Money Management

Groceries are expensive. Read on for ways to save. [[{“value”:”

The biggest expense in my household is currently housing. But second to that is food.

Grocery prices were only up 1.3% on an annual basis as of December 2023, according to that month’s Consumer Price Index. Yet the high cost of food has been wreaking havoc on a lot of people’s personal finances — mine included.

That said, I partially blame myself for that. See, I’m not always so careful when it comes to buying food. But I’m trying to do better by avoiding these mistakes that I’ve made in the past. And you may want to steer clear of these blunders so you can save money on groceries.

1. Not loading digital coupons to your cart

The other week, I was at my local supermarket when I noticed that canned tuna was on sale big time. When I went to check out, I noticed I didn’t get the sale price. So off I went to customer service, only to find out that the problem was me. I hadn’t bothered to load the digital coupon for the sale onto my store savings card, which explains why the discount didn’t come through.

Now thankfully, I check my receipts for accuracy when I shop for groceries, so I noticed the error. And the customer service person I worked with was good enough to give me the discount.

But do yourself a favor and always do a quick scan of the digital coupons your local supermarket is offering before you shop for food. And then load those coupons onto your card — it takes under a minute. That way, you won’t miss out on sales.

2. Shopping with your kids

I totally get that for some people, it’s impossible to go to the supermarket kid-free. But if you’re able to do so — maybe at night, once your partner gets home from work — it’s worth it. Unless your kids are super well-behaved and desire nothing, when you shop with kids, you’re likely to be distracted and conned into buying extra food items.

The last time I had to drag my daughters to the grocery store with me, they started bickering over something silly. I was so focused on them — and not on what I was buying — that I purchased the wrong yogurt flavor for my son.

Fast forward a few weeks, and those yogurts are still sitting in my fridge, uneaten, because my son isn’t a fan. I’ll probably suck it up and eat them even though I’m not a fan either to avoid wasting the $5 I spent.

What’s more, even when my kids are perfectly well-behaved at the store, they almost always want something — usually of the junk food variety, though not always. Not so long ago, my 9-year-old requested fresh lemons. My first thought was, “Well, better that than junk food,” only junk food might’ve been cheaper.

If it’s challenging to find a time to shop without your kids, try enlisting the help of a neighborhood friend to do a swap — you watch their kids for an hour on a random Wednesday so they can run errands, and then have them do the same for you. I used to do that before my kids were old enough to attend school, since my husband worked long hours outside the house.

3. Forgetting it’s not just stores like Costco that sell things in bulk

Many people join Costco for savings on bulk purchases. But you don’t need a membership to a warehouse club store to benefit from bulk discounts. If there’s an item you buy at your local supermarket, look around, or ask around, to see if there’s a bulk version right there.

A while ago, I realized that my local supermarket had a section at the end of the cereal aisle with bulk boxes that cost less per ounce than the standard-sized ones. Do you know how many times I overpaid for cereal (which, in my opinion, is ridiculously overpriced to begin with) due to not realizing that small section existed? If I had a dollar for every time I made that mistake, I’d have enough to buy…more cereal.

Nobody’s perfect. And even when you shop for groceries regularly, you can still make mistakes. But do your very best to stop making these at a time when food costs are still up. Your wallet will thank you.

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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 positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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If big CD rates have yielded generous returns for you, get ready to give Uncle Sam his cut. Read on to learn how CDs are taxed. [[{“value”:”

Certificates of deposit (CDs) are a low-risk investment that give you a guaranteed rate of return for a specific term, like 12 months. Last year, for the first time in over a generation, the best CD rates exceeded 5%, with some even going higher than 6%. And while earning 5% on your savings can yield a decent chunk of change, don’t count on all of it staying within your possession.

Like other interest-bearing accounts, CD interest totaling $10 or more is taxable and must be reported on your tax return. The rate from your tax bracket is the same rate used to tax your CD earnings (in 2023, they range from 10% to 37%). So, if you earned $2,000 in CD interest and your tax rate was 22%, you’d pay $440 in taxes. Note: You might also have to pay state and local taxes on CD earnings, too.

How do taxes work for long-term CDs?

The interest you earn in long-term CDs, or those with terms longer than one year, is taxed in the year it’s accrued at your applicable tax rate. This applies even if you don’t withdraw the interest from your CD account.

For example, let’s say you took out a 3-year CD on Sept. 30, 2023, and it accrues interest monthly. For 2023, you would pay taxes for three months of accrued interest (October, November, and December). In 2024 and 2025, you would pay taxes on interest accrued for the whole year, and, in 2026, you’d pay taxes on interest accrued up until your CD’s maturity date. And yes — you would pay these taxes even if your bank doesn’t let you withdraw funds from your account.

How do taxes work for short-term CDs?

For short-term CDs (those with terms of 12 months or less), you’ll pay taxes in the year the CD matures. The exception is 12-month CDs, which could technically span two calendar years. In this case, if your 12-month CD accrued interest monthly or quarterly, you would pay taxes in both years.

What about early withdrawal penalties?

Most standard CDs charge penalties when you cash in early. Usually, the penalty is equal to a period of interest, like six months’ worth, and you’ll pay it regardless of how much interest you actually earned.

Much like tax loss harvesting with stock investments, you can deduct early withdrawal penalties from your taxes. For instance, let’s say you deposited $10,000 in a 6-month CD with a 5.50% APY and an early withdrawal penalty worth three months of interest. You earn one month’s worth of interest (about $45.83) before breaking your CD, thus incurring the penalty ($137.50). Even though you technically only paid $91.67 (the penalty minus the interest you earned), you can deduct the full $137.50 from your taxes.

Is there any way to avoid paying taxes on CD interest?

The only way to avoid paying taxes on CD interest is to house your CD within a tax shelter, like an IRA or 401(k). Otherwise, you likely receive a 1099-INT from the financial institution that issued your CD, which you’ll then report to the IRS.

Most tax software can help you fill out a 1099-INT, which reports how much income you earned throughout the year, including CDs, savings accounts, and money market accounts, among others. The instructions are easy to follow, but if you’re ever in doubt, don’t hesitate to reach out to a tax professional. You don’t want to wind up owing money later, or worse — having your taxes audited.

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Buying IKEA furniture is a great way to stretch your budget further. But don’t miss out on this benefit if you already have some. Find out more. [[{“value”:”

Life is expensive, so taking advantage of any opportunity to save money is wise. Many people shop at IKEA because the retailer sells furniture at an affordable price. For those on a tight budget, it can be an excellent place to get furniture and home accessories. If you have existing IKEA furniture or plan to shop there soon, there’s one free perk you should know about.

Order complimentary small replacement parts

Anyone who has bought furniture from IKEA knows the most challenging part is building what you buy. One of the ways IKEA keeps its prices so low is its flat, compact packaging.

All dresser, side table, or bedframe pieces are tucked away in a compact, flat box. You’ll be responsible for building the final product. While the assembly process can be an adventure, you’ll feel good because you still have money in the bank — thanks to the low price you scored.

IKEA includes the tools and parts needed to assemble your furniture in the box. But there may come a day when you need to replace a part due to normal wear and tear. You can order spare replacement parts from IKEA for free. This is excellent news for your finances.

On its website, the retailer notes that you can order small spare parts like hinges, knobs, and screws for free. IKEA will deliver the parts to your home. If you need larger spare parts, these come at a cost. You can verify with your local store to see if your needed item is in stock.

To order a small replacement part, visit the IKEA website. You can search by part number to start the order process. If you don’t know the part number, search for the product and look at the assembly instructions document to get the necessary information. Remember this helpful hack if you need to repair your existing IKEA furniture.

Three tips to save more money at IKEA

If you’re a big fan of IKEA and appreciate a great deal, I have some tips that could help you save money the next time you shop for furniture or home accessories:

Join IKEA Family: To access exclusive discounts, join the retailer’s free loyalty program, IKEA Family. Some items are sold at a lower price to members. You’ll also earn rewards when you shop and can sip on a free coffee or tea when shopping in-store.

Pay attention to current deals: IKEA advertises current deals and promotions on its website. You can find savings opportunities under the IKEA offers section. Keep alert to these discount opportunities, so you don’t miss out. By timing your purchases, you can save money.

Shop as-is finds: Besides selling new furniture, IKEA sells as-is items. You can shop gently used items online through IKEA’s as-is online store. After ordering an as-is item, you can pick it up at your local store. You can also find as-is furniture at your local store.

Don’t ignore additional savings opportunities. Shopping tips like these can help you avoid a costly credit card bill. Check out our personal finance resources for more ways to save money.

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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.*

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I can afford to replace my older car if I really want to. But read on to see why I intend to drive my minivan into the ground. [[{“value”:”

In 2014, when I found out I was having twins, I knew an upgrade to a minivan was inevitable. I had a toddler at the time in a car seat, and it’s basically impossible to fit three bulky car seats in a single row when two of them are infant ones. As such, I knew I needed a car with a third seating row, and a minivan fit the bill.

After doing some research, I decided to finance a 2014 Honda Odyssey Touring. And although the car has served me pretty well through the years, at this point, I’m getting sick of it.

For one thing, my car looks like a 10-year-old car. It’s got more scratches and dings than I can count. And while I could pay for a detailing service, it’s not worth the financial outlay for a vehicle that old.

But aesthetics aside, the one thing that really bugs me about my minivan is that the sliding doors jam on me constantly. Imagine you’ve picked your kids up after school and are rushing to a series of activities…only you can’t leave your parking spot because your darn door won’t close. This is my life all the time.

Despite my frequent displeasure with my minivan, though, I intend to drive it for as long as possible. Here’s why.

I don’t want to borrow now, or anytime soon

These days, it’s expensive to take out a loan, whether it’s one you’re tapping your home equity for or one you’re using to buy a car. And the reason boils down to the numerous interest rate hikes the Federal Reserve introduced in 2022 and 2023 to fight inflation.

This year, the Fed is expected to start cutting rates. But even so, that’ll only make borrowing for a car (or any other purpose) moderately less expensive.

All told, I expect borrowing costs to be elevated for quite some time. If my minivan stops running and I’m forced to take out a loan at a less-than-favorable interest rate, so be it. But I can’t bring myself to take on any sort of debt when I have a car that actually runs.

I paid a lot for my car and I want to get the maximum amount of value out of it

Kelley Blue Book (KBB) puts the original MSRP of a 2014 Honda Odyssey Touring at $42,760. To be perfectly honest, I don’t remember exactly what I paid for my car. That figure sounds like it was somewhere in the ballpark, though, making my minivan the most expensive car I’ve ever owned. Because of this, I want to drive that car for as long as I can.

Some assets you own, like your home, have the potential to gain value over time. Cars, on the other hand, are known to lose value the moment you drive them off the lot.

At this point, the average price of my minivan in used form is $13,677, says KBB. Only I’d probably be looking at a lot less due to the aforementioned dinged-up condition of my car.

Either way, whatever amount I’d get for my car would be nowhere close to what I’d need to purchase a new vehicle that can accommodate my family. And it doesn’t matter whether I sell my minivan now or a few years from now — either way, I won’t get anywhere close to its original value. So the way I see it, I might as well drive it as long as possible — and put off a new car purchase, which is apt to be expensive, as long as possible.

Some people aim to upgrade their cars every few years. And if you can afford to do so, go for it. But while I’m certainly not in love with my minivan, I feel that hanging onto it until it stops running makes sense for my family’s finances.

Besides, I’m someone who, admittedly, has a hard time dipping into her savings account, which is something I’d possibly need to do to put a down payment on a car. So if I can put that off, it’s better for me mentally.

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.*

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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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Misunderstanding the rules around charitable giving can cost you. Find out how to give generously while maximizing your tax advantages. [[{“value”:”

Being generous is a double-dip of joy. You get to make someone happy to receive your support, and you get a thank-you from Uncle Sam in the form of a tax deduction. Tax deductions can lower your taxable income so you can legally pay less in taxes. You can dial your financial savvy factor up a notch or two by learning how to maximize the benefits of charitable giving.

Here are two insider tips that could help you keep more money in your pocket.

Misconception No. 1: Only large donations are significant enough to deduct

It’s true that if all you gave was $20 last year, claiming it won’t give you a big tax refund. But if you make multiple small contributions, keep track of them. Smaller amounts throughout the year can add up to significant tax savings. They can also be easier to budget for than one whopping gift.

What you can do about it

Use an app to track donations year-round. Try It’s Deductible, from Intuit. It’s a free app that’ll even track the fair market value of non-monetary items you donate. At tax time, all qualified donations count, no matter how large or small. If you take a few minutes to itemize each batch of clothing and household donations that you bring to your favorite charity, you might be astonished at the total value of your contributions by the end of the year.

Misconception No. 2: It’s best to spread your giving out equally from year to year

You might save more money by hopping on the charitable giving rollercoaster. There’s a tax strategy called bunching that allows you to maximize deductions in a single year. It works for many itemized deductions, not just charitable giving.

The way it works is that you increase your tax deductions in a single year, and then reduce them in a subsequent year, opting for the standard deduction instead.

What you can do about it

You could make two or three years’ worth of charitable contributions in a single year.

Let’s look at how bunching could affect a married couple filing jointly. In the first scenario, they spread their charitable giving out:

Here’s what the same couple might accomplish with bunching. Instead of donating a steady amount, they make two years’ worth of donations in a single tax year, and then pare their giving down to zero the following year.

Bunching would allow this couple to deduct almost $10,000 more from their taxable income over the course of two years. The dollar amount they’ll save will depend on their tax bracket.

Costly mistakes to avoid when you give to charities

In addition to learning how to strategize your giving and pay less in taxes, review these common errors. A misunderstanding could lead to a big tax bill in the future if you’re audited.

Believing there’s no limit to charitable giving deductions: Some kinds of charitable contributions are, in fact, limited.Claiming charitable giving deductions that don’t qualify: Not all money that goes to a qualified nonprofit counts as a tax deduction.Failing to keep proper records of your charitable contributions: As with all things taxes, if a question comes up, it’ll be up to you to answer it in a satisfactory manner. Create an email folder called “receipts.” Download and save your account statements. Scan or photograph paper receipts and save them in an online folder or your bookkeeping software. Documentation is your friend.

Charitable giving can be part of a savvy tax-minimizing strategy, and it’s not always straightforward or easy to understand. Once your itemized deductions start approaching the general neighborhood of the standard deduction for that year, it’s a good idea to consider hiring a tax professional. Tax preparation software can help you answer questions, too.

Where to invest $1,000 right now

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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.Kimberly Rotter has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuit. The Motley Fool has a disclosure policy.

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Cheap daycare may seem like a dream come true, but the reality is that there are big drawbacks. Here’s what to know before signing up your kids. [[{“value”:”

The average cost of daycare in the United States is so ridiculous that parents would be justified in having an epic toddler-level tantrum meltdown when they look at their bills. The average price of care in an infant center in a large county in the United States is an estimated $17,171 per year. It represents 19.3% of the median family income, which is a huge personal finance hit.

With costs so high, it’s not surprising many parents are interested in finding cheaper child care. After all, there may simply not be enough money in their checking accounts to pay these prices. But before signing up for an inexpensive daycare, it’s important to consider these three downsides.

1. Cheap daycares may be unsafe

The biggest downside of cheap daycare is that it may simply not provide a safe, nurturing environment for children. It costs a lot of money to provide a safe, stable, and enriching environment for small children, in large part because of the number of staff members required to give kids the attention they deserve. And daycares that offer this type of environment have to charge a high price for it.

While it may be possible to find a warm and loving low-cost daycare, it’s also very likely you will end up with an unlicensed facility or one that operates legally but doesn’t have to be licensed under local laws and isn’t subject to much regulation or oversight. These types of daycares may have hazardous conditions.

They may be understaffed, have dangerous pets around if they are home-based daycares, or they may be unclean. Children have been hurt and even killed in daycares that don’t meet minimum standards and it’s sometimes not easy to tell at a glance what goes on after drop-off each day.

2. Cheap daycares can be hard to find

Another problem with cheap daycare is that there are so few quality spaces that are affordable for parents. It may be difficult to find a facility, it may be far from your home, or it may have a long waiting list so your child may not get in. Spending hours searching for one may end up being a waste of your time if your child isn’t admitted.

3. Workers will likely be underpaid

Although it may be unpleasant to think about, daycares don’t exist just to provide a nurturing and loving environment for kids. They are businesses that are meant to make a profit. As a result, if they are cheap, that usually means the owners have to cut costs somewhere — and this could come in the form of underpaying staff.

Even in a best-case scenario, child educators are often underpaid. Full-time child care workers earn an average of just $14 per hour, which isn’t really a living wage. And those who work at cheap facilities may be paid even less.

If your cheap daycare pays very little, it’s less likely to attract credentialed, skilled staff members who can provide your child with the care they need to develop to their full potential. And there’s a greater likelihood of high staff turnover, which could be disruptive to your child.

Ultimately, these downsides of cheap daycare are unacceptable to most parents, and those with any choice in the matter will usually bite the bullet and pay the exorbitant prices that quality providers charge. If you cannot do that because you simply don’t make enough, you should look into daycare subsidies in your area (your local Department of Human Services probably has information about them).

If you are looking for daycare (cheap or otherwise), it’s also helpful to check your state’s provider database (here’s Pennsylvania’s, for example). You can find licensed providers and read ratings and information to confirm you’re choosing a place that’s right for your precious kids.

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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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