Money Management

Want to pad your savings nicely this month? Read on for some tips to achieve that goal. [[{“value”:”

It’s hard to believe that we’re already in February. At this point, you may or may not be behind on your personal financial resolutions for 2024.

One of those may be to give your savings account a nice boost. And if you make these smart moves in the coming weeks, you might end up $200 richer by the time February ends.

1. Have a casual Valentine’s Day

Data from the National Retail Federation finds that the typical consumer expects to spend about $186 on Valentine’s Day this year. If your goal is to bank an additional $200 this month, having a low-key Valentine’s Day might almost get you to your goal.

Instead of making reservations at a fancy restaurant, cook a nice meal at home instead. And rather than spring for flowers, chocolate, and a gift, come up with a low-cost activity you and your partner can do together. You might save a bundle and enjoy an even more meaningful night together.

Remember, too, that on Valentine’s Day, restaurants tend to be crowded, and you’ll often be stuck with a fixed-price menu that limits your choices. You and your partner might have a lot more fun cooking one of your favorite dishes together.

2. Keep your gathering small for the big game

If your home tends to overflow with guests during the big game, you may want to limit the number of invites you send out this month if you’re trying to save money. Hosting a crowd can get expensive. So instead of having 30 guests, pare things down. Invite a few close friends over, and whip up a large pot of chili instead of paying for multiple pizzas and wings.

Don’t hesitate to make your gathering a BYOB affair. Not having to spring for beer for everyone could lower your costs substantially.

3. Stay local for the holiday weekend

Many people have the day off on Presidents’ Day, so you may be tempted to take advantage of the long weekend by booking some travel. But even if you’re taking a road trip with friends and splitting the cost of lodging, you might easily end up spending $200 on gas and lodging alone.

If you’re eager to boost your savings this month, have a staycation instead. Use the extra day off to explore a part of your city you’ve never really spent time in. Or get in the car and explore another area that doesn’t require you to pay for an overnight stay.

If you want to keep things really budget-friendly, look up some different hiking trails and spend your weekend getting some fresh air. Granted, in some parts of the country, hiking in February may not be so appealing. But if you’ve never taken a cold-weather hike, try it. You may find that it’s a refreshing experience.

Adding $200 to your savings this month could do a world of good for your finances. These tweaks to your plans could leave you in a much better place by the end of February.

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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 recommends Flow. The Motley Fool has a disclosure policy.

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Are your healthcare costs going up in 2024? Even if you don’t qualify for a health savings account, check out your options to cover your medical costs. [[{“value”:”

Spending money on medical bills is not fun, but for many Americans, it’s a fact of life. As of 2021, according to the Peterson-KFF Health System Tracker, the average American spent $1,315 per year in per capita out-of-pocket healthcare costs. That means an average family of four could have annual healthcare costs of $5,260 that aren’t covered by health insurance.

Let’s look at a few good ways to pay for out-of-pocket healthcare costs in 2024.

What are out-of-pocket healthcare costs?

If you have excellent health insurance through your employer, you might be protected from out-of-pocket healthcare costs. But for Americans like me who are self-employed or own a small business, we have to pay for a lot more of our own healthcare. Other people might have out-of-pocket healthcare costs even if they have decent insurance from their job or have Medicare (which doesn’t cover everything).

Out-of-pocket healthcare costs can include:

Co-pays for doctor’s visits or prescriptionsYour health insurance plan’s annual deductibleCosts for types of treatment that might not be covered by your insurance, such as orthodontics, therapy, or massage therapyCosts for out-of-network care (depending on your health insurance plan’s network of providers)

Why an HSA or HRA is the best way to pay for out-of-pocket healthcare costs

Some health insurance plans will let you use tax-advantaged accounts like a health savings account (HSA) or health reimbursement account (HRA) to pay for out-of-pocket healthcare costs. There are a few key differences between HRAs and HSAs, though.

Health reimbursement accounts

Your employer owns the HRA and puts money into the account for you. You don’t get a tax break from the HRA money, but your employer does. Your employer also has a lot of control over the rules for how you can spend the HRA money.

Think of an HRA as another form of tax-free income that doesn’t show up on your tax return, just like the money your employer spends on your health insurance premiums. If you’re lucky, your HRA might cover all of your out-of-pocket healthcare costs. But an HRA is not truly “yours” — the account belongs to your employer, and you can’t take it with you if you change jobs.

Health savings accounts

HSAs are a powerful, versatile tax-advantaged way to save for healthcare or even invest for your future retirement. Opening an HSA lets you put money aside for healthcare costs while reducing your taxable income. For 2024, you can get a tax deduction for HSA contributions of up to $4,150 for single coverage, or $8,300 for family coverage.

But not every health insurance plan qualifies for an HSA. You need to have a high-deductible health plan (HDHP) where the deductible is within a certain range:

Single coverage: Deductible must be $1,600 to $8,050Family coverage: Deductible must be $3,200 to $16,100

If your health insurance plan’s deductible is too low — or too high — you do not qualify for an HSA.

What happens when you don’t qualify for an HSA

I found this out the hard way: In 2023, my family had an HSA, but in 2024, our health insurance changed — and our 2024 deductible is now too high to qualify for an HSA. This is not ideal from a tax-planning standpoint. But fortunately, we have a decent emergency savings fund, we’re generally in good health, and we still have some good options to pay for our out-of-pocket healthcare costs.

For people (like me!) who don’t qualify for an HSA in 2024, here are a few ideas to pay for out-of-pocket healthcare costs.

1. High-yield savings account or money market account

Save for healthcare expenses by putting extra cash into a dedicated account. The best high-yield savings accounts are paying over 5% APY as of Jan. 25, 2024. Or you can use a money market account if you want a debit card and check-writing ability to make it easier to pay medical bills directly from your savings.

You won’t get a tax break like you do with those sweet HSA tax deductions, but sometimes getting a dedicated savings account can help clarify your savings goals. And you might as well earn some yield on your savings while you’re waiting for your next medical bill.

2. Travel rewards credit card or airline credit card

If you expect to have a few thousand dollars of healthcare expenses in 2024, this could be a good time to sign up for a rewards credit card. The best airline credit cards have generous welcome offers, with up to 60,000 bonus frequent flyer miles or reward points.

For example, if you know that your child needs braces in 2024, open a new travel rewards credit card. Spend $3,000 or $4,000 in the first few months to meet the introductory requirements to earn the full amount of bonus miles. Then you can make monthly orthodontist payments with the card and earn more points or miles. You won’t get a tax break, but you can get free flights or other travel rewards.

3. Low- or no-interest payment plan

Many medical clinics, hospitals, and dental practices offer flexible payment plans. If you rack up some costly healthcare bills, you don’t have to panic. Ask for a payment plan and see if you can pay it off over time with $100 a month — or less.

Bottom line

Out-of-pocket healthcare costs don’t have to wreck your personal finances. Even if you don’t have an HSA, consider getting strategic with credit cards to pay your bills and elevate your travel experiences.

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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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Today’s best CDs have eye-popping APYs, but don’t be fooled: They’re not always the best investment. Learn more about the downsides of CDs here. [[{“value”:”

Certificates of deposit (CDs) are currently offering some eye-popping APYs. As of Jan. 31, 2024, the best CDs on our list are paying out at rates up to 5.30%. That makes this only the third time since the turn of the century that CD rates have surpassed 5% (the first was in 2000 and the last in 2007), so now’s a great opportunity to lock into a high rate before they drop again.

But for all their strengths, CDs aren’t completely without risks. If you’re on the fence about buying one, here are a few downsides to keep in mind.

You could lose money in a CD

Excluding no-penalty CDs, most CDs have an early withdrawal penalty. And yes — the penalty could result in a loss.

CD penalties are usually equal to several months of interest, whether earned or not. Often the longer the term, the more severe the penalty. For example, Wells Fargo imposes a penalty equal to three month’s interest for any CD terms between three and 12 months, while any CD term longer than 24 months would incur a penalty equal to 12 months’ interest.

Now, let’s say you get a 2-year CD from Wells Fargo and decide to withdraw early after three months. Since the penalty is equal to 12 months’ interest, your three months’ interest would be wiped out, plus you would pay out of pocket the equivalent of nine months’ interest. Yeah, ouch.

A no-penalty CD could mitigate this risk, but banks don’t offer as many no-penalty terms, plus the APYs can be weak. The exception is Raisin, which offers a slew of great no-penalty CDs with plenty of APYs above 5%.

You have to pay taxes on CD interest

I know — taxes, ugh.

Any interest you earn from a CD will be subject to both state and federal taxes. Generally, you’ll include whatever interest you earn within a year on your tax return. For instance, if you have a 5-year CD, you would report your earnings for each year of that term. The tax rate on your CD is the same as the rate on your ordinary income, between 10% and 37% for 2023 taxes.

That said, if you hold a CD within a tax-sheltered retirement account, like an IRA, you wouldn’t pay taxes on interest every year. Instead, you would pay taxes at your ordinary tax rate when you withdraw money in retirement.

Most interest-bearing accounts are taxable income, such as savings accounts. If you live in a state with a high tax rate — like California or New York — you might be better off getting T-bills, which have comparable rates to CDs but don’t impose taxes at the state level.

Decide if a CD fits your financial plan

A CD can lock in today’s high interest rates, helping you earn more for longer periods. But don’t be fooled by the “competitive” APYs; CDs won’t make you rich. They’re great if you’re approaching retirement or saving for a near-term goal. But for bigger savings targets — like retirement — you might be better off with long-term investments, like stocks and ETFs.

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.Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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It’s easy to grow weary of people telling us we’re not healthy enough. However, this is how much you can save by making a few healthy choices. [[{“value”:”

Few of us like to be told what we’re doing wrong. We’re not eating a healthy enough diet, not getting enough exercise, not drinking enough water. The list goes on (and on). The fact is, we know where we fall short but don’t always have the motivation to make big changes.

But what would you say if someone told you that even small changes could make you healthier while also putting more money into your savings account?

You could earn more

A Journal of Labor Research study found that people who exercise regularly earn 6% to 10% more than their colleagues. But here’s the deal: The researchers defined regular exercise as getting at least 20 minutes of physical activity at least three times a week. That’s only 60 minutes a week.

You don’t have to enter bodybuilding contests or run marathons to benefit from exercise, although the more you put into it, the higher the potential benefit. According to the study, there is a correlation between how hard you exercise and how much more you earn. The findings broke down like this:

Study participants who engaged in low-intensity workouts earn an average of $54,000 annually.Participants who engaged in medium-intensity workouts earn an average of $67,000 annually.And participants who engaged in high-intensity workouts bring in an average of $83,000 annually.

It’s natural to wonder if higher-income individuals are naturally predisposed to pushing themselves in all areas of life. It’s also natural to ask if higher-income individuals have more control over their time and whether having more control gives them the time they need to hit the gym or pilates studio.

You could save big in retirement

Exercise can save you money when you need that money most. According to a New York Times article from 2021, “People who start to exercise before or during middle age typically save from $824 to $1,874 annually on healthcare costs after retirement.”

Let’s split the difference and say a person saves $1,300 a year on healthcare costs thanks to small changes made to their exercise routine and diet. If they retire at age 66 and live to 86, that’s an extra $26,000 they could have invested, saved, or simply left behind to cover funeral expenses.

More importantly, you’re more likely to make it to retirement. According to a Rutgers University report, people in poor health die at a relatively young age. In fact, many don’t live long enough to collect the Social Security and pension benefits they spent their entire adult life working for.

And again, small changes can make a difference. A University of Michigan study found that something as simple as eating a hot dog can cost you 36 minutes of a healthy life, while choosing to eat a serving of nuts can help you gain an extra 26 minutes of healthy life. The healthier you are, the less money you’ll shell out for medical care and the more you’ll have to spend the way you want.

Small changes add up

Any time you make a change in life, it’s the details that matter. Here’s a sample of how much you can save by altering a handful of the thousands of decisions you make in the average week.

By adding the total of small changes ($3,495.96) to how much a person would save by eliminating a $7-a-day smoking habit ($2,555) and trading two fast food meals per week for home-cooked ones ($520), we end up with a total potential savings of $6,570.96. That could be a significant boon to your personal finances.

Some of these changes may fit perfectly into your routine, and some may not be quite right for you. Ultimately, the goal is to come up with a list of small changes you can stick with — changes that will leave you healthier and perhaps a bit wealthier.

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.The Motley Fool has a disclosure policy.

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