Money Management

If you have an extra $20,000 in your checking account, you likely aren’t earning interest. Find out where to move your cash and see how much you can earn. 

Having some extra cash in your checking account is smart. If an unexpected expense comes up or an automated bill is more costly than planned, your extra money can serve as a buffer. But you don’t want to keep all your extra cash in a checking account.

Why? Most checking accounts don’t earn interest — so you won’t earn much of anything while your money sits in the bank. Do you have an extra $20,000 stashed in your checking account? I’ll explain why you may want to move that money to a high-yield savings account instead.

Help your money grow with interest

Most checking accounts don’t offer rewards or interest, so there’s not much incentive to keep your savings in this type of account. However, if you move your emergency fund savings into a bank account that earns interest, your money will grow as it sits in the bank.

When considering savings accounts, check the annual percentage yields (APYs). Banks use APY to describe the results you can expect from keeping your money in a savings account for one year. Since rates can vary, it’s essential to compare rates so you can maximize your earnings.

Don’t miss out on extra cash

Are you wondering how much interest you’re missing out on by keeping an extra $20,000 in your checking account? It may be much more than you think. In the below table, I’ll show you how much money you could earn by transferring your $20,000 in savings to a high-yield savings account for one year.

Here’s how to calculate how much interest you’ll earn: Multiply your deposit ($20,000) by the APY your bank offers. Doing this will show you how much interest you’ll earn if you keep the money in your savings account for one year.

I used a 4.65% APY for a high-yield savings account for the following calculations. The accounts on our best high-yield savings accounts list have APYs currently ranging from 4.25% to 5.25%. These are typical rates currently available to customers.

You can earn even more with compound interest

Earning $930 in interest in one year is a lot better than earning $0 from keeping your savings in a checking account. But you can earn even more than that over the long term.

The longer you keep your extra savings in the bank, the more you can make, thanks to compound interest — which is interest you earn on interest.

To illustrate how compound interest works, I’ll show you how much money you can earn by keeping your initial $20,000 deposit in a high-yield savings account for anywhere from one to three years.

Keep in mind that the below calculations assume you make no additional contributions beyond your initial deposit. However, you can boost your earnings if you continue to put more money into your account. You may want to automate the savings process to save yourself time.

Here’s a breakdown of your potential earnings:

That’s $2,921.75 earned in three years, assuming the APY on your savings account doesn’t change. It’s worth mentioning that APYs can change over time, so your APY will likely fluctuate.

So, what are you waiting for? Move that extra $20,000 into a high-yield savings account. Taking this one step can be a major win for your personal finances.

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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.The Motley Fool has a disclosure policy.

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Strong credit could help you qualify for a mortgage. But read on to see why that’s just one of several factors lenders will consider. 

You’ll often hear that if you’re looking to apply for a mortgage, it’s important to focus on your credit score. It takes a minimum credit score of 620 to qualify for a conventional mortgage. But some mortgage lenders may insist on a higher score than that. And the higher your credit score is, the more competitive an interest rate you’re likely to get on your mortgage.

Meanwhile, Experian, one of the three major credit bureaus, says that a credit score of 800 or above is considered excellent. So if you have a credit score that falls into that category, you might assume that your mortgage application is bound to get approved.

But you should know that your credit score is only one of several factors that mortgage lenders consider when evaluating loan candidates. And while a higher credit score will certainly help your case, you might struggle to get approved for a mortgage regardless of having excellent credit.

Your credit score alone isn’t enough

Your credit score tells lenders how risky you are as a borrower. A strong credit score sends the message that you commonly pay bills on time. That’s something mortgage lenders like to see since they typically write loans for hundreds of thousands of dollars.

But your mortgage lender will also look at other factors to determine whether you’re eligible for a home loan. And it’s important to know what those are.

One such factor is your debt-to-income ratio, which measures your existing debt relative to your income. Citizens Bank says that most mortgage lenders require a debt-to-income ratio of 43% or less — meaning, you’ll spend a maximum of 43% of your gross monthly income on debts, including your new mortgage payment.

If you’re worried about your debt-to-income ratio, you can try paying off some existing loan or credit card balances before applying for a mortgage. You can also seek out a lower mortgage amount, though doing so might require you to readjust your expectations on the home-buying front.

Another factor that mortgage lenders look at is income. There’s no such thing as a minimum income required to get a mortgage. That’s determined on a case-by-case basis, since the income needed for a $200,000 home loan is apt to differ from the income needed for a $600,000 mortgage. But all told, your lender will run its numbers to make sure your salary can support your ongoing payments.

However, having a certain income isn’t enough. Mortgage lenders also tend to want to see evidence of income stability.

If you’re new to a job, a lender might hesitate to write you a loan because it wants to see that you’ve been earning an income consistently for quite some time. Lenders generally want to see a minimum of two years of steady income before writing loans.

Look at the big picture

Boosting your credit is a great way to set yourself up to qualify for a mortgage. But it’s not the only step to take if you want to get a lender to write you a giant loan. You may also need to work on paying down debt and boosting your earnings (which you can do via a second job) to be able to qualify for a mortgage.

One factor you can’t control is the length of your work history. If you graduated college in May 2022 and got a full-time job in September of that same year, you can’t yet present a two-year history of full-time work on a mortgage application.

In that case, though, you can ask your employer to write a letter that speaks to the stability of your job. That may be enough to get a mortgage lender to agree to give you a loan despite that one missing piece of the puzzle.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has positions in Citigroup. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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You’ll often hear that it’s important to follow a budget. Read on for a better way to get a handle on your finances. 

One of the oldest pieces of financial advice you might hear is that it’s important to follow a budget. Without one, you might easily lose track of your spending and fall short of meeting your financial goals.

But let’s face it — not everyone has the patience for budgeting. And if you’re someone who loathes the idea of sitting down with a spreadsheet every week and logging your expenses, you’re not alone.

Granted, these days, helpful budgeting apps can make the process less cumbersome. Many of these apps sync up with your checking account and credit cards to categorize your spending and help you stay on course. But even then, you still have to look at that data. And that may not be something you’re eager to do.

Believe it or not, that’s something financial guru Suze Orman has no problem with. Orman herself is not a fan of budgeting. And she thinks there’s a much easier route you can take to achieve financial security.

Why Orman thinks budgeting stinks

Orman knows that people are often told they need to budget. But she also thinks budgets tend to be fairly useless.

“They’re like diets,” she says. “You cut back on things and then get frustrated and go out and buy stuff…it’s not effective.”

She makes a really solid point. Budgets can be extremely restrictive. If you’re supposed to only have $400 a month allocated to groceries and you spend $415, you’re now in a position where you need to look at other expense categories and find out where to make up that $15. Who wants to spend time doing that?

Similarly, you might do a really good job of sticking to a budget for a period, only to get tired of the process and throw that budget away. So why put yourself through the torture in the first place?

A better idea to save money

The whole purpose of sticking to a budget is to not spend your entire paycheck month after month. That way, you can build up some savings — money that serves as your financial cushion.

But a better way to get to that place, says Orman, is to automate the process of saving money. Arrange for an automatic transfer so that a portion of each paycheck leaves your checking account and lands in your savings. It can be $40 a month, $80 a month, or $200 a month — whatever you can afford.

If you go this route, you’ll know you’re meeting your savings goals and are building yourself the emergency fund you need. And from there, you can stop sweating the small stuff, like going $15 over your grocery allocation for the month.

And it’s not just emergency savings you can automate. If you’re looking to save for retirement, signing up for a workplace 401(k) will let you build a nest egg by having funds deducted from your paychecks automatically. And if you don’t have access to a 401(k), many IRAs allow you to set up automatic transfers, too.

It’s important to have savings, and following a budget might get you to that place. It might also get you there in an aggravating, frustrating manner. So rather than force yourself to budget, look at automating your savings instead.

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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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This mom of three no longer flocks to Aldi on a weekly basis. Read on to see why. 

At some point in 2022, I discovered Aldi and began shopping there weekly. I found that I was able to save money on my grocery bill by purchasing certain produce items there. And since I happen to have an Aldi adjacent to my local Costco, it wasn’t particularly out of my way.

But over the past few months, I’ve become less enamored with Aldi. Here’s why.

1. The selection is just too limited

Aldi — at least near me — is a minimally stocked grocery store. The shelves aren’t loaded the way they are at my nearby ShopRite and Stop & Shop.

To be fair, this was the case when I first started shopping there. But because there’s just not a lot of selection, I’m generally limited to only buying a few items when I pop into Aldi.

Not so long ago, I was running into Aldi for some fruit, which I usually buy there, and I needed to grab shredded cheddar cheese. Normally, I get that at Costco, but I didn’t want to run next door to Costco and wait in a line for cheese alone. Unfortunately, though, Aldi didn’t have the cheese I needed, so I had to make an extra stop anyway.

2. The inventory is too inconsistent

Not only is there a limited selection of food items I can buy at Aldi, but sometimes, I can’t even find the five or six things I’m looking for. Aldi was once my go-to source for avocados, since it’s an expensive purchase and Aldi tends to sell them for less than Costco (at least in my area). But the last few times I stopped at Aldi, avocados weren’t in stock.

And that’s happened to me with other things, too. Over the past several months, I’ve struggled to find everything from cucumbers to strawberries at Aldi as well.

3. What the store saves me on groceries, I lose via lost working hours

Shopping at Aldi still has the potential to save me a little money on groceries. At a time when supermarket prices are up 3.6% on an annual basis, that helps.

The problem, however, is that even though Aldi is right near Costco in my neighborhood, thereby allowing me to combine those trips, it still takes time to visit an extra supermarket. I have to find parking, wait in a checkout line, and spend time searching the shelves.

While it’s nice to save $2 here and $3 there, the reality is that a stop at Aldi might cost me 20 or more minutes of work — especially when I don’t manage to find the things I need. And losing out on that work time often means forgoing more than $2 or $3 of income. So from a time perspective, it’s just not worth it.

Shopping at Aldi could make sense for a lot of people. If you’re someone with flexibility in your schedule and grocery list, and you’re not so picky about the brands you bring home, then it could pay to spend the time visiting Aldi, even if you don’t always manage to find all the things you need. But I’ve reached the point where shopping at Aldi makes less and less sense for me, so I’ll most likely stop going there unless it’s a one-off basis.

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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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The only thing better than warehouse store prices are warehouse store sale prices. See some deals from Costco this month. 

Sure, Costco has a lot of stuff that isn’t edible that’s worth buying. But let’s face it, a lot of us are getting our money’s worth out of our Costco memberships by saving big on groceries.

Although Costco’s regular prices on most groceries are a great deal already (just avoid the produce), putting those groceries on sale makes them even better. Here are a few of the more interesting grocery sales in the September Coupon Book. These deals are valid through Sept. 24, 2023.

1. Starbucks K-Cup Pods

Item details: 72-count, various flavors

Discount: $6
Costco.com sale price: $36.99
Per-unit price: $0.51 per pod

Instacart Costco price: $0.51 per pod ($37.05, 72-count; sale price)
Sam’s Club price: $0.47 per pod ($33.98, 72-count; sale price)
Target price: $0.73 per pod ($31.99, 44-count)

2. Mini Babybel Cheese Snacks

Item details: 36-count, various flavors

Discount: $4.30
Costco.com sale price: N/A
Per-unit price: N/A

Instacart Costco price: $0.29 per piece ($10.37, 36-count; sale price)
Sam’s Club price: $0.31 per piece ($7.98, 26-count; sale price)
Target price: $0.59 per piece ($11.69, 20-count)

3. Impossible Plant-Based Burger Patties

Item details: 10 count

Discount: $5
Costco.com sale price: N/A
Per-unit price: N/A

Instacart Costco price: $1.20 per patty, ($12.01, 10-count; sale price)
Walmart price: $2.25 per patty ($13.48, 6-count)
Target price: $2.65 per patty, ($5.29, 2-count)

4. PopCorners Popped-Corn Snack

Item details: 30-count, variety pack

Discount: $3.50
Costco.com sale price: $13.49
Per-unit price: $0.45 per bag

Instacart Costco price: $0.38 per bag ($11.47, 30-count; sale price)
Sam’s Club price: $0.48 per bag ($13.48, 28-count)
Target price: $0.80 per bag ($11.99, 15-count)

5. Campbell’s Simply Chicken Noodle Soup

Item details: 18.6 oz, 8-count

Discount: $5.60
Online sale price: $10.39
Per-unit price: $1.30 per can

Instacart Costco price: $1.08 per can ($8.63, 8-count; sale price)
Sam’s Club price: N/A
Target price: N/A

The Instacart conundrum

It’s nice to see that Costco is making an effort with its Costco.com experience by increasing the items it makes available there. And it really does seem like it’s trying on the prices.

That said, we found that Instacart’s Costco prices were often lower than the prices listed on Costco.com for shipping. And, just as important, those prices were also frequently lower than competitor’s prices.

So, this means you could still be saving quite a bit on hitting a regular store even if you’re using Instacart to save you time at Costco. (And given how many of us tend to overspend when we go in person, this could be an even smarter financial decision for some!)

For those thinking about the credit card rewards possibilities, there’s some back and forth about how Instacart codes with card issuers. Many folks say it codes as groceries, which could be great for folks missing out on grocery rewards by shopping in Costco stores.

Also, if you happen to have a qualifying Chase credit card on hand, you could be eligible for a free Instacart+ membership. Some cards also offer monthly or quarterly credits on Instacart purchases.

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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.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale, JPMorgan Chase, Starbucks, Target, and Walmart. The Motley Fool has a disclosure policy.

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