Money Management

The amount of money it takes to be considered middle class in Topeka is different from New York City. Here’s how much you need in 20 metro areas. 

According to Pew Research Center, the number of middle class households has steadily declined over the past 50 years. As a result, more families have moved into either the upper or lower income tax brackets.

What complicates the issue somewhat is that you might easily be considered middle class in one city, but not another. Here, we share what it takes to be considered middle class in 20 metro areas across the country.

Honey, I shrunk the middle class

In 1971, 61% of American households were considered middle class. Since that time, the percentage has steadily declined. Today, it’s estimated that 50% of households are middle class. The term “middle class” is used by Pew Research to describe individuals whose household income amounts to two-thirds to double the national median for households of the same size.

According to the U.S. Census Bureau, the median household income in 2022 was $74,580. That means American households with incomes ranging from as little as $49,719 to $149,160 are technically considered middle class. Nationally, that is. But it’s not the amount of money a household earns that matters so much, but rather what they can do with that money. Given how much higher the cost of living is in some areas of the country than others, hitting middle class can be more difficult.

Where you live makes a (huge) difference

When CNBC crunched 2021 U.S. Census Bureau data, it became clear how much harder it can be to keep money in your checking account in some of the most populous U.S. metros.

Interesting tidbits

Pew Research Center’s findings include some interesting facts. For example:

Despite all that has been said and written about baby boomers “having it easier” than the rest of us, more than one-third of Americans over the age of 65 fall into lower-income households.To no one’s surprise, multi-earner or married households reach and hold middle class status more easily than single adults do.

Factors that can make you lose that middle class feeling

Even if your household is firmly planted in the middle-class category, it may not always feel as if you have the wind at your back. Here are some of the issues that can make any income level feel like too little.

Health: Medical costs in the U.S. are out of control, and a single illness can push a household to bankruptcy.Debt load: No matter how much money you earn, there’s a limit on how much debt you can comfortably carry. If you’re looking for ways to get out of debt, know that it is possible.Family resources: Let’s face it — being born into a well-to-do family can offer financial security, and inheriting a chunk of money doesn’t hurt either.Education: As expensive as higher education is, college degrees continue to open doors to job advancement and higher salaries (in some fields).

The goal for most households is to have enough money to live comfortably, save for the future, and have savings to fall back on when things go south. While there’s no magic formula, creating a financial plan is a good first step. That step may be to seek a job that pays more, start a part-time business you truly enjoy, or take the leap and go back to school to learn a high-demand skill.

There are some things in life we can’t control, like the cost of living. What we can do is take a clear look at our situation and decide whether we’re sitting pretty or want to make changes.

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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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Amazon’s mega sales event is having a repeat in October. Read on for ways to make the most of it. 

Amazon’s July Prime Day event was hailed as one of the most highly anticipated shopping events of the year. And now, Amazon is gearing up to do it all over again with its Prime Big Deal Days, which are slated to take place on Oct. 10 and 11.

If you’ve been saving up for October’s Prime Day event, you may be getting increasingly excited about it by the day. But here are some key steps to take if you want to put yourself in a position to capitalize on the best bargains.

1. Set up personalized deal alerts

There are apt to be certain hot-ticket items that Amazon will be slashing prices on during its October Prime Day event. But that doesn’t mean you’re looking for or interested in those specific items. And you don’t want to find yourself getting distracted by offers on the big day for things you don’t need.

A better bet? Make a list of the items you want ahead of Prime Big Deal Days. Then, go to Amazon and create deal alerts for the specific things on your list. If prices drop during October’s Prime Day event, you’ll be notified automatically.

2. Order your list by priority

During Prime Big Deal Days, you may find yourself overwhelmed with options as those deals drop one after the other in short order. To stay focused and make sure you end up with the items you really want, make a list before the big event that’s ordered by priority.

If the most important thing to you is snagging a tablet or laptop, put that item at the top. Then, work your way downward in order of importance.

Remember, if you charge a $100 kitchen gadget on your credit card at the start of Prime Big Deal Days, and that’s the fourth-most important thing to you, you’ll risk not having enough money left over for your personal top three. So aim to tackle your list in order so your money does the most for you.

3. Keep checking in

If you have a job and other responsibilities, you probably can’t afford to spend the entirety of Oct. 10 and 11 glued to your laptop. But it pays to visit Amazon multiple times during that two-day period to see what’s happening.

One strategy you may want to employ is to do some shopping the morning of Oct. 10, then check back that evening, and then have another look in the afternoon of Oct. 11. Remember, the deal alerts you set up will inform you of bargains related to the items you designate. But checking the site often might alert you to deals on items you could use but didn’t think to put on your list in the first place.

If Prime Big Deal Days is anything like Amazon’s July Prime Day event, the savings opportunities have the potential to be massive. Take advantage by setting up custom alerts, setting priorities for yourself, and checking in at a cadence that’s reasonable without going overboard.

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

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Want to close out the month of October with a higher bank account balance? Read on to see how. 

If your goal is to build a solid emergency fund so you’re protected from racking up debt when unplanned bills arise, you need to start somewhere. And that could mean reaching your goal gradually by saving $100 a month.

Socking away $100 a month is doable but tricky nonetheless. Someone spending $2,000 on an apartment in an area where the average rent is only $1,400 might have plenty of options for slashing their spending. But if you’re paying under-market rent, that’s not a route you can pursue.

Similarly, perhaps you truly spend very little on leisure and non-essential bills. In that case, finding a spare $100 over four weeks and change could mean having to give up the few things you tend to treat yourself to.

But the good news is that there may be a way to close out October with an extra $100 without making yourself miserable. Here are a few options to consider.

1. Be smart about heat usage as the weather changes

In some parts of the country, October is when the weather turns cold enough that property owners feel compelled to turn on the heat at home. But if you don’t rush to crank up the thermostat, you might manage to close out the month with a smaller heating bill — and more money for your savings.

This isn’t to say that you should allow yourself to be perpetually uncomfortable in your home. But you may be surprised at how layering on a cozy sweatshirt can take the place of heat. And if you work from home, not running the heat all day could result in a lot of banked cash.

If you have a programmable thermostat, you can set it to lower the heat at home automatically at times when you’re asleep or not around. Otherwise, just be mindful of those settings and adjust them accordingly.

2. Explore free entertainment

October is a great month to spend outdoors. But rather than pay a premium to explore a pumpkin patch or take a 12-minute hay ride with your family, find free things to do instead.

Look up local trails and take in the colored leaves. Research state parks and see if any have environmental centers with no-cost programming. And look at your town’s social media page to see if there are any local meetups for adults who enjoy sports or parents who want the company of other families at the playground. That way, you can get your fill of the season without having to spend money.

3. Go easy on Halloween

Halloween spending across the U.S. is expected to reach $12.2 billion this year, reports the National Retail Federation. And on an individual basis, consumers are expecting to spend $108.24 on average, up from the previous record high of $102.74 in 2021.

There’s nothing wrong with celebrating Halloween, whether by letting your kids dress up in costume or setting up a table so neighborhood kids can stop by for candy. But if you want to save $100 this month, don’t go overboard, either.

Try making costumes for your kids or encouraging them to wear last year’s getups if they’re more focused on the amount of candy they get than what they look like. And while it’s fun to adorn your porch with spider webs and scary goblins, if you can’t swing the decor, a homemade “Happy Halloween” sign also does the trick.

Finally, be judicious about buying candy. Don’t purchase give-outs for 100 when you normally get 20 to 30 trick-or-treaters. And while it’s nice to be the person on the block who gives out full-sized candy bars, if you’re eager to boost your savings, don’t be the hero this year. Instead, stick to lower-cost miniatures.

Meanwhile, if you do tend to attract a crowd, consider buying your candy in bulk at Costco. And if you don’t have a membership, ask a friend who has one if you can tag along.

Closing out October with an extra $100 might make you feel worlds better about your finances. So be a little stingy with heat at home if that’s doable, pursue free outdoor activities, and don’t overspend on Halloween so you’re able to hit that goal.

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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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If you’re disappointing your credit card company, that’s a good thing. Find out here why you want to be a deadbeat. 

My oldest credit card just turned 13, which means as much time has passed since I was a freshman in college. I don’t know what the credit card company expected from me back then — or why it approved me for a cash back credit card on my first go — but I have definitely disappointed it. In fact, my credit card company would likely call me a deadbeat. Here’s why.

Credit card companies make money when you don’t pay your bills in full and on-time

In my 13 years of using a credit card, only twice can I remember carrying a balance. The first was when I didn’t understand how APR worked (whoops) and got a rude awakening upon seeing the interest charge on my account. The second was when I had a little credit card debt after traveling for 20 months.

Between the two, the interest I paid wasn’t severe. I’m being generous, but I may have paid around $100. In the same amount of time, I’ve earned thousands upon thousands in rewards, welcome offers, and cash back from credit card companies — even earning $1,645 on one credit card in a single year.

When folks like me take advantage of credit card rewards and don’t carry a balance, credit card companies apply a special term: deadbeat. From their perspective, we’re sinking costs, non-productive assets, people who stay away from egregious APRs, who take rewards, and who don’t dish out cash for interest payments.

A good chunk of a credit card company’s revenue comes from interest income. To give you some perspective, credit companies earned about $76 billion on interest fees in 2021. When you consider that credit card companies posted $176 billion in revenue for the same year, you’ll understand just how important interest payments are.

How to be a deadbeat credit card user

If you want to take advantage of your credit cards, here are three rules for how to be a deadbeat.

Pay your bills in full and on time: Unless you have a 0% intro APR period, this is the best way to avoid credit card debt. Paying your full balance and refusing to carry charges from one billing period to the next ensures you won’t pay credit card interest. Apply for rewards cards that match your ordinary spending: In other words, create a suite of credit cards that will maximize your rewards. This could take some time, but ideally you should be earning at least 3% to 5% on nearly every purchase, save for those that charge credit card fees, like DMVs (ugh). Use all your perks: Most credit cards often come jam-packed with additional perks, like valuable insurance. Sometimes these perks aren’t advertised clearly, so be sure you dig into your card’s fine print to understand its rewards potential.

If you’re doing all these consistently, then congratulations: you, too, are a deadbeat. Now take advantage of your card’s rewards or better yet — take a look at some of today’s best credit cards to see how yours compares.

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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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Higher interest rates have made both CDs and savings accounts extra attractive as of late. Learn why you might want to opt for savings over a CD, though. 

Thanks to a higher federal funds rate (due to the efforts of the Federal Reserve), now is a really great time to have cash savings in the bank. If you have extra money on hand and need a new and virtually risk-free place to keep it, you’ve got options: high-yield savings accounts and certificates of deposit (CDs).

You might assume that a CD is a better choice — after all, according to the FDIC, the average APY on a 12-month CD (which is the highest of all the rates the Fed keeps track of) is currently 1.76%, while the average savings account APY is just 0.45%. But you should consider more factors than just APYs when picking a deposit account. Let’s discuss the advantages a savings account has over a CD.

1. You likely won’t need a minimum deposit

Many of the best CD rates are available to you only with a minimum deposit amount — in most cases between $500 and $2,500. Conversely, you can open many of the best high-yield savings accounts with $0.

This makes savings accounts a lot more accessible, and since the rates on the best ones available are comparable to the rates you’d get with a CD, it makes a lot more sense to opt for a savings account if you have only a small amount of money to start with.

2. You can keep adding to your balance

Your savings account balance might start out small, but you’ll have the flexibility to add to it whenever you want. With a CD, on the other hand, you’re locking your money in place for a period of time. In addition to being unable to withdraw any of it early without penalties (more on that below), you also can’t add more money during the term.

If you open a savings account linked to an existing checking account, funding it couldn’t be easier — you can transfer money from checking to savings in a matter of seconds if it’s only moving between accounts at the same bank. Even having a savings account at a different bank isn’t a hurdle to saving. I have my main checking and main savings at different banks, and money transfers quickly in one direction (checking to savings) and slowly going back the other way — this slight inconvenience actually gives me more incentive to not tap my savings.

3. You have easier access

Going back to my earlier point, part of the deal with a CD is that you must agree to leave your money alone for the duration of the term, lest you lose some of the interest you’ve accrued. Penalties vary, and you could lose a few months’ worth or more — for example, one of the best CD issuers charges an entire year’s worth of interest as a penalty for breaking into a CD term of 12 months or fewer early.

Keep in mind that a savings account will have some limits on accessing your money. Many banks still have a cap of six convenient withdrawals per month, per Regulation D (this rule was suspended as a result of COVID-19, but it’s up to banks to change their own rules — or not). Plus, you’re not likely to get a debit or ATM card to access your savings. This makes a certain amount of sense, as ideally you’re leaving money in the account to grow with interest until you need it.

And “need” is the key word here. A CD is a terrible place for important cash like your emergency fund. When it’s an emergency, you need that money sooner rather than later. So even if you opt to put some savings into a CD, always keep your emergency fund in an unrestricted account, like a savings account or a money market account.

If you’ve got cash saved, you’re in an excellent position. Just be sure to find the right home for that money. For all the reasons above, opting for a savings account over a CD could be your best bet.

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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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