Money Management

Shopping at Aldi may help you trim your grocery spending. But make sure you’re not falling for these traps that get you to overspend. [[{“value”:”

If you’re trying to reduce your spending by sticking to a strict grocery budget, Aldi can be a great place to shop. The low-cost grocer is known for its affordable prices. Many shoppers keep more money in the bank by shopping at Aldi instead of bigger grocery chains.

But it’s still possible to overspend beyond your means when filling your cart at Aldi. If you’re trying to save money, you’ll want to make strategic choices as you wander the store. Here are a few shopping traps to be aware of the next time you visit your local Aldi.

1. Buying name-brand items

Most products you’ll see on store shelves are private-label brands exclusive to Aldi. These essentials are similar to name-brand alternatives, but they’re sold for a fraction of the price. However, Aldi sells some name-brand items, too — but they’ll cost more. Give the private-label brands a try before assuming you’ll prefer the name-brand versions.

2. Forgetting your reusable shopping bags

If you’re a brand-new Aldi shopper, here’s one extra cost that could creep up at checkout — bag fees. Aldi doesn’t provide free bags. You’ll need to bring reusable bags or pay for disposable or reusable bags at checkout.

While the bags aren’t expensive, it’s still an extra cost that can impact your bank account. You can avoid spending more than you planned by remembering to bring bags. I keep a few reusable grocery bags in the front seat of my car so I don’t forget them when I go to Aldi.

3. Falling for the weekly Aldi finds

In addition to alerting shoppers to what’s on sale that week, the grocer also advertises weekly “Aldi finds.” These limited-time items include clothing, accessories, electronics, household items — and more. While these buys can be tempting and a great deal, they’re advertised to get you to walk through the doors. If you’re shopping for groceries and end up wandering down that middle aisle where these items are, you may end up buying things you don’t need. Keep this in mind while you shop.

4. Loading up on seasonal finds

Aldi has some fantastic seasonal finds, like holiday food and decor. These items are exciting, but they’re often sold at a higher price than everyday products on the shelves. You could spend more than you budgeted by filling your cart with these limited-time items. Buying new seasonal items you know you’ll use is OK. But always consider your budget before making a purchase decision.

5. Shopping without a plan

It’s best to have a plan before you walk into the grocery store. Having a shopping list is one way to prepare. When you stick to the list, it’s easier to stay on budget. Without a plan, you may overspend or forget ingredients for meals, and have to make multiple trips. Aldi makes it easy for you to draft a budget-friendly shopping list. You can find current sales on the retailer’s website and mobile app.

Smart shopping moves can save you money

Remember these shopping traps the next time you go grocery shopping at Aldi. You can alter your shopping habits by being aware of potential shopping pitfalls that could negatively impact your wallet. For additional money-saving tips, check out our personal finance resources.

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It’s a great thing to hit your savings target ahead of retirement. Read on for tips to preserve your wealth. [[{“value”:”

Many people reach retirement age having fallen short of their personal savings goals. Data from Northwestern Mutual shows that the average 60-something has just $112,500 socked away for retirement. That’s not a lot of money over what could be a 20-year window or longer.

On the other hand, if you start saving from a young age and invest your nest egg wisely, you may end up in the enviable position of having met your savings goal before retirement officially begins. And while that’s a great position to be in, there are steps you might want to take to preserve your wealth.

1. Shift toward safer assets

So your goal was to have a $2 million IRA in time for retirement, and lo and behold, you’ve gotten there with a couple of years to spare. That’s a great position to be in. But now, it’s time to shift away from riskier assets, like stocks, and load up more of your portfolio with assets that are known to be more stable, like bonds.

Within the realm of bonds, you have choices. Treasury bonds are considered safe because they’re backed by the full faith and credit of the U.S. Treasury. These bonds usually carry a 20- or 30-year maturity, and recent rates were 4.75. The interest on these bonds is subject to federal tax, but not state or local tax.

You could also buy corporate bonds, which are those issued by public companies. Those often have strong yields but there are no tax breaks involved.

Another option is municipal bonds — those issued by cities, states, and other localities to fund public projects. You might earn a bit less interest from municipal bonds than corporate bonds, but that interest is always tax-exempt at the federal level. And if you buy municipal bonds issued by your home state, there’s no state or local tax to pay, either.

2. Focus on stocks that keep paying

It’s a good idea to keep some stocks in your portfolio even once you’ve met your retirement savings goal. But if you can identify strong companies that pay dividends, you’ll put yourself in a strong position for retirement. That dividend income will get added to your portfolio, so you’ll have even more wealth at your disposal.

However, one thing you don’t want to do is invest in a given stock solely because it pays a large dividend. First of all, dividends aren’t guaranteed. When you buy bonds, the interest rate you’re promised at the time of your investment is guaranteed, but dividends work differently. A company could cut its dividend at any time or stop making those payments altogether.

Also, it may be that a stock is paying large dividends but isn’t poised for growth. So what you might gain in quarterly dividends income, you might lose in the form of share price depreciation.

3. Have plenty of cash at the ready

Once you’re no longer working, you may need to tap your retirement plan regularly to cover your living expenses. But liquidating assets at a time when their value is down could mean locking in permanent losses in your brokerage account — and struggling financially due to leaving yourself with less money after the fact.

That’s why it’s so important to set aside enough cash savings to cover at least a full year of bills when you’re near retirement. That way, you’ll have the option to leave your portfolio alone when it’s not a good time to be taking withdrawals.

One thing you may want to do with some of your cash savings (but not all) is set up a CD ladder. That way, you can earn a higher rate of interest on some of your cash, but you’ll also be able to regularly access your money when you need it.

It’s a great thing to meet your savings goal ahead of retirement. But now it’s time to focus on preserving wealth to the best of your ability. Doing so could help you approach the end of your career with a lot more confidence.

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Taking on a larger mortgage payment is a huge financial commitment. Find out whether you should try my technique to make sure you’re ready. [[{“value”:”

Last year, I bought a home at a very inconvenient time. Mortgage rates were not quite at a record high when I bought, but they were a whole lot higher than they’ve been during most of my adult life. And the area where I wanted to buy a house had a very limited stock of homes available, so I had to pay more than I really wanted to for the property.

Since I was getting an expensive loan and an expensive property, I knew my housing payment was going to be higher than the home loans I’d had in the past. I wanted to make sure I wouldn’t come to regret this, so I did something very important to make sure I was ready for it.

I made sure I wasn’t making a big financial mistake with my home purchase

On paper, my house seemed affordable even with the higher-than-desired price tag and mortgage rates, since my housing costs would still be below 30% of our household income. But I know that just because the math works on paper doesn’t always mean that it’s going to work in reality.

After all, I have a lot of other financial goals besides just paying for my house. I want to put money in my brokerage account to save for my future, and I have two small kids who have futures to save for as well. I also enjoy traveling and dining out with my family. I didn’t want to have to make drastic lifestyle changes to buy the house, nor did I want to slash my savings rate.

So, to make sure I wouldn’t have to do those things, I did a test run of making my new mortgage payment. For five months before moving forward with making an offer and looking into actually applying for a home loan, I paid the difference between my current mortgage payment and my expected future payment into a savings account.

Here’s how this works: Let’s say your current mortgage is $1,000 but your new one will be $1,500. In this scenario, you’d pay your current mortgage as usual but put the extra $500 into savings. This is what I did, for months, before actually getting the process of buying the new house underway.

There’s a very good reason why this is so important

Doing a test run like this is really important because it’s easy to sacrifice to pay extra for a mortgage when it’s all theoretical. After all, if you fall in love with a house, you might think you’ll be OK with reducing your budget elsewhere to pay for it even if it’s more than you are currently paying (or perhaps even if it’s more than you’d hoped to pay).

But thinking that financial sacrifices are doable is different from actually making them. And the best way to be sure you won’t come to regret a new obligation is to try living on the reduced budget that this commitment would leave you with. In theory, I’d have liked to do my practice run for even longer, but I ran out of time when I found the perfect house — and after five months, I was reasonably confident that my life wouldn’t have to change in undesirable ways to make payments to my mortgage lender.

You can do this with any big commitment, whether it’s a house or a car loan. And you should. You don’t want to find out after you’ve agreed to a 30-year mortgage that the new budget you’d be living on isn’t sustainable. By then, it will be too late.

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Borrowing rates may not drop for a bit. Read on to see why. [[{“value”:”

Many U.S. consumers have been struggling with their finances ever since inflation started surging in 2021. The Federal Reserve has been doing its part to manage that situation accordingly. Between March of 2022 and mid-2023, the central bank raised its benchmark interest rate 11 times to cool inflation.

And it worked. Inflation has eased notably over the past year, to the point where the Fed has been hitting pause on rate hikes in recent meetings. Inflation has cooled so nicely that many economists are anticipating interest rate cuts from the Fed this year.

Just as interest rate hikes have made borrowing more expensive across a range of categories, from auto loans to personal loans to credit cards, so too could rate cuts do the opposite — bring borrowing rates down. But when the Fed meets in March, it’s unlikely to cut interest rates. Here’s why.

We’re not where we want to be on the inflation front

The Federal Reserve has long maintained that it likes to target an annual inflation rate of 2%. But the most recently released Consumer Price Index, which measures changes in the cost of common goods and services, showed annual inflation at 3.4%. That’s not so far off from the Fed’s goal, but it’s also a ways off.

In a recent 60 Minutes interview, Federal Reserve Chair Jerome Powell said, “We want to see more evidence that inflation is moving sustainably down to 2%. Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates.” What this tells us is that the Fed is unlikely to cut interest rates at its March meeting — and that rate cuts may not happen until the second half of 2024.

How to cope with today’s interest rates

Higher interest rates make borrowing more expensive. So if you’re looking to sign a loan and that loan can wait, sit tight.

Let’s say you need to borrow money to renovate your house. It may be something you want to do as soon as possible, but it isn’t an emergency. If you’re taking out a $20,000 loan you intend to pay back over five years, waiting a few months for rate cuts to happen could result in lower payments for 60 months.

Meanwhile, if you’re carrying a credit card balance, try your best to whittle it down. With interest rates still being high, chances are, you’re paying a small fortune on that balance for each month you carry it forward. You may be able to boost your income with temporary gig work to chip away at that balance and save yourself money on interest.

Finally, if you have spare cash, now’s a good time to put it into the bank. In fact, you may want to lock in a certificate of deposit while CD rates are still strong. Once the Fed starts cutting rates, CDs could start to pay a lot less.

It’s definitely too soon to give up on hoping for rate cuts in 2024. There’s a good chance the Fed will start to lower its benchmark interest rate at some point during the year. Unfortunately, we’re not there yet. And we’re probably not going to be there in March. So if you can wait on a loan, doing so could save you a lot of money.

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You shouldn’t have to worry about paying your bills after you’ve concluded your career. Find out more about typical retirement savings here. [[{“value”:”

As a retiree, the last thing you want to do is spend your days worrying about whether you have enough money in your bank account to cover the basics. You deserve to enjoy yourself after a lifetime of working, which means that ideally you have plenty of cash to pay for necessities and the things you’ve been dreaming of doing.

If you want that future, though, you need to make sure you’re investing enough money to get it. But are Americans putting enough cash into their investment accounts to provide the future financial security they deserve? Here’s what you need to know.

This is the typical 401(k) contribution

According to recent research from Fidelity, the total savings rate in 401(k) accounts for the third quarter of 2023 was 13.9% of income. This is the total amount people are contributing to their accounts, on average, including employer matching contributions.

Now, this doesn’t mean everyone is contributing that amount. Baby boomers are contributing more than other generations, putting away about 16.7% of their income in their retirement plans. But the average is fairly consistent, and it’s not too bad of an amount, although it is a bit below the common recommendation of around 15% of income.

The amount you’ll end up with if you contribute 13.9% of your earnings does vary depending on the age when you start investing and the amount of money you make. But if you’re diligent with doing this throughout your career, you could set yourself up for a pretty good retirement.

In fact, if you start with a $25,000 annual salary at age 22, get a 2% annual raise, and contribute 13.9% of your income from retirement until age 66, you’d have about $1,254,161.95 in your 401(k), assuming a 10% average annual rate of return on your investments.

That would produce about $50,000 in annual retirement income, assuming you followed the 4% rule. That rule advises you to take out 4% of your account balance in year one then, adjust the amount annually to maintain buying power despite inflation. The 4% rule is designed to help you avoid running out of money, which can happen if you spend your retirement funds too quickly.

How do your contributions compare?

Ending up with over $1 million could be a great place to be in as a retiree but not everyone is actually contributing 13.9% of income (even with an employer match). Many people fall short, and if you’re one of them, you may find yourself with a lot less. You can use the calculator on Investor.gov to input your savings amount and account balance to see what you’re likely to end up with.

If you aren’t putting as much money as you should into your 401(k), look for ways to increase the amount you invest. One of the easiest is to simply divert any salary increases to your retirement plan. So if you get a 2% raise, before you get used to living on more, up your retirement account contributions by 2%.

You can also slowly inch up contributions by, say, going from 9% to 10% and then a few months later up to 11% until you’ve hit your target. By making slow increases, you don’t have to make big lifestyle changes at once.

Budgeting to prioritize 401(k) contributions is another option, as is cutting a big fixed expense (like getting a cheaper used car) and investing the difference.

If you make saving for retirement a priority and try to get up to at least the average contribution amount — and ideally 15% of income — you can have the retirement you deserve. You owe it to your future self to make that happen.

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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 Target. The Motley Fool has a disclosure policy.

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It’s normal to feel anxious about your finances after losing your job due to a layoff. But your finances can benefit from this life change. Find out how. [[{“value”:”

No one wants to get the news that they no longer have a job. Unfortunately, a layoff can happen — especially when you least expect it. Finding out that you’re no longer employed can be stressful. You may worry about how you’ll pay your bills despite no longer having a steady income. This fear is understandable, but you should know that a layoff could benefit your finances. Here’s why being laid off could be an unexpected win for your wallet.

You can prioritize better-paying work

Many workers stay in their current jobs even if they’re dissatisfied because it’s easier to stay with their current employer than to put themselves out there and seek better opportunities.

A layoff could be a significant win if you’ve felt underpaid and undervalued for some time. When looking for new work, you can prioritize jobs that offer better pay and benefits.

Research before applying for jobs if you need clarification on a competitive wage for your desired role. You can use online salary database tools or talk with colleagues in your industry.

If you want to earn more money, be picky as you compare job listings. You may feel resentment if you settle for a new opportunity that pays similarly or less than your previous role.

It may take time to land a new role, but when you land a job with a salary matching your experience and skills, you’ll feel more valued. And if you’re working hard to reach your personal finance goals, the income boost can help you get there.

You can spend time building your own business

Here’s another way a layoff could benefit you financially — you could switch gears and make money from a business of your own. As an employee, your work benefits the company, not you individually. Beyond building skills (and of course a regular paycheck), your work itself won’t benefit you long term. But if you’re a freelance or small business owner, the work you do every day directly impacts you.

Being laid off could be the perfect push to make your goal of starting a small business a reality. Starting a business is hard work, and it takes time to build a successful company. But if you no longer have a job to go to each day, you’ll have more time to commit to this goal.

This will be easier to do if you have a solid emergency fund. Make sure you can afford to pay your bills without going into credit card debt. If you have minimal funds in your savings account, another option is to get a part-time job while you spend time growing your business.

Many people who transition into freelance work or start a business earn a better income and feel fulfilled. One thing to consider is how your finances will change as a business owner. If you want to start a business, check out our small business resources for more financial tips.

A layoff isn’t all bad news

Yes, a layoff is life-changing, and you may initially feel disappointed and stressed. All of the emotions you’re experiencing are valid. But it can be beneficial to frame your thinking differently instead of focusing only on the negatives. Earning more money by taking a better-paying job or creating a business you love could be a major win for your bank account.

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