Money Management

Loud budgeting is currently one of the hottest trends on social media. Find out what it is and how it can help you build wealth. [[{“value”:”

Forget about keeping up with the Kardashians. New superstars are in town, best described as the “anti-Kardashians.” These new stars have been inspired by a TikTok content creator named Lukas Battle. Rather than spend their time showing the world how “fabulous” they are and flaunting (questionable) wealth, Battle and others like him are gaining traction by addressing their financial situations humbly and realistically.

The practice is called “loud budgeting.”

What is loud budgeting?

Loud budgeting is the practice of candidly sharing one’s financial situation. It’s about being honest about the steps they’re taking to live at or below their means. There’s no posing or trying to be anything they’re not. Loud budgeters have committed to respecting their monthly budgets and making short-term decisions to benefit their long-term goals.

If you happen to be on social media and see a video of a young adult explaining why they would not agree to spend $100 for a night out with friends, it’s likely a case of loud budgeting. For that person, spending $100 for an evening out means having less money to pay down debt or deposit into their high-yield savings account.

Many young adults realize that the “perfect” bodies posted on their favorite sites are airbrushed. They also know that most social media images of a person surrounded by expensive luxury goods are likely staged. It’s all smoke and mirrors. Loud budgeting is all about being proud to be frugal and sacrificing momentary pleasures for long-term gain.

A change in course

As a direct response to overconsumption and worsening consumer debt, this new breed of social media hero is getting real about their financial situation. Rather than brag about tennis shoes that cost them hundreds of dollars, a loud budgeter is more likely to share where they buy secondhand clothes or sell some of their belongings to pay down debt.

Loud budgeters are also quick to describe their motivation. They want to be able to pay bills without losing sleep at night. They want to save money and invest for the future. They may not have as much stuff as others, but that’s okay. A loud budgeter has goals and a plan in place to reach those goals.

Conspicuous displays of wealth are nothing new, but loud budgeters have gone viral in rejecting those displays. Shortly after 2024 rang in, TikTok user Lukas Battle announced his plan to get real about his financial situation. In very little time at all, Battle’s TikTok video had amassed more than 10 million views, and others began to share their stories. Suddenly, being authentic about money became the hip thing to do.

How loud budgeting can be a game changer for you

To find financial peace of mind, loud budgeters are stepping back to a time when carefully managing money was respected and showing off was considered crass. In the meantime, they’re building a solid financial foundation from which to grow. If you’re interested in joining the loud budgeting generation, here are some steps you’ll want to take.

Forget about the Joneses. Keep your eyes on your financial goals rather than attempt to keep up with what others have.Remember that “I don’t want to spend money” is a complete sentence. Even if you have the money to spend, you don’t have to.Learn to say no. If spending money today means taking money from your future, stand your ground by being honest.Stop thinking of the phrase “I can’t afford it” as dirty. There’s nothing wrong with being vocal about your expenses — or being short on cash.Don’t think you’re alone. There are far more people like you than you might imagine. Just because someone hasn’t shared their financial situation does not mean they don’t have struggles.Remember that you’re on your own. No one is going to save you if there’s a financial crisis and you need to tap an emergency savings account. No one else will likely help you pay down debt, buy a house, or retire one day. Taking a stance today means being in better shape to take care of yourself in the future.

Loud budgeters share the goal of becoming financially healthy, but each person does it in their own way. For example, some people dine out less often or use coupons more often. Others offer to visit with a friend over a bottle of wine rather than meet in a bar where they’ll spend more money.

Once you’ve settled on your goals, play around with which money-saving techniques will work for you. And then, don’t be shy about letting the people you care about know you’re on a quest to build a healthier financial future.

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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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A surprisingly large percentage of Americans don’t have a bank account or rely on nonbank payment and credit services. See why you should get banked in 2024. [[{“value”:”

It might seem as if everyone in America has a bank account and a credit card, but this isn’t true. According to the FDIC, as of 2021, 4.5% of U.S. households were “unbanked,” and another 14.1% were “underbanked.”

Being unbanked or underbanked can leave people vulnerable to higher fees, less access to credit, and lots of inconvenience. There are many advantages to having a bank account and being fully “banked.” Fortunately, today there are more options for people to get access to low-cost banking services.

Let’s look at what it means to be unbanked or underbanked, and why it’s important for more people to get fully included in the financial system.

Unbanked vs. underbanked

The FDIC National Survey of Unbanked and Underbanked Households defines “unbanked” as a household where no one has a bank or credit union checking or savings account. “Underbanked” households have a bank account (or credit union account), but still use some nonbank transaction services (like money orders or check cashing services), or nonbank credit (like payday loans, rent-to-own, or auto title loans).

Why does it matter that some people are unbanked or underbanked? Ideally, everyone in the U.S. could have a bank account so they can benefit from FDIC insurance and other consumer protections. Nonbank transactions and nonbank credit services tend to charge higher fees and provide lower-quality experiences for customers.

Economic inclusion is the idea that everyone should be part of the financial system and benefit from its shared umbrella of protections. Being unbanked or underbanked can leave you out in the cold.

Why people stay unbanked

It’s not so simple to just say that “everyone should have a bank account.” People who are unbanked or underbanked are making personal choices for valid reasons. Some people live in neighborhoods underserved by bank branches. Some people don’t have enough money to open a bank account. Some people can’t afford bank fees, or have a low ChexSystems score from previous bad experiences with bank accounts.

The FDIC survey found that Black and Hispanic households, lower-income and less-educated households, single-mother households, and households with a working-age person with a disability were more likely to be unbanked. When asked their reasons for being unbanked, people said:

They don’t have enough money to meet minimum balance requirements (21.7% of respondents)They don’t trust banks (13.2%)Avoiding a bank gives me more privacy (8.4%)

People from historically disadvantaged and marginalized communities are often less likely to trust banks. For example, a 2023 survey of LGBTQIA+ people found that 23% of people in this community did not have a checking or savings account, and 11% said they had experienced discrimination when using financial services. Banks have a responsibility to build relationships and trust among communities of people who have traditionally been left out.

Why you should get banked in 2024

If you don’t have a bank account, or are underbanked and relying on some nonbank financial services, you should strongly consider getting fully “banked” in 2024. Here are a few reasons why.

Getting a bank account gives you FDIC insurance for your deposits

FDIC insurance for bank accounts (and NCUA insurance for credit unions) is one of the most underappreciated benefits of the financial system. Ever since it was created during the Great Depression, the FDIC has protected the bank accounts of everyday people. Unless you have lots of money in the bank (over $250,000 per account) you won’t lose that money if the bank fails.

Some unbanked people have started to use peer-to-peer (P2P) payment apps and digital wallets, like PayPal, Venmo, CashApp, Apple Pay, or Google Pay to store their money, instead of a bank account. But these payment apps do not guarantee that your money is safe with deposit insurance. If your payment app fails, or the app’s partner bank fails, unless you’ve jumped through the right hoops to get pass-through deposit insurance, you could lose every dollar that you have in those digital wallets.

Don’t let your money fall into a black hole. Keep your savings and your everyday checking account cash in a bank or credit union with federal deposit insurance, not a payment app.

Nonbank services often charge higher fees

When people have to use nonbank services for sending money, cashing checks, or borrowing, they are vulnerable to higher fees, higher interest rates, and fewer protections. The Ascent’s analysis found that someone with a prepaid debit card and check cashing services might be spending $150 per year on fees for nonbank financial services.

If you’re worried about bank fees, keep in mind that many banks offer second-chance bank accounts and free checking accounts with no fees and no minimum balances. It’s easier than ever to access your bank account with mobile banking. Banks can give you a better deal than you might think.

Getting a credit card can help you build credit

If you don’t have good credit, or have no established credit history, it’s easy to think that banks aren’t for you. But if you’re borrowing money from nonbank credit services, you’re going to get hit with higher interest rates. Getting plugged back into the financial system and building your credit score can help you save big money on borrowing costs in the future. Consider signing up for a secured credit card or credit building product like Credit Sesame’s Sesame Credit Builder.

Bottom line: Despite people’s frustrations with banks, the fact is that banking services are often a better deal than nonbank services. If you’re not part of the banking system, you’re vulnerable to losing your money, getting charged junk fees, or being exploited by predatory lenders.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 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.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Alphabet, Apple, and PayPal. The Motley Fool recommends the following options: short March 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy.

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I’ve been a Costco member for years. Read on to see why I love the store so much. [[{“value”:”

It’s hard for me to believe that a city girl like me has been living in suburbia for about 18 years. And one of the first things I did when I moved to the suburbs — other than learn to drive a car — was sign up for a Costco membership. I figured that if I was going to reside out in the ‘burbs, I might as well get access to bulk groceries and other household items on the cheap.

I can still say with certainty that joining Costco was one of the smartest financial decisions I’ve ever made. And here are some of the membership perks I appreciate the most.

1. Cash back

When it comes to joining Costco, you have a choice. You could stick to a basic membership for $60 a year, or you could upgrade to an Executive membership for an annual fee of $120.

I’ve been an Executive member for a number of years, and I love the fact that I get 2% cash back on my Costco purchases. This means that even if I buy furniture or a vacation package — in other words, an expensive one-off purchase — I get some money in return.

2. Cheap gas

Even though I work from home, I do my fair share of driving, whether it’s taking my kids to their soccer games or shuttling them around to birthday parties. And driving a minivan means that filling up my tank can be an expensive prospect.

As such, I really appreciate the fact that Costco offers lower prices than most of my neighborhood stations on gas. And since Costco’s pumps are right outside the store, I don’t need to make an extra trip to fill up.

3. Extended warranties

A while back, I needed a new laptop for work and decided to buy one from Costco. I’m someone who naturally gets nervous whenever I’m looking at shelling out a pile of money for any given item. But the great thing about Costco is that you get a free second-year warranty on electronics. So that gave me some peace of mind — and made the credit card bill that ensued a bit less painful.

4. Great customer service

I work hard for my money, and I don’t enjoy throwing it away. So when I take a product back to a store because it doesn’t meet my expectations, I don’t like to be hassled.

At Costco, that’s never been the case. I’ve never had a bad experience with customer service in my many years of shopping there.

Quite the contrary — years back, I bought a two-pack of feta cheese, and one of the sealed packs started to grow moldy well ahead of its expiration date. I brought the half-eaten cheese back to Costco and requested a 50% refund. The customer service representative I spoke to insisted on refunding me 100% despite my insistence that a partial refund was fine, since I’d gotten to consume half the product. That’s the kind of customer service you’ll get at Costco.

All told, my Costco membership is more than worth the $120 a year I pay for it. If you’re new to Costco, I’d encourage you to explore the different benefits of being a member, whether it’s low-cost travel packages or savings on tires for your car. There may be some hidden perks you didn’t even know existed.

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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.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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Trying to decide whether to invest in CDs or stocks? Read on for some surprising big-name stocks that have failed to beat the long-term return on CDs. [[{“value”:”

Certificates of deposit (CDs) and other cash accounts are often considered to be safe, low-risk, guaranteed return — but “boring.” If you want your money to grow over the long term, putting it into CDs is generally not a good investment strategy. But sometimes, CDs can outperform riskier assets like stocks. That’s because individual stocks don’t always go up!

Sometimes, publicly traded companies run into trouble, encounter unexpected downturns, make bad decisions, experience bad luck, and otherwise burn through their shareholders’ money. This can make companies’ stock prices go down, not just over the course of one month or one day, but for years and decades at a time.

The volatility of stocks can be scary for investors. No one likes to lose money. Have you ever wondered if it’s “safer” and a better investment to buy CDs than to buy stocks? Sometimes, depending on the stock and the timeframe that you own that stock, companies’ stocks have delivered a lower ROI than cash.

Let’s look at a few stocks and ETFs that have been outperformed by CDs and cash — and what this means for your investment strategy.

What is the historical return of CDs during the past 20 years?

First, let’s clarify a few assumptions. It’s hard to calculate the historical investment return of CDs, because each CD’s APY (annual percentage yield) depends on the CD’s term, the bank, and more. But a general proxy for long-term cash investment yields is the U.S. 3-Month Treasury bill, which the best CD rates tend to match.

During the past 20 years, from 2003 to 2023, cash investments (as measured by U.S. 3-Month Treasury bills) generated an annualized rate of return of 1.3%. So for the purpose of this article, let’s assume that you put $10,000 into the best certificate of deposit in 2003, and you kept reinvesting your money into the highest-yielding CD you could find, over and over again. After 20 years, you would have a profit of $2,935 — before inflation and taxes.

That’s not good! This low rate of return on CDs happened because, for several years after the 2008 financial crisis and Great Recession, interest rates were near zero. The Fed just recently started raising interest rates aggressively during 2022. For example, as of Jan. 25, 2024, the best CDs were paying 5.30% APY. But for several years before 2022, you would be lucky to find a bank CD with 0.10% APY. Owning CDs wasn’t a good way to earn yield on your savings.

But even that meager rate of return is still a good deal compared to some investments that have actually lost money during the past 20 or so years. There are some surprisingly big names on this list — companies that you might have heard of in everyday life.

Here are a few stocks and ETFs that have delivered a lower ROI than cash, failing to return at least 1.3% per year, for extended periods during the past two decades.

1. The Kraft Heinz Company (KHC)

Kraft Heinz is one of the largest food and beverage companies in the U.S. It owns famous brands that make beloved products like Heinz Ketchup, Oscar Mayer hot dogs, and Kraft Macaroni & Cheese. But for several years, the company’s stock has been in steady decline.

If you invested $10,000 in Kraft Heinz Company stock on Dec. 31, 2015, as of January 2024 that stock would be worth $7,132 — a compound annual growth rate (CAGR) of –4.14%.

2. Paramount Global (PARA)

Paramount is a leading global media company that delivers premium content to billions of people; the company owns production studios, networks, streaming services, and more. You’ve probably seen movies with the Paramount logo; the company also owns CBS, BET, Comedy Central, and the Paramount+ streaming service.

But times have been tough for Paramount’s TV and movie businesses in the past few years. With pandemic-closed theaters and stiff competition from Netflix and other streaming services, Paramount’s stock price has taken a hit. If you invested $10,000 in Paramount’s Class B stock (PARA) on Dec. 31, 2005, that investment would be worth $8,804 today. That makes for a CAGR of –0.70%.

3. Deutsche Bank AG (DB)

If you didn’t know much about the stock market, you might think that a big German bank would have a big stock price. After all, Germany is one of the most economically powerful countries in the world, and banks always make money, right? What could go wrong?

Unfortunately for its investors, Deutsche Bank AG, Germany’s largest bank, has become one of the worst-performing stocks in the financial services world. The bank has been hit by a series of scandals and controversies, paying billions of dollars in fines and settlements that have damaged its reputation and its stock price.

If you bought $10,000 of Deutsche Bank stock (DB) on Dec. 31, 2002, as of Dec. 31, 2023 your investment would be worth $4,333 — adding up to a CAGR of –3.90%.

Lessons for your investment portfolio: Picking individual stocks can be risky, and no one can predict the future. Even big companies with well-known products can suffer years-long stock price drawdowns. Even if you think “this is a great company, it’s a big name, the stock price is sure to go up,” the company might underperform, or the entire industry could go into a downturn for complex reasons beyond your control. The market ultimately decides the stock price.

Bottom line: Don’t put all your eggs in one basket. Create a diversified portfolio of stocks, bonds, and ETFs, and you can avoid the risk of losing money — and the embarrassment of getting outperformed by safe, humble, “boring” CDs.

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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 Netflix. The Motley Fool has a disclosure policy.

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Many Americans are doing something likely to lead to long-term financial problems. Find out about a common credit card mistake and why it’s such an issue. [[{“value”:”

There are good ways to use credit cards — like charging some purchases, earning rewards, and then paying your cards off in full and on time. Doing this can help you get cash back or miles for purchases you’re making anyway — and can help you to earn a better credit score.

But there are also some bad ways to use cards. And unfortunately, as many as 40% of Americans are making a major mistake with the way they’re using credit. Here’s what’s happening, why it’s such a problem, and what you should do if you’re one of the many who may be using cards in a way that could lead to long-term trouble for your personal finances.

Far too many Americans are using their cards in a dangerous way

A recent study from Ramsey Solutions on “State of Personal Finance in America” has revealed something really troubling about credit card use. According to the research, close to 40% of Americans have indicated they are relying on their cards to cover basic monthly expenses.

This is a huge problem for a few reasons. For one thing, it means people are spending beyond their means if they have to rely on credit cards and can’t cover the essentials out of their bank account. This is a big issue in and of itself, because if you can’t pay for necessities without relying on debt, it’s going to be impossible for you to save for emergencies, big purchases, or important future life events like retirement. This makes you vulnerable to financial problems for years to come.

And that’s not the only problem with relying on cards to cover the essentials. Credit cards are a very expensive financing option when you’re paying interest. The average credit card interest rate is 21.47%. So if you are relying on your cards to cover all of your basic costs, you’re essentially paying even more for those essentials. This means people who are already struggling to pay for the basics find themselves with even less money because those basics are over 20% more expensive each year thanks to the credit card interest they’re paying.

That brings us to the next problem, which is that those credit cards have to be paid off. Each month, there will be a credit card payment to make — which leaves you with even less money to pay for the basics, which in turn makes it more likely that you will find yourself relying on debt.

For all of these reasons, covering basic essentials with credit card spending is a huge problem.

What should you do if you’re covering daily essentials on a credit card?

If you’re among the 40% of Americans relying on credit card debt to fund your lifestyle, chances are good you already know this isn’t an ideal situation. But, there are some options for trying to get out of this cycle.

One of the best solutions would be to try to make a major cut to one fixed expense that frees up money so you can more consistently spend below your means. This approach can be a lot better than trying to nickel-and-dime yourself, stripping little luxuries out of your budget and forcing yourself to get by with less each month. If you can cut your housing costs by getting a roommate or your vehicle costs by downsizing to a used car, for example, those are one-time changes that will consistently give you more money without constantly forcing yourself to spend less.

Other possible options could include increasing your income (perhaps by taking on a side hustle) or resolving to temporarily live on a strict budget that will help limit spending so you can cover your costs without the help of credit cards.

It’s worth exploring all of these potential solutions. Continuing to rely on cards to cover essentials just isn’t something you can do for the long term due to the huge costs and the future challenges you’re creating for yourself by racking up more bills to pay.

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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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Making money with a CD is easy and low-maintenance. Find out the best way to go about it. [[{“value”:”

A CD — short for certificate of deposit — can be a great place to park your mid-term savings. (Note: This is not your emergency fund. You want that liquid. We’re talking down payment savings or similar.)

And that’s especially true right now with rates so high. Here’s a quick guide on the best way to take advantage of high-yield CDs.

Before you open a new CD

There are three main things to consider when getting a new CD.

1. The minimum deposit

Most CDs have a minimum deposit limit, which is the lowest amount of money you can deposit to open that CD. If you can’t meet the minimum, you’ll need to look for a different CD.

In general, accounts with the highest rates tend to have the highest deposit requirements — but this isn’t a hard-and-fast rule. You can still find very competitive rates with lower (or no) deposit minimums.

2. The APY

The best way to maximize your CD earnings is by looking for the highest APY (annual percentage yield). So, before you open an account, it’s a good idea to look around to see which bank or credit union will offer you the best CD rates.

If you’re lucky, your current bank will have competitive rates. However, you may need to look into an online bank or your local credit union to get the best APY.

3. The maturation term

Most CDs (no-penalty CDs are a rare exception) have a time period during which you can’t withdraw any money without paying early withdrawal penalties. A CD that hits the end of that time limit is said to have “matured.”

For example, a 12-month CD takes 12 months to mature. If you withdraw your money before those 12 months are up, you’ll pay a hefty penalty, usually amounting to a certain number of months’ worth of interest.

Make sure you choose a term that meets your timeline. Don’t open a CD with a maturation term longer than you can afford to go without that money. Which leads us to…

During the life of your CD

The only real rule here is: Don’t touch it.

Seriously, don’t even think about that money as existing. For all intents and purposes, that money disappeared when you opened the CD, and it will magically manifest anew on its maturation date — with its good friend, interest income.

What’s the big deal? CDs have very expensive early withdrawal penalties. We’re talking up to half of your interest earnings. That definitely defeats the whole purpose of the CD in the first place, which is to make money.

CDs vs. high-yield savings accounts

If you’re at all worried you might need access to your money during the maturation period, don’t get a CD. Get a high-yield savings account instead.

Rates right now are so good you can easily find high-yield savings accounts with rates directly comparable to most CDs. Online banks, in particular, tend to have excellent rates on savings accounts.

Moreover, savings accounts allow you to move money to and from the account (mostly) at will. (Some banks limit you to six withdrawals a month from a savings account; this is a holdover from pre-COVID-19 Regulation D rules.) This not only means you can get to your funds at any time, you also can add funds to take advantage of the high APY on additional savings.

Once your CD matures

When your CD hits its maturity date, it will typically be automatically rolled over into a new CD with the same term. For instance, a 6-month CD will roll over into a new 6-month CD, and a 3-year CD will roll over into a new 3-year CD.

You’ll have a seven- to 10-day grace period to withdraw your funds with no penalties. If you don’t take out the money, it will be locked into the new CD. (The exact amount of time you have will be listed in the terms and conditions of your CD.)

When you should withdraw

If you’re going to need your money before the new CD would mature, withdraw your money during the grace period. You can then put it into a shorter CD, or place it in a high-yield savings account until you need to use it.

You may also want to withdraw your money if you’ve found a better rate elsewhere. For example, if you originally signed up for a promotional CD rate, it will likely renew at a lower rate. It’s definitely worth taking the time to compare rates before the grace period ends to ensure you’re not missing out.

When you should rollover

Provided you don’t need the money and the rate is still competitive, leave it alone. The money will continue to compound and grow while you go on about your life. Easy peasy.

CDs can be a great place for your short- and mid-term savings. As long as you play by the rules, they’re a low-risk place to grow your money.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 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.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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