Money Management

Finding out you’ve been laid off from work is not ideal. But if you lose your job, you should take steps to protect your finances. Find out what to do. [[{“value”:”

Unfortunately, layoffs have been a hot news topic lately. Most workers only consider how they would handle a layoff once it happens to them. But it’s better to know what to do before that happens so you know what steps to take.

If you’re ever laid off from work, give yourself grace and take time to process this life-changing reality. But it’s wise to get your finances in order after taking time to process the news. Here’s one move you should take after being laid off from a job.

Reduce your expenses to stretch your dollars further

Most people file for unemployment immediately after discovering they’ve been released from their jobs. This is a solid strategy because there may be several weeks’ delay while you wait for your claim to process and receive your first check.

But there’s another financial move you can take to set yourself up for success as you adapt to your recent life change. You should review your finances and find ways to reduce some of your ongoing expenses.

Some expenses, like your mortgage payment, will remain the same regardless of your current employment status. But if you can trim some unnecessary spending, you’ll reduce your monthly expenses. Doing this can allow you to stretch your emergency fund savings further.

You can do this by taking the following steps.

1. Make a list of your must-pay bills

Take inventory of your monthly expenses and list the bills that must be paid. Examples include your housing expenses, utility costs, and insurance. You’ll also want to include debt-related expenses like credit cards and auto loans. These are the expenses you’ll continue to pay in full.

2. Review your bank and credit card statements to tally up other costs

Next, you’ll want to get a feel for what other expenses you’ve been paying. This may include streaming app subscriptions, takeout and dining purchases, groceries, and any other shopping.

You can familiarize yourself with your spending habits by reviewing your recent bank account and credit card statements. Tally up your recent purchases to see how much you’ve been spending. You can trim some less-necessary costs like takeout and subscription costs.

3. Set a spending budget for variable expenses

Some costs, like variable expenses, can’t be eliminated but can be reduced. Unlike fixed expenses, variable expenses fluctuate. One example is groceries. You might spend $650 at the grocery store in January, then $400 in February.

Expenses like this are necessary. You have to eat! But you may be able to adjust your shopping habits to reduce your spending slightly so it’s more consistent going forward.

Now that you know how much you’re spending on your other living expenses, you can set a budget for variable costs like groceries. If you struggle with this task, consider using one of the best budgeting apps so it’s easier to track your spending and stick to your goals.

It pays to keep your living expenses to a minimum

If you’ve recently lost your job, keeping your living expenses to a minimum can be beneficial. Stretching your money further can buy you time to find another job.

If you have money in your savings account, you can use this money and other funds like severance pay or unemployment benefits to cover your living expenses without racking up expensive credit card debt.

Don’t give up hope if you’ve lost your job. While it may take time to land a new role, you will find one. For additional tips, check out our personal finance resources.

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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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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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You can add a minor to your credit card, and there are surprising benefits to doing so. Learn why I made my 3-year-old an authorized user. [[{“value”:”

My 3-year-old son doesn’t know what a credit card is, but one arrived in the mail with his name on it a few days ago. Obviously, at his age, he isn’t able to open one on his own, so I added him as an authorized user on my primary credit card.

I don’t plan to actually give him access to my credit line, not even when he’s a teenager. But I hope one day he’ll be grateful for what I did. Here’s why.

What’s the point of an authorized user?

Adding someone as an authorized user on your credit card enables that person to charge purchases to your account if they want. They’ll get their own card with their name and they can use that to buy items, but you’ll get the bill at the end of the month.

In addition to giving the authorized user access to your credit line, it also adds the credit account to their credit report. And that’s why I chose to add my son to mine.

By the time he’s 18 and able to open his own credit account, it’ll show that he’s already had a credit card for 15 years, and that the bill was always paid in full and on time. This should boost his credit score quite a bit. That, in turn, will open the door to more affordable credit when he’s ready to borrow money.

Who shouldn’t make their child an authorized user on their credit card?

The goal of adding your child as an authorized user to your credit card is to help them build a strong credit history over time. So if you feel that your credit behavior wouldn’t accomplish this, it’s best not to do it. For example, if you struggle to pay your credit card bills on time and have a lot of credit card debt, making your child an authorized user could hurt them more than it helps them. Focus on improving your own credit first and then you can revisit this down the road.

It’s also not a good idea to make your child an authorized user if you feel they would abuse their access to your credit line. You’ll be responsible for all purchases they make, so it’s important to carefully supervise their activity and review your credit card statements for unusual transactions. You could also add your child as an authorized user without telling them so they aren’t tempted to use it without your permission.

How do you make your child an authorized user on your credit card?

You should be able to add authorized users to your credit card through your online credit card account. Alternatively, you can contact your credit card issuer by phone. It only took me a few minutes. All I had to do was enter my son’s name and date of birth. Some providers also require the child’s Social Security number. Then, a few days later, my son’s card showed up in the mail.

It’s important to recognize that each credit card company has its own rules about authorized users. Some, like Chase and Bank of America, don’t have minimum age requirements. You could add a day-old newborn if you like. Others, like American Express and Discover, require you to wait until your child is a teen to add them. Talk to your credit card issuer if you’re unsure of its requirements. You may also want to inquire if there are any fees associated with adding an authorized user.

Making your child an authorized user can get their credit history off to a strong start, but this is just a first step. It’s important to teach your child how to manage their money and how their actions could affect their ability to secure loans and credit cards in the future. Continue to educate your child in age-appropriate ways as they grow so they’re ready to take control of their own finances when they reach adulthood.

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 6, 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.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Kailey Hagen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and JPMorgan Chase. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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Did you know you can earn 4% (or more) on your savings these days? Keep reading to learn how. [[{“value”:”

If you’re one of the Americans fortunate enough to have cash savings, you might not think about it much — beyond being grateful that you have it when an unplanned bill pops up. But while it’s a terrible idea to put your emergency fund or cash you’ve saved for a near-term expense (like a vacation or a down payment on a large purchase like a home or car) in the stock market, that doesn’t mean you should accept not earning any return on that money at all.

High-yield savings accounts (HYSAs) are paying high rates as a result of a higher federal funds rate. Here’s how you can capitalize on this — and why you should.

Got a HYSA? You’re in the minority

According to recent savings account research by The Ascent, just 31% of us have a savings account paying 4% APY or more. APY stands for annual percentage yield, and this is defined as the amount of interest you can earn on your savings throughout the year. For example, if you have $10,000 saved and your account has a 5% APY, that’ll generate $500 for you in a year (assuming the interest rate doesn’t change). $500, just for keeping your money in the account? Wow!

If you haven’t opened a HYSA yet, I highly recommend acting now. It’s especially crucial to take advantage of this opportunity while you have it. The reason APYs are so high on these accounts right now is that we’re also living with a higher federal funds rate.

The Federal Reserve raised its benchmark rate 11 times between 2022 and 2023 in an attempt to bring down rampant inflation. The Fed doesn’t set consumer interest rates, but the two tend to move in the same direction. Consequently, we’ve got higher rates on savings accounts, CDs, and money market accounts — but also higher rates on loans and credit cards. Since inflation has eased since its peak in June 2022 (9.1%, ouch), the Fed is expected to lower its benchmark rate this year. When it does, rates for consumers will likely fall, too.

What can a HYSA do for you?

You already know that a HYSA will pay you more interest on your banked cash. But these accounts have other attractive features worth mentioning. The best HYSAs are FDIC-insured, which means that up to $250,000 of your cash will be protected in case of bank failure.

It’s incredibly easy to open a HYSA with an online bank. (You’ll usually find the best rates with online banks since they don’t have the overhead costs that come with maintaining physical branches and can pass the savings on to account holders in the form of higher rates.) Doing so will take just a few minutes.

You usually won’t need a certain minimum deposit to open the account, and you usually won’t even be charged a monthly fee to maintain the account. And online banks often have great mobile apps where you can move your money around easily, see saving and spending trends, and possibly even access budgeting tools and perhaps your credit score. My own online savings account offers sub-accounts that I use to save toward different goals, and they made saving easier and more fun in 2023.

Here’s how to find the right HYSA for you

I’m hoping I’ve sold you on HYSAs and you’re ready to open one of your very own. Good news! The Ascent maintains a list of the best high-yield savings accounts around, so hop on over and take a look. I’d encourage you to choose an account that has the right features for you beyond just a high APY, because remember, savings account APYs are not fixed. If the Fed cuts rates this year, your savings account’s rate will likely follow suit. But ideally, you like the account enough to keep it, even if the interest you earn on your cash dips.

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…

See the 10 stocks

*Stock Advisor returns as of February 6, 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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