouble. We learned this firsthand with our window-sizing ordeal. It all started with a simple mistake by our draftsman, who got the window measurements wrong. It seemed like a minor hiccup, but it snowballed into a major issue.

Here’s the catch: our contract didn’t say anything about who’s responsible if something like this happens. We just assumed that the contractor would double-check everything before ordering. Well, it turns out that wasn’t the case. The contractor went ahead with the draftsman’s plans and ordered the windows, and by the time we realized the error, it was too late.

So there we were, stuck with a bunch of windows that were the wrong size. And since they were custom-ordered, returning them wasn’t an option. Guess who had to foot the bill for this mistake? Yep, us. It was a tough pill to swallow, especially considering it was an error we hadn’t even made.

This whole fiasco taught us a valuable lesson. When you’re building a house, you’ve got to be on top of every little detail. You can’t just assume that others involved will catch mistakes. It’s crucial to actively participate, ask questions, and have an expert double-check the plans.

Also, make sure your contract is crystal clear about this kind of stuff. Who checks what, who’s responsible for errors — get it all in writing. Trust me, it’s worth the extra effort to avoid the kind of headache we went through.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*

They just revealed what they believe are the 10 best stocks for investors to buy right now…

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*Stock Advisor returns as of February 12, 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.The Motley Fool has a disclosure policy.

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