Money Management

Most millionaires say that being wealthy is being financially secure. Read on to find out their thoughts on building wealth. 

A new study conducted by Ameriprise Financial shows that even when Americans have stashed sizable sums of money into their investment accounts, they still might not see themselves as wealthy.

The financial group surveyed hundreds of Americans with $1 million or more in assets and found some surprising results, including that 31% say they are “middle class.” That may come as a shock to many Americans who have assets worth far less than that. Among the group of millionaires, 60% say they are “upper middle class,” and just 8% consider themselves “wealthy.”

Why is there a difference in how the respondents defined their personal finances? It may be because everyone has a different perspective on what they think wealth is. The survey showed that most investors (85%) define wealth as financial security. Others thought wealth was being able to provide for themselves and their family, while some said it was the “freedom to do what I want.”

Definitions of the middle class vary

You might excuse the surveyed millionaires for not knowing whether they’re middle class, partly because there are many different ways to define it.

For example, the Pew Research Center says someone is middle class if they have an annual household income that is two-thirds to double the national median income. The national median household income was $74,580 in 2022, which means a middle-class household earns between $49,720 and $149,160 under this definition.

However, the Brookings Institute says there are three separate definitions of the middle class, and it doesn’t even require a household to earn a specific income. Instead, it says the term can refer to a person’s professional credentials, their culture, or the amount of money they have.

How millionaires recommend building wealth

No matter how you define being middle class, there are some practical lessons all of us can take from those who’ve accumulated substantial wealth. The Ameriprise survey respondents mentioned three top factors that helped them accumulate more than $1 million.

Financial planning and investing: 80% of respondents said this was the most important driver to building wealth. Thankfully, you don’t have to be an investing wiz to do well financially. Owning low-cost index funds in an investment account can help you build wealth over time.Earning a good income: 71% of respondents cited this as a key driver of their wealth. But finding a few ways to boost your income can go a long way to helping you achieve your financial goals as well. Gig workers earn an average of $5,700 annually, and many of these jobs can be done in addition to your day job.Living within your means: 69% said living within their means contributed to their financial success. The high cost of living has made this suggestion difficult for many Americans, but it’s a good reminder to keep tabs on your purchases. Debt payoff apps can be an excellent way to get your finances back on track if you need help.

You don’t have to accumulate $1 million to be on the right financial track; for some people, that might not be the best goal. Instead, think of one financial goal you want to achieve. It could be stashing $1,000 in your savings account, putting money aside for buying a home, or paying off your credit card balance. It all starts with setting a goal and creating a financial plan to get there.

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

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Yet another home repair situation arose in my world. Read on to see how I handled it. 

Owning a home can be a far more expensive prospect than you’d imagine. That’s because on top of your mortgage loan payments and property taxes, you also have to cover the cost of repairs. And boy do I know a thing or two about those.

In recent years, I’ve had to replace not one, but two air conditioning units in my home, my water heater, and my deck. And those are just the larger repairs. I’ve also had components of my sprinkler system break on me, faucets stop working, and more.

After a pretty consistent stretch of costly repairs, my husband and I thought that maybe, just maybe, 2023 would be our year of minimal repairs. But nope. During our routine heating maintenance appointment this fall, our technician found major issues with both of our heating units.

We had the option to make repairs to both rather than replace them. The problem, though, was that since both units were pretty old, in doing repairs, we ran the risk of those systems giving out on us in a year or two anyway.

As such, we decided to move forward with replacing both — at a cost of $12,000. Thankfully, though, we’re not carrying a penny of debt as a result.

We at least had time to shop around

The last time we had a major repair on our hands — having to replace an air conditioner — it happened in the middle of a heatwave, and so we had no choice but to go with the first company that could get us a replacement unit. This time around, we had time to shop around because we discovered these issues with our heating system in early October, before the time had come to pump up the heat. (Side note: If you’re not already routinely having your heating system inspected, set up a recurring annual appointment prior to winter.)

That helped save us a lot of money, because the company that does our maintenance wanted to charge us over $15,000 to replace both units. Another company came in with a lower price, so we went with it. And while our bill wasn’t cheap at $12,000, it was better than $15,000.

Our emergency fund bailed us out once again

When we had to replace our air conditioners, deck, and water heater, we dipped into our emergency fund to cover those expenses. And this past fall, our savings account once again bailed us out.

Now, you’d think our emergency fund would’ve been whittled down after all of those previous repairs. But one thing my husband and I always make a point to do is replenish our emergency fund after taking a withdrawal.

That doesn’t always happen right away. And this time around, it may take a while to get that $12,000 back into our savings. But it’s something we’re working on now, so we’re ready when the next big home repair inevitably pops up.

The importance of an emergency fund

Recent data from SecureSave found that 63% of Americans do not have the cash reserves to cover a $500 emergency expense. That’s a problem in general. But I’ll say that it’s especially problematic if you’re a homeowner, because repairs like the ones I recently faced can pop up at any time. And if you don’t have savings to tap, you might end up with a heaping pile of debt.

In fact, one thing you should know about my house is that it’s fairly new — it was only constructed about 14 years ago. And in spite of that, I’ve still faced my fair share of repairs. So if those things can happen to me, they can happen to you. Make sure you’re ready by having some cash at your disposal, even if you have to slowly build up your emergency fund over time.

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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. Maurie Backman 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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With so many great deals available, shopping online can be a wise financial choice as long as you’re maximizing your savings. Find out how to do just that. 

As we near the end of 2023, you’re likely doing some online shopping. Whether you’re getting holiday gifts for your favorite people or purchasing the household essentials, electronics, and other items you’ve been saving up for all year, take steps to maximize your savings as you shop.

By taking a few extra moments before hitting the “submit order” button, you can get a better deal that allows you to keep more cash in your bank account. Let me show you how.

1. Use a price comparison tool to score the best price

Before you place your next online order, reviewing prices at other retailers is wise. You could end up overpaying if you’re in a hurry and choose a retailer with a higher price.

You can use price comparison tools to compare prices quickly. Google Shopping and Capital One Shopping are two popular options that are easy to use. Why spend more money than necessary?

2. Get a bigger discount with coupon codes

One easy way to maximize your savings when shopping online is to use promo and coupon codes. These codes provide shoppers with additional discounts, and many retailers offer them.

All you have to do is enter an active coupon code during checkout to save money on your order. You can use one of the tools on our list of the best coupon apps to find codes.

3. Don’t ignore price match guarantees

Many brands have price match policies that could help you save money as you shop. Some policies allow you to get a price match if a similar retailer has the same item at a lower price. Other retailers will match their own lower prices if you recently purchased an item and it later goes on sale.

Policies vary by store, so review the terms and use these guarantees to your advantage. I’ve used price match guarantees on several occasions to get a better deal.

4. Review email newsletters and social media for deals

If you regularly shop with a favorite retailer or have been saving for a more expensive item with a pricey brand, you may consider joining the company’s email newsletter.

Brands frequently promote sales to their customers through email and social media. Staying alert to communications like this can help you better time your shopping trips to save more money.

5. Pay for your purchase using a rewards credit card

Before entering your credit card details, consider which credit card to use to pay for your purchase. You can earn rewards when spending money online by using one of the best rewards credit cards. You won’t get immediate savings when you shop, but you can later redeem your rewards for cash back, gift cards, travel, and more.

If you prefer cash back earnings, explore our list of the best cash back credit cards to find a card that will reward you in cash.

6. Earn cash as you shop with cash back apps

Using cash back apps and browser extensions is another strategy that can help you maximize your savings. Similarly to credit card rewards, you won’t save money right away. But as you shop online, you can earn cash back rewards.

I’ve been using Rakuten for several years and still get excited whenever my cash back rewards hit my PayPal account. Rakuten isn’t the only cash back app to consider. Check out our list of the best cash back apps to learn more.

Take advantage of every way to save

Shopping online is easy and convenient. But don’t be so quick to check out that you miss extra savings opportunities. By maximizing your savings when online shopping, you can keep more money in your pocket.

For more ways to save, check out our personal finance resources.

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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.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and PayPal. The Motley Fool recommends the following options: short December 2023 $67.50 puts on PayPal. The Motley Fool has a disclosure policy.

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It can be easy to tip excessively, which can negatively impact your finances. Here are a few ways to give thanks with tips and not go overboard. 

As more businesses add tip jars to their counters and use payment systems with tipping capabilities, it can seem like a never-ending cycle of feeling like you need to tip.

I have an appreciation for tips because, as a former waitress, they helped me pay my bills throughout my college years. However, I can understand how it can start to feel overwhelming when tipping prompts appear at every checkout screen.

Some workers, like bartenders and food delivery app drivers, rely on tips to afford to live. But not every purchase requires a tip, and there’s such a thing as overtipping. Before leaving a tip, it’s best to consider your personal finances.

Why? Because if you tip excessively, you may end up overspending beyond your means.

Here are a few ways to approach tipping to keep your spending in check.

1. Consider the service being provided before leaving a tip

Now that many businesses use electronic payment systems like Square, the dreaded “Do you want to leave a tip?” prompt appears more frequently. But just because you’re asked to tip doesn’t mean it’s required or appropriate — and you shouldn’t feel pressured to tip.

To keep your spending in check, it’s a good idea to consider the service provided before leaving a tip. If you had food delivered to your table, received drink refills, and were cared for by a staff member at a restaurant, you should leave a tip.

You should leave a tip if you’re using a convenience service, like getting groceries or takeout delivered to your doorstep or taking trips with ride-hailing drivers. Most of these workers are contractors who receive minimal pay for their services.

But if you’re picking up a cake at a bakery or stopping to get prepared meals at a store and have minimal interaction with an employee at the checkout counter, don’t feel obligated to tip.

Sure, your tip may be appreciated. But when you tip on every occasion, it adds up fast. Taking time to consider the level of service provided before tipping can help you avoid overspending.

2. Give yourself a spending limit

Whether going out for a happy hour with friends or having dinner with your sweetie, having a spending limit in mind can be beneficial before you leave your house. Do the math and remember that number when deciding how you spend your money.

By giving yourself a total spending limit, you can ensure you’re able to tip without breaking your budget. If you’re going out with a spending limit of $60, you’ll likely want to keep your spending under $45. That way, you’ll have enough money to cover sales tax and a tip.

3. Save the generous tips for people you know well

A generous tip is appreciated, especially by workers who rely on tips. But if you’re extra generous when tipping every person you meet, you could drain your checking account fast.

While spending your money as you wish is okay, you may want to prioritize being extra generous with the people you know well — instead of every stranger you meet.

For example, your go-to bartender at your local watering hole and your hairdresser both provide you with regular service. You know these workers well, and they will appreciate your extra generosity. Following this strategy can help you avoid overspending when leaving tips.

Don’t stop tipping and always give thanks when others help you. But do consider your finances when making everyday decisions that involve your money, such as tipping.

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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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If you’re looking for an easy Christmas present, look no further. Check out the deals on these three Costco gift card bundles. 

Some people shame the gift card as a Christmas present, but truthfully…sometimes a gift card is all a person wants. This is even more true if you, like me, aren’t good at picking out presents. Then, a gift card is probably all a person wants from you.

Regardless of your feelings toward gift cards, one of the best places to buy them is Costco. True, the warehouse has a limited selection, and the price might be higher than what you’re willing to spend. But if you’re buying for multiple people, you could buy gift card bundles from Costco and carve out money to add to your savings account. Here are just a few gift card categories you could choose from.

1. Gaming gift cards

For the gamers in your life, Costco can help you give them all a present. Right now, you can buy four $25 Sony PlayStation or Xbox gift cards for $89.99. That’s a savings of $10. The gift cards are electronic, so you’ll have to be creative with how you wrap them (print them out, put them in a card). But with 10% of the gift card value built into the bundle, it’s a present that helps your personal finances, too. Other gaming gift cards include:

Nintendo eShop $50 digital card ($44.99)Roblox $50 digital card ($44.99)Four Roblox $25 digital cards ($89.99)Four Candy Crush $25 digital gift cards ($79.99)

2. Multi-brand restaurant gift cards

Costco sells numerous restaurant gift cards. But one of its best values is Landry’s Multi-Brand Restaurants & More. The card has a $100 value (two $50 e-gift cards), but sells for $79.99 online. These gift cards allow the receiver to buy food at over 400 restaurants, such as Bubba Gumps, Morton’s Steakhouse, and Rainforest Cafe. Check out the full list of participating restaurants. There are exclusions, but this option is more versatile than other gift cards that Costco sells.

Another good multi-brand card is the San Diego Restaurant. This one is also worth $100, but sells for an uber low price of $69.99. The restaurant list is more exclusive and the card is limited to a few states, like Arizona, California, Colorado, New Mexico, Nevada, and Texas. But for the foodies in your life, it could be what they want.

Finally, check out the Kahala Brands gift card. This one works at seven brands: Cold Stone Creamery, Baja Fresh, Planet Smoothie, TacoTime, Blimpie, Pinkberry, and sweetFrog. This card has a $100 value but sells for $79.99.

3. Entertainment gift cards

While gaming cards could appeal to younger kids, Costco’s entertainment gift cards might be the better gift. While its selection isn’t vast, Costco does offer great value for sports and arcades. Here are some cards you can find online.

Two Topgolf $50 digital gift cards ($79.99)Four Bowlero $25 digital gift cards ($79.99)Two Main Event $50 digital gift cards ($74.99)Two Dave & Busters $50 digital gift cards ($79.99)

In addition to these, Costco also sells two $50 digital gift cards for Spafinder for $79.99. It also has travel gift cards, like a $500 Airbnb gift card for $449.99.

Be careful of limitations

Because Costco is basically losing money on these gift card bundles, it has restrictions on how many you can buy per membership. For example, Costco limits its Airbnb gift card to one per membership, while its Southwest gift cards are limited to five.

In other words, if you see a gift card that you like, buying it for someone else may mean you can’t buy it for yourself. Oddly enough, that limitation makes these gift cards not just great deals but ideal Christmas gifts, as they can embody the generosity that Christmas is supposed to represent. Take a look at the gift cards on Costco’s website or inside your local warehouse and see if you can find a bundle your friends and family might like.

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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 Costco Wholesale and Uber Technologies. The Motley Fool has a disclosure policy.

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