Money Management

Data reveals that younger Americans face different obstacles when saving for long-term goals like retirement. Discover one that might catch you off guard. 

Saving for long-term goals like retirement isn’t easy. And there are many things that have the potential to get in your way.

A recent Schwab survey found that Gen Zers are facing a number of obstacles that are impacting their ability to save for the future. A good 54% point to inflation as a major obstacle, while 31% cite emergency expenses.

But for 30% of Gen Zers, helping aging parents financially is a reason they’re struggling to save money. And that’s not a boat you want to end up in. With a couple of key steps, however, you can potentially avoid that situation.

1. Have conversations about caregiving and support before an actual need arises

Many adults end up in a position where they have to assume a caregiving role. That’s something you may want to be able to do for your parents — namely because they sacrificed so much to raise and care for you.

However, you should know that the cost of being a caregiver can be huge. For one thing, you might spend a lot of money just running back and forth to see your parents and helping them with tasks like shopping and household chores.

Also, if your parents are reliant on you for help, you may not be able to commit to a higher-level job. The result? Lower earnings for you, and less opportunity to save.

That’s why it’s so important to set expectations and have an open discussion about things like caregiving and logistical and financial support before your parents end up in a position where they need it. And if you have siblings, involve them, as it should really be a group effort to make sure your parents’ needs are met.

2. Encourage your parents to look into long-term care insurance

A big reason some adults end up in a caregiving role is that the cost of long-term care can be absolutely prohibitive. Genworth reports that as of 2021, the average cost of a home health aide was almost $62,000 a year on a national level. If your parents can’t afford to shell out that kind of money, they might end up relying on you to help on a regular basis as they age.

That’s why it’s a good idea to talk to your parents about long-term care insurance. If they have a financial advisor they work with, that person could serve as a resource and help them explore their options.

Long-term care insurance is definitely a notable expense, and each policy out there comes with its own costs and coverage. So it’s the sort of thing that will require a lot of research, and that research may be over your head. Hence, it’s a good idea to turn to a financial advisor for help.

However, a long-term care policy could help defray a lot of the costs your parents might face as they get older — such as visits from home health aides and assisted living fees. And if your parents are able to get that outside help, it’ll put less of a financial and logistical burden on your personal finances.

You may be of the mindset that you should do everything you can to support your parents as they age. But mapping out a plan and looking into long-term care insurance are ways to help out, so aim to do those things sooner rather than later.

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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.Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool recommends Charles Schwab and recommends the following options: short December 2023 $52.50 puts on Charles Schwab. The Motley Fool has a disclosure policy.

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Many self-made millionaires didn’t sacrifice learning or relationships so they could spend more hours in the office. Here’s what we can learn from their habits. 

As another new year rolls around, it’s natural for us to turn our attention to habits we want to adopt or changes we want to make. I don’t know about you, but I’ve got a few financial goals I want to achieve in 2024 and beyond. It isn’t easy to build wealth when high living costs chip away at our wallets. But some people can put money aside, no matter what’s going on around them. I want to be one of those people.

The trick is knowing how to cultivate a millionaire mindset and build helpful habits into our routines. Popular author Tom Corley spent five years interviewing over 350 people, rich and not-so-rich. The summary of his research includes responses to over 144 questions and shows some stark differences in people’s routines and attitudes.

Find out whether you already practice any of the following habits that many wealthy people share.

1. Balancing your checkbook

Balancing your checkbook used to involve checking the stubs against your statement to know everything was correct. Fewer people write checks these days, but the habit of monitoring your accounts is still a goodie. Over 90% of the rich people Corley spoke to balanced their checkbook each month. In comparison, only a third of people who were struggling financially did the same.

Why it could help make you rich

A regular check in on your spending can help you increase the gap between what you spend and what you earn. The more you can increase that gap, the more money you can put into your savings or brokerage account.

What you can do

Keep an eye on your day-to-day bank balance and schedule a fixed time every month to look over your finances. This will tell you if your spending is on track, if you’re meeting your goals, and whether you need to make any adjustments. A budgeting app can also make it easier to monitor where your money goes.

I have a monthly calendar alert so I don’t forget to check-in. I try to make financial tasks more fun by rewarding myself with a piece of cake or chocolate bar. But I also consciously cultivate a positive attitude toward managing my money. Rather than viewing it as a chore, I try to take satisfaction from being in the financial driving seat.

2. Building strong relationships with people you admire

A wealthy mindset isn’t only about saving and investing money. People and relationships matter too. If you’re running a project or setting up a company, each member of your team can be like gold dust. Moreover, if you neglect your personal life in your pursuit of wealth, you risk being a Scrooge-like figure sitting alone and counting your money.

Rich people say they’ve actively built relationships with people they admire and sought mentors who can help them along the way. Indeed, 86% of the rich people Corley interviewed said they associate with success-minded people, while 93% said a mentor was responsible for their wealth.

Why it could help make you rich

Whether you’re an introvert or an extrovert, relationships are important. The people you spend time with can inspire you and challenge you. Corley argues that consciously surrounding yourself with successful people will help you adopt their good habits, work ethic, and passion. On a practical level, your network may help you find a new job or support you if you launch your own business.

What you can do

If you have ambitious money goals, you may find you need to put in a lot of hours to achieve them. But don’t neglect your relationships. Corley’s research showed that 80% of rich people called people on their birthdays and around other life events. They send thank-you notes. These are habits you can adopt, too.

This isn’t about superficial networking where you exchange business cards or LinkedIn messages and never speak to that person again. Look for ways to help others and take an interest in people’s lives. Be appreciative when people do things for you. Try to be active in your industry by attending events and following up on the connections you make.

3. Keep learning

Lifelong learning isn’t necessarily about collecting degrees. Rather, it’s about fostering a spirit of curiosity. According to Corley, many wealthy individuals didn’t finish college. But they do invest time in self improvement and developing new skills. Indeed, 94% of the rich people he spoke to kept informed about current affairs. Moreover, 96% of the self-made millionaires said they spend 30 minutes a day on education, career, or self-improvement.

Why it could help make you rich

According to Harvard Business Review, ongoing learning is good for our wallets, relationships, health, and careers. We live in a fast-changing world, and increasingly need a mix of skills to succeed.

If you are a retail investor, there’s a direct connection between learning and improving your wealth-building abilities. The more you learn about investing, the better the decisions you can make. At a professional level, a commitment to self improvement can help you adapt and stay on top of your game. This could be the secret to getting the next promotion or successfully applying for a new job.

If you’re an entrepreneur, keeping on top of the latest trends will help you identify opportunities before your competitors. You can’t always hire people to fill every gap in your business. Sometimes it makes more sense to develop those skills yourself, whether that’s marketing, coding, customer service, or something else.

What you can do

Follow those millionaires and set aside time each day to learn something new. Everybody learns differently. If you’re not a big reader, try listening to podcasts during your commute. If you want something more formal, look for free (or paid) online courses that pique your attention and go from there. You might even look into in-person evening classes.

If you catch yourself watching a lot of cute kitten videos online, try to consciously switch to a TED Talk or educational YouTube channel. That’s not to say kitten videos don’t have their place. But sometimes there’s value in being more intentional about the time you might otherwise spend on aimless web browsing.

Bottom line

When you think about money habits, it is easy to get dragged into the details and lose track of the big picture. This year, I’m not making resolutions around skipping my regular takeout latte. I want to build broad habits and attitudes that help me focus on what’s important. The idea is that if I can get the big things right, the smaller things will take care of themselves.

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Healthcare is an unavoidable expense for many people. Read on to see how a 2024 change now lets you allocate more money toward healthcare in a tax-advantaged manner. 

Certain life expenses are unavoidable. We all need housing, for example, and we all need to eat.

Similarly, healthcare is an expense that’s hard to steer clear of. This doesn’t mean you’ll have to swipe a credit card at your doctor’s office every day. But you may find yourself raiding your savings account every few months to cover a medical bill.

It pays to contribute to a tax-advantaged account like an HSA (health savings account) if you can. An HSA won’t make your actual healthcare bills less expensive. Instead, you’ll benefit in the form of tax savings.

Let’s say you end up with $1,000 worth of medical bills one year. If you dip into your bank account to pay those bills, they’ll cost you $1,000.

If you fund an HSA with $1,000, your medical bills will still technically cost you $1,000 — only not really, because you’ll save yourself taxes on that $1,000 contribution. So yes, you’ll pay $1,000 to your medical provider, but you might save $240 in taxes by making that contribution, depending on your tax bracket.

In other words, HSA contributions are made on a pre-tax basis. So if you put $1,000 into an HSA, you’re not being taxed on $1,000. Your exact savings will hinge on your tax bracket. But in this example, if you’re in the 24% tax bracket, a $1,000 HSA contribution saves you 24% of that, or $240.

Meanwhile, in 2024, HSA limits are increasing. If you’re eligible for one of these accounts, you have even more opportunity to shield income from the IRS and reap savings that way.

Know the new limits

With an HSA, you can adjust your contributions whenever you want, provided you’re not exceeding the maximum allowable contribution for the year. So if you initially signed up to only put, say, $1,000 into your 2024 HSA, it’s not too late to add more money.

Now the amount you can put into an HSA hinges on your coverage and age. Right now, the limits for HSAs are:

$3,850 for self-only coverage if you’re under 55$4,850 for self-only coverage if you’re 55 and over$7,750 for family coverage if you’re under 55$8,750 for family coverage if you’re 55 or older

In 2024, the limits are rising to:

$4,150 for self-only coverage if you’re under 55$5,150 for self-only coverage if you’re 55 and over$8,300 for family coverage if you’re under 55$9,300 for family coverage if you’re 55 or older

You may not be able to max out an HSA if you have many other bills you’re on the hook for. But if you can max out your HSA, you’ll save even more money by getting to pay the IRS less.

Is your health plan compatible?

Your health insurance plan needs to meet certain requirements for you to be able to participate in an HSA. In 2024, your plan must have a:

Minimum deductible of $1,600 for self-only coverageMinimum deductible of $3,200 for family coverageMaximum out-of-pocket amount of $8,050 for self-only coverageMaximum out-of-pocket amount of $16,100 for family coverage

Qualifying for an HSA one year does not automatically mean you’ll be eligible for one the following year. If you’re not sure and you get health coverage through work, talk to your benefits team about whether your plan is compatible in 2024. If you buy your own coverage, your plan should indicate if it’s HSA-eligible or not. Just log into your healthcare.gov account to check.

You may not be able to avoid healthcare bills. But you can at least save money when paying them. And in 2024, you can potentially save even more if you manage to max out your HSA.

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There are steps you can take to spend less on food and fuel. Learn how you can trim these costs. 

Inflation has been wreaking havoc on consumers since 2021. And while it’s thankfully cooled a bunch this year after peaking in mid-2022, Americans are still grappling with higher living costs. And many are changing their spending habits to cope.

Recently, Bank of America surveyed members of Gen Z about their financial habits, and 73% of respondents said they’re spending less on groceries and gas due to rising prices and persistent inflation. Of those, 96% anticipate maintaining those changes over the next 12 months. But the reality is that anyone can benefit from reducing their spending in essential categories like these, even if prices do drop.

How to save money on groceries

Groceries may be an essential expense, but you can take different steps to spend less on them by:

Buying household items in bulk: It’s not just stores like Costco and Sam’s Club that give you access to bulk quantities of groceries. Just look on Amazon for pantry staples, or check out the inventory at your local Target or Walmart. Your regular supermarket might also sell bulk quantity items that result in you paying less. However, only buy items in bulk that are staples in your household. That way, you’re more likely to use them up and not waste them.Loading up at discount grocers: Discount grocers like Aldi have the potential to offer a lot of savings. However, you have to be willing to go off-brand to take advantage of those discounts. You may not want to do that when it comes to things like your kids’ favorite granola bars. But when you’re buying bread, pasta, and butter, why not save your money by giving up the fancy packaging?Doing more meal planning: The simple act of getting organized could save you money on groceries. Figure out what you’ll be cooking at the start of the week, and, if possible, try to coordinate your menu with what’s on sale at your local supermarket.

How to save money on gas

You need to fuel your vehicle to get around town, but you can save on gas by:

Paying in cash: Many fuel stations offer a steep discount per gallon for paying in cash. Do some research in your neighborhood to see what discounts you can snag by hitting the ATM before you fill up.Running errands more efficiently: You may be in the habit of running out to the store whenever the need arises. Instead, try to plan your shopping for the week, and use an app like Google Maps to figure out a cost-effective route.Fill up at Costco or join Walmart+ for the gas savings: Filling up your car at Costco may be a lot less expensive than filling up at another gas station in town, so try to make a point to fill up when you do your shopping. Meanwhile, a Walmart+ membership gives you $0.10 off per gallon of gas at thousands of fuel stations across the country. And, you get free shipping on grocery orders of $35 or more. Taking advantage of that membership could mean lower costs at the pump and fewer trips to the supermarket. That could also result in gas-related savings.

It makes sense that younger Americans are trying to cut back on large expenses at a time when prices are high. If you’re trying to conserve funds and improve your personal finances, it pays to do the same.

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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.Bank of America is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon, Bank of America, and Target. The Motley Fool has positions in and recommends Alphabet, Amazon, Bank of America, Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy.

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Being charitable can benefit you from a tax perspective. Keep reading to learn how it works. 

The holiday season is upon us, which means a lot of people are feeling more generous than usual. If you’re feeling as though you’d like to give back in some way during the holidays, whether by donating money to a charity you support or passing gently used toys along to children in need, you may get a tax break out of it — even if your primary intent is to simply do good. So it’s important to keep good records of charitable donations you make.

Why not save money on your taxes?

When you write a $40 check to your church or give $50 to an animal rescue that does great work in your community, you may not be thinking of benefiting from a tax perspective. But if you itemize on your taxes, then donations to registered charities are considered tax-deductible. What this means is that they can shield some of your income from taxes, resulting in a higher refund or a lower tax bill.

So, let’s say you donate $1,000 to charity in 2023. The IRS won’t tax you on $1,000 of earnings, which means you’ll owe a bit less or get more money back when you file your tax return.

And it’s not just monetary donations you can deduct on your taxes. You can also deduct the fair market value of goods you donate.

Perhaps you donate a carload of gently used toys to a registered charity in your neighborhood. You can’t deduct the original value of those toys — meaning what you paid for them when they were new. But you can deduct their fair market value — what they’re worth today. Figuring that out isn’t so simple, so if you’re going to take a deduction for donated goods, it’s best to work with a tax professional.

In fact, any item you’re itemizing on a tax return, hiring a professional tends to be a smart bet. They can help you determine what deductions to take and make sure you’re claiming the right amounts.

You should also know that if you have a vehicle you really need to replace, donating your car to charity may be worth considering before you rush to sell it — especially if you’re looking at getting a small amount for your car. However, the rules of car donations aren’t so simple, either, which is why it pays to work with a professional if you’re claiming that sort of tax break.

Keep good records no matter what

If you’re going to be charitable, you might as well eke out some tax savings in the process. But one thing you must do is keep solid records of your donations in case the IRS comes asking for proof.

If you donate money to a registered charity via credit card, retaining your email confirmations and statements showing those donations is a good bet. And even if you donated via an app like Venmo, there’s usually a record of that transaction, so make sure to hang onto it.

If you’re donating goods, you may be given a physical receipt after you drop those goods off and they’re assessed. It’s always a good idea to scan physical receipts you might need for tax purposes, since they have the potential to get lost or degrade over time.

Nobody wants to pay the IRS more money than they have to. If you’re giving money to charity this season or in general, read up on the rules for claiming a tax deduction. Better yet, talk to a professional who can walk you through the rules and make sure you’re getting the tax benefit you’re entitled to.

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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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Zillow thinks homeowners will get tired of waiting for lower rates and will list their homes. Check out why buyers could see relief in 2024. 

I’ve been sitting out on the sidelines of the housing market for a while now, waiting to see if conditions will improve — and I’m not alone. More than half of potential home buyers are waiting for lower mortgage interest rates or for housing prices to fall before they consider buying.

But Zillow economists think a shift is happening among homeowners that could change that market. The company’s 2024 housing market predictions report says that homeowners will get used to higher interest rates and be more willing to list their homes for sale.

Homeowners will stop waiting around for lower rates

Many current homeowners who want to move are waiting to do so because many of them scored historically low interest rates over the past few years. For example, an estimated 80% of mortgages have an interest rate below 5%. Zillow thinks some of these homeowners are getting tired of waiting for mortgage rates to fall and will list their houses for sale in 2024.

“Expect more homeowners who locked in long-term payments when rates were near all-time lows to list their homes for sale, as they grow weary of waiting for the historically low rates of 2021 to return,” the company said in its report.

The result could be improved housing affordability. The average transaction price for a home is $431,000, a massive 27.7% increase from just three years ago. But if more homes hit the market in 2024, prices could fall as home buyers have more options to choose from.

Interest rates could come down in 2024

While Zillow is predicting homeowners will list their houses for sale no matter what rates do, additional relief for home buyers could be on the horizon.

Federal Reserve members kept interest rates the same in their latest meeting and indicated that three rate cuts could come in 2024. The federal funds rate is the highest it’s been in more than 22 years, and the higher rate has affected mortgage rates, which has added to affordability problems for potential buyers.

If the Federal Reserve cuts rates, then homes could potentially be more affordable. For example, a $350,000 home with an interest rate of 6.7% costs about $2,376 per month (assuming a 20% down payment). But the same home with an interest rate of 6% would be $127 cheaper per month.

And if more homeowners list their houses for sale, as Zillow expects, there could be more housing inventory and lower interest rates at the same time.

Shop around for a lender no matter what happens

One of the best things you can do when buying a home is to shop around for the right lender. Every mortgage lender will have its own set of criteria for lending out money, and some may be able to offer you better terms — including a lower interest rate — than others.

But you won’t know unless you shop around. So take some time finding out which lenders will offer you the best deal. You can’t control how many homes are on the market or what interest rates will be when you buy, but you can shop around to ensure you’re not overpaying for your mortgage.

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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.Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Zillow Group. The Motley Fool has a disclosure policy.

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