Money Management

CDs can be a great place to let your money grow, but it’s probably best to start slow. Learn more about getting yourself set up with CDs. [[{“value”:”

Certificate of deposit (CD) rates have risen over the past few years, making them an attractive option for people looking to grow their money. But figuring out how much to put into a CD and when it’s the right time can be challenging. Here are a few things to keep in mind before you jump in.

RELATED: Best CD Rates

How much should you put into a CD?

The specific amount you put into a CD depends on your personal finances. The best way to decide how much money to put into a CD is to figure out how much cash you can afford to part with for an extended amount of time.

While that amount will be different for everyone, you should keep a few things in mind. First, a minimum amount is usually required. Most CDs have a minimum deposit between $500 and $2,500, though some can be lower or higher than this range.

Once you have enough money saved for a minimum amount, the next step is to look at the current amount of cash in your bank account and your total investments to determine how much should go into a CD. For example, U.S. Bank says a general rule of thumb is for cash and cash equivalents (including CDs) to make up 2% to 10% of your portfolio.

Let’s assume you have a total of $50,000 of investments and cash. In this scenario, you may want to put $2,500 — 5% of your $50,000 — into a CD. Keep in mind that you don’t want to put all your cash into a CD.

What money should go into a CD?

A CD is a safe place to store some of your money so it can earn you more money. But it works differently than a high-yield savings account.

With a savings account, you can generally take out the money when you want to, without a penalty. Savings accounts give you more flexibility but typically earn a lower rate of return. But when you put your money in a CD, you’re agreeing not to touch the cash for a set amount of time — sometimes for up to 5 years — while you earn a predetermined rate on the money you put into it.

In exchange for handing your money over for that time, you receive a higher interest rate.

What money shouldn’t go into a CD?

A CD isn’t the place to build an emergency fund, and it’s not for retirement investing. Most financial experts recommend having at least $1,000 in an easily accessible emergency savings account. Ideally, you want to eventually build that amount up to three to six months’ worth of your living expenses.

A CD isn’t the place to keep this money because you won’t be able to easily access it during an emergency. CDs often charge fees for withdrawing money, while savings accounts generally do not. If you need cash to fix your car or replace a broken appliance, you want easy access to your money and no penalties for withdrawing it.

Plus, a CD isn’t the place for you to put your retirement money. A CD generally won’t earn enough to build a retirement nest egg, so it’s best to put that money into a brokerage account where you can buy stocks and index funds.

Dip your toe in first

Like any major financial decision, it’s best to move slowly. It may be a good idea to put a small amount of money into a six-month CD to learn how it works, how you earn interest, and how you feel about having your cash temporarily committed to a CD.

And if you don’t like having some of your money in CDs by the end of six months, at least you’ll have earned some interest and learned something new along the way.

Where to invest $1,000 right now

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The U.S. savings rate falls far below that of many other countries. Here are a few steps to take to boost your savings. [[{“value”:”

While the U.S. is a wealthy country, our economic status doesn’t always translate to American households saving money. It’s not easy to squirrel money away, which is probably why 33% of Americans have no savings, according to Ramsey Solutions.

Here’s how America’s household savings rate stacks up to other countries and a few tips to help build your savings.

Countries with the highest savings rates

The Organization for Economic Co-operation and Development (OECD) tracks the household savings rate by country, and the latest data from the OECD shows citizens in the following countries are the thriftiest:

Switzerland: 19.3% savings rateSweden: 13.3% savings rateNetherlands: 12.3% savings rateLuxembourg: 11.6% savings rateFrance: 11.2% savings rate

The U.S. household savings rate is relatively low

The OECD doesn’t have the latest data for the U.S. household savings rate. But information from the Federal Reserve Bank of Boston shows that in the three years leading up to the pandemic, the average U.S. savings rate was just 6.2%. Ouch.

And data from the U.S. Bureau of Economic Analysis isn’t much better. The organization says America’s long-term savings rate average is 8.4%, and the current U.S. savings rate is just 3.7%.

After stimulus checks helped boost America’s savings during the pandemic, soaring inflation — including expensive housing costs — has made it more difficult for Americans to find extra money to put into their bank accounts.

Economists have different theories about why Americans save less, including government economic policies, housing costs, spending habits, and slowing income growth. Whatever the culprit, it’s clear Americans typically stash away less cash.

How to improve your personal savings rate

Most financial experts recommend putting $1,000 into savings to use for emergencies. That may seem like an impossible amount if you’re just getting started. But you can make a few moves to quickly improve your personal savings rate. Here are just a few.

1. Find a few ways to cut back on spending

Combing through your spending habits is a good way to discover expenses you may not have remembered were there and cut them out. I recently did this with my monthly subscriptions and found they were much more expensive than I remembered.

I cut out my Apple TV+ subscription — after catching up on Slow Horses, of course — and also cut out website hosting I wasn’t using. Between the two, I saved $25 in monthly expenses. That’s not a huge amount, but it took nearly zero effort on my part to save that money.

I manually combed through my online bank statements, which took way too long. I probably would have benefited from using a budgeting app to track down extra expenses.

2. Open a high-yield savings account

There are a couple of reasons why opening a high-yield savings account can help you improve your savings. The most obvious is that a higher interest rate will help your money grow faster. Some banks are paying more than 5% interest right now, making it easier than ever to grow your money.

The second reason is that some banks offer bonuses when you open a savings account and deposit a certain amount or set up automatic deposits. Opening an account with a cash bonus could add several hundred dollars to your savings.

The bonus could go a long way to helping you reach your financial goals without having to put in much effort.

3. Automate deposits

Once you’ve found one or two ways to cut back on spending and opened a high-yield savings account, the next step is to automate your savings.

It might seem unnecessary to set up automatic deposits rather than just move your money manually. But automating the process ensures you never forget to save money and removes the chance you’ll talk yourself out of it.

Plus, when you automate deposits to your savings account, you may be less likely to spend that money. This psychological trick works for me, as I’m far less willing to spend money that’s in my savings account than I am with money in my checking account.

It’s worth mentioning that no amount is too small to start saving. While you want to eventually have at least $1,000 in an emergency fund, contributing regularly to your savings account is the primary goal.

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.Citigroup 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. Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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If you drive a newer, connected vehicle, you could get car insurance from Ford, GM, or Tesla. See how this special telematics car insurance can help you save. [[{“value”:”

Auto insurance prices skyrocketed in 2023. According to the Bureau of Labor Statistics, the average cost of auto insurance increased by 20.3% from December 2022 to December 2023, making this the largest annual car insurance price increase since 1976. There are many reasons for the rise in car insurance prices: Cars are more expensive to repair, mechanics have raised their prices, and people are getting in more car crashes.

As a driver, so much of what happens on the road is out of your control. If traffic is congested, if the weather is bad, or if another driver crashes into your vehicle, you can’t always protect yourself from that. But there’s one thing you can control: your own driving habits. Several car companies are now offering a special kind of auto insurance that rewards you for safer driving. It’s called “embedded insurance,” or “telematics car insurance.”

Let’s look at what embedded car insurance means, and why it could give you a better deal on car insurance in 2024.

Embedded insurance: Car insurance from inside your car

Did you know that auto insurance isn’t just offered by traditional auto insurance companies anymore? Some car companies have started to offer auto insurance that works within your vehicle. This is a type of embedded insurance, where you can get insurance while purchasing or experiencing another product or service.

Here’s how embedded car insurance works: Some car companies now offer telematics technology that — with your permission — collects and shares data about your driving habits. This technology is already built into connected vehicles from newer model years. If you sign up for this special kind of car insurance, you can qualify for lower-cost car insurance based on your driving habits.

Different car insurance companies measure different types of telematics data. For example, some might track your acceleration and braking speed, how many miles you drive, what times of day you drive, how much time you spend idling in traffic, your seat belt usage, and other aspects of your life behind the wheel.

Car insurance companies want to reduce risks and avoid paying out money for collisions. If you help them save money, the best insurance companies will reward you for safer driving. Telematics car insurance is an intriguing option, because it lets you take control of your own car insurance premium. It’s an opportunity to prove to your car insurance company that you’re a responsible driver who deserves a lower car insurance premium.

Which car companies offer telematics car insurance?

Ford, GM, and Tesla are a few major car companies that are offering telematics car insurance. Let’s look at a few details for each of these connected vehicle telematics car insurance plans.

Ford: Ford Insure

Ford Insure is a special insurance plan for newer Ford vehicles (model year 2020 or newer) that have connected vehicle technology. This telematics insurance can reward Ford drivers with discounts of as much as 40% off, and it’s available in most states as of Jan. 26, 2024 (except for Alaska, Hawaii, Louisiana, Massachusetts, and Oklahoma). Ford Insure also gives you the option to bundle your auto insurance with homeowners insurance or pet insurance.

GM: OnStar Insurance

OnStar Insurance is available for Buick, Cadillac, Chevrolet, or GMC vehicles that are model year 2016 or newer. As of Jan. 26, 2024, OnStar Insurance is available in only three states: Arizona, Illinois, and Texas. But it could be coming soon to Indiana, Ohio, Pennsylvania, and other states.

Tesla: Tesla Insurance

Tesla electric vehicles are known for sophisticated digital technology, and they receive automatic over-the-air software updates like a smartphone or laptop. Tesla Insurance uses that same seamless digital connection between your car and the Tesla company.

You can sign up for Tesla Insurance via the Tesla app. With your permission, Tesla Insurance measures your real-time driving behavior data to give you a Safety Score that determines your monthly auto insurance premium.

To get Tesla Insurance, you must own a Tesla Model S, Model 3, Model X or Model Y. Tesla’s insurance coverage is only available in 11 states as of Jan. 26, 2024 (Arizona, Colorado, Illinois, Maryland, Minnesota, Nevada, Ohio, Oregon, Texas, Utah, and Virginia).

Why car insurance from your automaker could be a better deal

If you’ve considered telematics car insurance before, or if you just want to save money after a year of big premium increases, getting car insurance from inside your car could be a solution. Here are a few reasons why these car companies’ auto insurance programs might be a good deal.

No new gadgets or devices

Auto insurance companies’ telematics insurance plans often require you to download apps or plug in a new device into your vehicle. If you get car insurance from your car company, you don’t have to worry about that. The telematics insurance technology is already built into your connected vehicle.

Save on insurance in multiple ways

Ford Insure offers interesting options to help you save more money, like bundling your Ford Insure auto insurance with homeowners insurance or pet insurance. With Ford Insure, you can also choose a pay-per-mile insurance plan, depending on your lifestyle and how much you drive.

Special benefits and discounts

GM’s OnStar Insurance offers a few unique benefits, like loyalty discounts for Buick, Cadillac, Chevrolet, and GMC drivers, and OEM parts coverage to make sure your vehicle gets repaired with GM Genuine Parts. OnStar Insurance also gives you the chance to earn accident forgiveness and deductible waiver benefits.

Bottom line

If you drive a newer, connected vehicle and have a good relationship with your automaker, you might want to consider telematics insurance from your car company. These special auto insurance programs are easy to use and offer exciting opportunities to save money. No new gadgets required!

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

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Adjusting how you manage and spend your money can be transformative. Small habit changes can provide big results. Find out what money moves to make in 2024. [[{“value”:”

Many people tackle financial resolutions at the start of the year. While it’s already February, there’s still plenty of time to make changes to improve your finances in 2024. Developing new money habits is one way to set yourself up for success in the coming months and years. I’ll share several money habits to start in 2024 that could transform your finances for the better.

1. Monitor your spending

Many people spend their money with little thought, making purchases without looking at their bank account balance. But this isn’t the best approach. You should be aware of how much you’re spending so you can make more informed choices.

This year, get into the habit of monitoring your spending. Once you know how you’re spending your money, it’s easier to make changes to waste less money. You can use one of the best budgeting apps to stay on track. Tools like this make it easier to be informed and learn how to adjust your spending habits so you can free up more money for your financial goals.

2. Open a high-yield savings account

If you’re already saving money, that’s excellent news. But ensure you’re earning interest while you save. Keeping your emergency fund in a checking account is not recommended. Since most checking accounts don’t earn interest, you won’t get rewarded for saving.

Keep your extra cash in a high-yield savings account. Why? You’ll earn interest as your money sits in the bank. This simple change could help you boost your account balance. Opening an interest-earning bank account is an easy way to make financial progress.

3. Avoid credit card interest

Credit card debt is stressful for many Americans. But you can avoid it by making the right money moves. When you use credit cards to make purchases, you’re borrowing money. You’ll need to pay your credit card issuer back.

Many people rack up credit card debt because they pay only the minimum amount due listed on their bills. You’ll be charged interest if you only pay the minimum amount due. Since credit card interest is expensive, debt can pile up quickly.

This year, change your habits. Whenever possible, pay the entire statement balance listed on your bill. By doing this, you’ll avoid paying credit card interest fees and stay out of debt.

4. Pay yourself first

Many people hope to save but have little extra money left in the bank before their next paycheck arrives. If this sounds familiar, I have a suggestion: Pay yourself first. When you treat your savings like a bill, you’ll prioritize your savings.

Here’s how to pay yourself first: Every time you get paid, immediately transfer a portion of your paycheck into your savings account. Doing this will ensure you don’t accidentally spend the money you intend to save. But if you’re forgetful, take advantage of automation tools.

Automating your savings can be a game changer. You can set up automatic transfers through your bank so your savings are on autopilot. Once you do this, money will be transferred regularly to your savings account. This simple change can result in big wins.

5. Use a credit card that earns you rewards

You’re missing out if you’re using credit cards and not earning rewards. Many people use credit cards to earn cash back rewards or other rewards when they spend money. Getting into the habit of using a rewards credit card at checkout can be a win for your wallet. Check out our list of the best cash back credit cards to learn more.

Small changes make a big difference

You don’t have to make massive changes to transform your finances. Small money moves and habit changes can add up over time. The above suggestions may help you improve your finances in 2024. For more money-related tips, review our free personal finance resources.

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.
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A change to the tax code might benefit homeowners in 2026. Read on to learn more. [[{“value”:”

There’s a reason people are cautioned to make sure they’re on solid financial ground before diving into homeownership. The cost of owning property extends far beyond just the expense of a monthly mortgage payment.

In addition to the money you have to send your mortgage lender every month, you’re required to pay for homeowners insurance, maintenance, repairs, and property taxes. And in some states, the latter can be quite expensive.

Take New Jersey, for example. Known for its soaring property taxes, the median homeowner bill in that category was $8,797, as of 2022.

Now, the good news is that homeowners who itemize on their tax returns can take a deduction for property taxes. The bad news, though, is that homeowners in high-tax states may not be able to write off their property tax bills in full.

Your deduction is capped at $10,000

As a result of the Tax Cuts and Jobs Act, the state and local tax deduction (otherwise known as the SALT deduction) is now capped at $10,000 regardless of your state of residence. This means the maximum deduction you can take for property taxes and state income taxes combined is $10,000.

It’s worth noting that the $10,000 limit applies to federal taxes. States can set their own limits for deducting property taxes, and in some states, the threshold is higher than $10,000.

But still, if you’re someone with a $12,000 property tax bill, you automatically don’t get to deduct $2,000 of that total on your federal tax return under the current rules. If you pay $8,000 a year in property taxes and $7,000 a year in state income taxes, you similarly lose out on a deduction to some degree due to the $10,000 SALT cap.

But that $10,000 cap may not last forever. And come 2026, owning a home in a high property tax state may be more affordable.

The rules might change

The Tax Cuts and Jobs Act limited the SALT deduction to $10,000. But that rule is currently set to expire in 2025 unless lawmakers determine otherwise. As such, come 2026, it’s possible that as a homeowner, you may be able to take a larger tax deduction for your property taxes. And that could result in a world of financial relief.

Granted, this potential change may not impact you if you live in a state with no income tax and your current property tax bill is something like $3,500. But for residents of states with higher property taxes, this change could be huge.

You can also appeal your property taxes

At this point, it’s too soon to know whether the $10,000 SALT cap is here to stay for the long haul. But you should also know that you’re not necessarily stuck with the property tax bill you’re assessed.

As a homeowner, you have the right to appeal your property taxes. The process for doing so differs from state to state, but your local tax assessor should be able to walk you through the process of filing an appeal where you live.

To win a property tax appeal, though, you have to prove that the value being assigned to your home by your local tax assessor is higher than the home’s true market value. At a time when home prices are up on a national scale, that may be tough to do.

However, if the real estate market cools off in the coming months or years, fighting your property tax bill may be more doable. If your home is assessed at $500,000, and you can find proof that comparable homes in your neighborhood sold recently for $420,000, you have a case.

If the SALT cap limit expires in 2025 as it’s currently scheduled to do, then you may find that you’re eligible for a larger tax deduction in 2026. However, don’t go into homeownership now banking on a larger tax write-off in 2026. Instead, crunch the numbers to make sure you can afford the full cost of homeownership — regardless of whether the SALT deduction becomes more valuable in the future.

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.
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Just 49% of Americans have at least $1,000 for unplanned expenses. Read on to find out why the rest are at risk of financial disaster. [[{“value”:”

Having money saved for emergencies is pretty important, but it’s simply not something everyone has done. In fact, according to recent research from Ramsey Solutions, just 49% of Americans have at least $1,000 in a savings account for unexpected expenses. And, sadly, 33% have absolutely no money in the bank at all in case something goes wrong.

While it is understandable that saving for emergencies can be hard and may not be on the top of everyone’s list of financial priorities, it’s actually a really huge problem that so many people have so little money to fall back on. Here’s why.

Emergencies aren’t a question of if, but when

The sad reality is that those who do not have money saved for emergencies are very likely to face one at some point. That’s because everyone is likely to experience a surprise unexpected expense on a pretty regular basis. In fact, one Pew study found that 60% of households had experienced a financial shock in the past year, and a third of households had experienced at least two!

These unexpected expenses weren’t small ones either, with the median household spending half a month’s income on their surprise expense, and the median cost coming in at $2,000. And, these shocks happened across all income levels, affecting rich people as well as poor ones.

I recently had to spend a surprise $800 for new tires when one of mine was discovered with a tear in it, and my family had to deal with drywall and roof repairs when a particularly bad rainstorm caused an unexpected leak to occur directly over our bed.

Without at least $1,000 saved to cover these kinds of surprise expenses, a little bump in the road can turn into a huge long-term disaster.

Debt can often be the only answer without emergency savings

In a lot of cases, when a financial shock happens and there’s no money in savings, people end up having to turn to debt. This could mean using credit cards, which is expensive enough, as the average interest rate on a card is 21.47%. Or, in a worst case scenario, those who can’t use cards could get stuck with payday loans that have interest rates of around 400% annually.

Once you’ve taken on this debt and committed to making monthly payments for it, you’ll end up with even less money going forward to cover both routine expenses and any further surprises that come your way. You could end up in long-term financial trouble, which is why the Pew survey revealed that more than half of households struggled to make ends meet after their shock happened.

This is bad, but there are even worse consequences you could face — like foreclosure or repossession if you can’t cover a car bill or a mortgage payment.

The bottom line is, if you’re one of the majority of Americans without $1,000 saved, you should work on fixing that ASAP. You can start with depositing your tax refund into savings if you get one — which may be enough by itself. You can also work a side gig for a little bit to save $1,000, sell belongings you don’t really need, or dramatically slash your budget temporarily, perhaps by giving up luxuries for a while like eating out.

RELATED: Emergency Fund Calculator

Yes, it will require sacrifice, and it may not be fun to try to come up with this money. But it’s better to do it now before the disaster strikes, so the cash will be there when you need it.

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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Christy Bieber 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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