Money Management

Could making multiple deposits in your own bank account actually be a problem? Keep reading to learn about structuring. 

Depositing money in your savings or checking account is something you’ll probably do often over the course of your life. But it may come as a surprise that making a series of small deposits could actually cause some problems for you.

You need to be aware of when and how you could possibly face legal and financial scrutiny if you make deposits in a certain pattern that trigger the attention of authorities. Here’s what you should know.

Structuring can be a big problem when making bank deposits

You’re probably wondering how making deposits in your own bank account could ever be a problem. It’s simple: You could have an issue if your actions are seen as “structuring.” Here’s why.

If you deposit more than $10,000 in cash in your bank account at one time, your bank is required to report this behavior and to keep a record of it. The Banking Secrecy Act of 1970 mandates that banks keep records of larger cash deposits in an effort to prevent financial crimes. Banks must file a Currency Transaction Report, even if you deposit just a penny over $10,000.

Many people — especially those who may not want these reports filed — are aware of this regulation. As a result, sometimes people break up their big $10,000 deposit into several small ones so they don’t trigger the reporting requirement. This is called “structuring deposits,” and it is illegal regardless of whether the money you are depositing came from legal activity or from illegal activity.

Now, this doesn’t mean it is always unlawful to deposit more than $10,000 even if you break up the deposit. This behavior becomes a crime if the purpose of breaking up the deposits was to evade the currency reporting requirements.

Banks must file a suspicious activity report if they suspect structuring, which could trigger a full investigation and possibly criminal penalties.

How to avoid problems with deposits

The good news is, most people are not going to be depositing $10,000 in cash in their bank accounts or savings accounts regularly — either all at once or in a series of independent transactions — so most people don’t really need to worry too much about this.

And if you do have a large deposit of $10,000 or more to make, you shouldn’t really have a problem making it. The bank or financial institution has the responsibility of filing the report, and as long as the deposit is above board and you aren’t trying to evade taxes or launder money, you shouldn’t have any issues.

The main thing is to avoid behaviors that could make bank officials suspicious because even if you’re innocently depositing small sums that add up to $10,000, you may trigger unwanted attention if the bank thinks you’re trying to hide something. If you have concerns, you can always talk to your bank about the best way to make sure you’re making large cash deposits in a way that won’t cause a problem.

Fortunately, having to deposit large amounts of cash is generally a good problem to have. Just be sure you aren’t dividing up your bank deposits in a way that could make it look as if you have something to hide and you should be in the clear.

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You don’t have to luck into a bundle of cash to pay for a vacation. Here are five easy steps you can take to build a proper vacation fund. 

Earlier this year, IPX 1031 surveyed Americans to see if they plan to take a vacation. Of those surveyed, 90% answered with a resounding “yes.” Trips varied in scope, but 9 out of 10 said they plan to go somewhere.

Here’s the rub: Around the same time IPX 1031 conducted its survey, LendingClub released a report stating that 60% of U.S. adults, including more than 4 in 10 high-income consumers, live paycheck to paycheck. Practically speaking, it may be challenging for some living paycheck to paycheck to come up with the funds needed to get away for a while.

If you’re among those who long to hit the open road but are just making ends meet, these five ideas may help.

1. Automate savings

The majority of us opt for immediate gratification. When offered a choice, we immediately do (or buy) the thing that provides satisfaction. Psychologists call it “present bias.” In other words, we are biased toward our present selves and likely to make choices that will benefit us at the moment.

Let’s say there’s a choice between going out for a great dinner tonight or using the money we would have spent to open a holiday savings account. Even though we know we’ll wish we had that holiday account when December rolls around, our present bias pushes us to go out and have fun instead.

The best way to overcome present bias is to remove the temptation. Go over your monthly budget with a fine-toothed comb, looking for any expenses you can live without. The lowest-hanging fruit tends to be things like gym memberships that are rarely used and subscriptions you’ve forgotten you’re still paying for.

Once you decide how much you can cut, ensure the funds go directly into your vacation savings. Here are two ways to have money automatically deposited into your savings account:

If you use direct deposit for your paychecks, update how the deposits are made. Financial institutions have made it easy by allowing you to request a “split” each time your check is deposited. For example, if you usually have $2,500 deposited into your checking account and your budget shows you can spare $100, split the deposit, with $2,400 going into checking and $100 into savings.Another easy way to move money into savings without lifting a finger is to set up automatic deposits from checking to savings. For example, if you’re paid every two weeks, set up a transfer the day after each deposit hits your account. The money never passes through your hands, making it less likely that you’ll spend it.

2. Stop loaning the government money

The average tax refund for 2022 was $3,028. If you regularly receive a federal tax refund, ask yourself why. Why are you loaning your hard-earned money to the federal government, free of charge? Unless you have a good reason for doing so, now may be the time to raise the number of deductions you claim.

If your refund runs around $3,000 yearly, that’s an extra $250 per month that could go into your vacation fund instead of sitting in government coffers.

3. Save on energy bills

If your bills are shockingly high right now, you’re not alone. It’s been a wickedly hot summer. Still, there are easy things you can do that cost next to nothing but will positively impact how much energy you’re using and how much you’re paying for utilities each month. These include cleaning your air filters and changing the type of lightbulbs you use.

Even if your monthly utility bills drop by $50, that’s an extra $600 per year toward your next vacation.

4. Buy generic

You can save about 40% on average by purchasing generic and store-brand groceries rather than name-brands. The trick is to conduct comparison tests. Each week, buy one or two new generic items and compare them against the brands you’re accustomed to buying.

It may be food, cleaning supplies, cat litter, or any other generic or store-brand label product. Whatever you purchase, take it home and give it a fair chance. For example, you may find that your kids enjoy store-label corn chips more than the name brand or that you can’t distinguish between a generic paper towel and a paper towel from a package with an uber-attractive lumberjack on the front.

If buying generic saves you even $10 per week, that’s an extra $520 per year toward vacation.

5. Look for money in the nooks and crannies

Like throwing coins into a jar, we often give little thought to small amounts of money. Why not gather those small piles of money together to see how much you end up with?

Unclaimed property

Across the U.S., more than $20 billion is waiting to be claimed by folks who may not even know they’re owed unclaimed property. Unclaimed property can include uncashed paychecks, refunds, deposit returns, abandoned bank accounts, and other valuable assets.

To learn if there’s any money out there, just waiting for you to claim it, go to unclaimed.org. Once there, you’ll be directed to your state’s website. The entire process will take minutes but may be well worth your time.

Online payment apps

If you have accounts with PayPal, Venmo, or any other online or app-based payment service, check to see if there’s any money sitting in one of those accounts.

Credit card points

Set aside a few minutes to log into your credit card accounts. Once you’re in, check how much you’re owed in cash back and travel points. Any money back you’re due can go directly toward covering the cost of vacation, and travel points may be enough to reduce the price you pay for travel and lodging.

While we’re on the subject of travel points, paying for everything — from utilities to groceries — with a travel rewards card will speed up how long it takes you to build points. The important trick here is to pay the credit card off in full at least once a month (more often if it’s easier to remember).

Return unwanted items

If you have a collection of items you’ve meant to return for a refund, pick a day when you can get it done in one fell swoop. Then, go by stores, to the post office, UPS, or wherever else you may need to return the items. All those items that have been building up are suddenly transformed into cash for vacation.

While you’re at it, have a garage sale or use a grocery app to snag the lowest price on food in your area. Try a gas app to quickly locate which gas station has the lowest price per gallon. None of these suggestions alone are likely to bring in enough money to cover your entire trip, but together, they can make a huge dent.

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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.
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This is the last year that I won’t have two kids in school. Take a look at how I’m preparing to cover the extra cost. 

This year, I’m paying preschool tuition for my son, and it’s costing me a pretty penny. Next year, I’ll have to pay for both my son and my daughter since my son won’t be old enough for kindergarten yet and my daughter will be starting preschool. This means my expenses are going to double.

I’m not alone in facing the high cost of care for multiple children. The average cost of preschool for children between the ages of 3 and 5 is around $10,000 annually. The school I’ve chosen will come in at a little less than that per child because it’s a church preschool that offers sibling discounts, but it doesn’t provide full daycare, nor does it provide any care in the summer.

Covering the tuition for both kids is something I have to do, but it will require some adjustments to my budget so I don’t end up in credit card debt or compromising other goals. Here’s what I’m doing.

Increasing my work time

One of the biggest ways I’ll find extra money to pay for two preschool tuitions is by working more. Right now, I work while my husband or my in-laws watch my daughter or while she is napping. But once she is in school, that will free up time for me to pick up more hours.

Many parents find they have more time for work when their kids start preschool or other daycare, and the extra money coming into your bank account from this can help defray the cost. However, this alone may not cut it.

While I will have some extra time to work, it’s not a lot since she’ll only be in school part of the day and I’ll still have to drop her off and pick her up. And not every parent can just pick up extra work hours. If you can’t, you could perhaps still use the time to cut costs by doing money-saving activities like meal planning or clipping coupons.

Reducing spending on other expenses

Lowering what I spend in other areas of my budget is also a part of the process of affording extra childcare. I’ve looked at how much the two tuitions will cost and adjusted other things in my budget to make room for them. We’ll be dining out a little less once my daughter’s tuition bills start coming in, for example.

It can be difficult to sustain big budget cuts for long periods, but fortunately, preschool tuition costs or daycare costs don’t last forever. If you need to make adjustments to afford childcare, just try to keep in mind that this is a short season and you’ll soon be able to get those funds back for other things once your kids graduate into the public school system (if they will attend a public school).

Saving up in advance for the cost

Since I know I will soon have two preschool tuitions, I’ve been saving up for them over time so I don’t have to come up with the money all at once. I’ve started setting aside a little money each month into a preschool fund held in a high-yield savings account — including extra windfalls that come my way.

It shouldn’t come as a surprise when your kids get old enough for preschool. You can plan ahead, even from the time they are born, to put aside a little extra money into a fund for this expense.

Taking advantage of discounts

Finally, I’m trying to take advantage of every discount I can. My school offers a sibling discount, and you also save if you pay with a checking account instead of a credit card and if you pay multiple months of tuition upfront.

If you’re sending your kids to school, it doesn’t hurt to ask if there are ways you can reduce the tuition price — especially if it’s a struggle to cover it.

These steps are hopefully going to work to make school affordable for my personal finances, and you can implement them yourself if you have one, two, or more school tuitions to worry about in your future.

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If you keep an extra $1,000 in your checking account, you likely won’t earn interest. Find out where to keep your savings and learn how much you can earn. 

Keeping some extra money in your checking account is not a bad idea. Doing this can ensure you have enough funds to cover your everyday expenses and give you additional wiggle room. But keeping all your extra money in a checking account isn’t the best financial strategy.

Why? Since most checking accounts don’t earn interest, you won’t have the opportunity to boost your bank account balance in this way. Interest can add up quickly, and any extra money earned is a win for your personal finances.

Do you have an additional $1,000 sitting in your checking account? Find out why you may want to transfer that money to a high-yield savings account soon.

Interest can help you boost your bank account balance

Most checking accounts don’t offer interest or rewards. That means there’s little incentive to keep your savings here. But if you keep your emergency fund in a bank account that earns interest, your money will grow over time without doing any work.

As you research savings accounts, pay attention to the annual percentage yields (APYs) you see. Banks use APY to describe the returns you can expect when keeping your money in a savings account for one year. Rates can vary significantly, so it’s best to compare accounts to choose the right one.

You may be missing out on extra cash

Are you wondering how much interest you’re missing out on by an extra $1,000 in your checking account? It may be more than you think. Below, I’ll show you how much money you could earn by stashing an extra $1,000 in a high-yield savings account for one year.

To determine how much interest you’ll earn, multiply your deposit ($1,000) by the APY. This will show you how much you’d earn if you kept it all in your savings account for a year.

I used a 4.50% APY for a high-yield savings account for the following calculations. The bank accounts on our best high-yield savings accounts list have APYs ranging from 4.15% to 5.25% — so I settled somewhere in between.

Compound interest is on your side

While $45 may not seem like a ton of money, it’s much better than earning $0. Life is expensive, so an extra $45 earned is a big deal. The longer you keep your savings in the bank, the more you can make, thanks to compound interest, which is interest that you earn on interest.

To illustrate the power of compound interest, I’ll show you how much money you can make if you keep your initial $1,000 deposit in a high-yield savings account for anywhere from one to three years.

The following calculations assume you make no additional contributions beyond the initial deposit. You can earn even more if you continue to deposit money into your account. For those who want to save regularly, we recommend automating the savings process for simplicity.

Here’s a breakdown of the potential earnings:

That’s $141.17 earned in three years, assuming the APY on your account doesn’t change. It’s worth noting that APYs can change over time, so your APY likely won’t stay the same rate forever. Now you can see why keeping your extra savings in an interest-earning bank account is a good strategy.

Do this to boost your savings account balance

Saving for emergencies is wise. If you have a savings stash, make sure you’re not missing out on interest. By opening a high-yield savings account and keeping your savings there, you can increase your bank account balance as you earn interest. But if you keep every last cent in your checking account, you’ll miss out.

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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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Over 5 million small business applications were filed last year. Read on to find out what small business topics people are most interested in. 

More than 5 million small business applications were filed last year, according to the U.S. Chamber of Commerce, and this year is already on track to surpass last year’s applications.

The Economic Innovation Group says that applications for new businesses in the first six months of 2023 are already 7% higher than last year.

With all of those applications, many people are going online to find answers about starting, funding, and running small businesses. Data from Google shows that people searching for the small business topic in the business and industrial category over the past year searched for the following related queries.

1. Small business loans

There are lots of different ways small business owners can fund a new business. These can include self-funding, crowdfunding, using venture capital, or through a small business loan, according to the U.S. Small Business Administration (SBA).

The SBA recommends getting a small business loan if you want to retain complete control over your business. But before you apply, you’ll need to get a few things set up first. For example, per the SBA website, you should have a business plan, expense sheet, and financial projections for the next five years.

When applying for a loan, the SBA says you should shop around from different sources to compare lenders and find the right one. And if you don’t qualify for a direct SBA loan, you may want to consider an SBA-guaranteed loan.

2. Small business ideas

Maybe you know you could be good at managing your own business, but you don’t know exactly what you want that business to look like.

Thankfully, Next Insurance has a few ideas. The small business insurance company compiled a list of the hottest small business trends for this year, which include:

Home remodeling workSolar panel installationSmart home installationHome healthcareFitness trainingDigital content creationAnimal caretaking and trainingCybersecurity

Of course, the best small business idea is the one that’s specific to what you want to do. Just make sure you do some market research once you have a business idea, so you can figure out your market and potential competitors.

3. Small business marketing

One of the most pressing questions online users had was how to market their small businesses. Each business will have its own unique approach to marketing and how to present the business.

If you’re just starting out, you’ll need to create a marketing plan. And it should include a few basic ideas, according to the SBA:

Target market: Know who your audience is and know them well. Take some time to think about their demographics, what your potential market size is, and what unique traits your target market may have.
Competitive advantage: Figure out what sets your product or service apart from the competition. You may be cheaper, offer better customer service, or have a superior product. Knowing what makes your business unique will help you market it better to customers.
Set marketing goals: You may want to get a certain amount of people to see your online ads, increase email subscribers, or get more people in your storefront. Whatever you want your marketing to help you with, make sure you have a measurable goal.
Set a budget: Lastly, determine how much money you can put toward your marketing. Track your expenses and the results of your marketing spending to see if what you’re investing is raising your brand awareness or increasing sales.

4. Small business grants

Thousands of grants are available for businesses each year and one of the most comprehensive grant websites is Grants.gov. The site lists grants for more than 1,000 grant programs and the total amount available is $500 billion annually.

The SBA also has grants available, though it doesn’t offer grants directly to people for starting or expanding their businesses. Instead, the SBA says it has a limited amount of grants for community organizations that promote entrepreneurship. Your local SBA office may have more information about what types of grants are available to small businesses.

5. Small business credit cards

Another important question web users had about small businesses was about credit cards. Many small business owners open a business line of credit to help them cover costs and expand their businesses.

The SBA says on its website that small business credit cards are an “essential financial tool” to separate personal and business expenses. The organization recommends shopping around for the best card that fits your business needs and comparing the interest rate, card benefits, and fees.

Business credit cards often have higher spending limits than personal credit cards, and business cards report to business-specific credit reporting agencies, which protects your personal credit and helps create a credit identity for your business.

These topics are just scratching the surface of small business topics. If you’re looking for more information about small businesses, including marketing, credit cards, taxes, human resources, or more, check out our comprehensive small business page.

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

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Having money in savings is a good thing, but having too much isn’t, due to opportunity cost. Here’s how much you could lose if you misallocate your assets. 

Putting money into a high-yield savings account is indisputably a smart financial move. You need some money in savings to cover emergency expenses so you don’t end up in credit card debt. If you have short-term financial goals you’re saving for, like putting a down payment on a house so you can qualify for a mortgage loan, this money should be in savings as well.

But it is not a smart financial decision to keep too much money in savings. If you do that, there’s a big opportunity cost, and you could end up making your net worth a lot smaller.

Just how much could you lose if you keep too much in your savings account? Here’s what you need to know.

The opportunity cost of a too-big savings account balance

The big problem with having too much in savings is the opportunity cost. Every extra dollar that you put into a savings account when you don’t really need it there is money that you cannot invest. And if you invest, you can typically earn a much higher rate of return than you could by putting your cash into a savings account offering even the most competitive rate.

Let’s say, for example, that you were consistently able to earn a 3% average annual return in your savings account — which is very optimistic, given that the national average savings account rate is just 0.43% as of Aug. 21, 2023 (high-yield accounts tend to pay much more than the national average). In contrast, you might reliably expect to earn a 10% average annual return if you put your money into a brokerage account and bought shares of an S&P 500 index fund.

So, how much could you lose by accepting a rate of return that’s so much lower if you stick too much in savings? It depends on the amount you have in your account and your timeline.

The table below gives you an idea of the opportunity cost you would experience if you kept too much in savings over the course of five years versus investing it via a brokerage account instead.

As you can see, you will lose out on thousands of dollars even if you don’t have a ton of extra money in savings and even if it’s only left there for a relatively short period of time.

How much should you put in savings?

You can’t afford the opportunity cost of overloading your savings account. To make sure you aren’t losing your chance at earning thousands of dollars extra by investing money that should be in the market, keep this in mind:

Money should be kept in savings if you may need it at any moment. This applies to an emergency fund or money you’re saving for expenses like car repairs. You don’t want to have to sell investments to pay for surprise bills or be forced to go into credit card debt to cover them.Money should be kept in savings if you’ll need it in the next two to five years. When investing, you want to make sure you have time to wait out any potential market downturn that occurs. If you have a short time period before you’ll need the funds, the risk of investing is too great.

Any money you won’t need for a while should be put into the market instead of a high-yield savings account. As the table above shows, the opportunity cost of not doing so is simply too great.

Fortunately, investing can be pretty easy. Open a brokerage account, move that extra money into it, and start researching investments that make sense for you. If you’re not sure where to start, some inexpensive exchange-traded funds (ETFs) that track the performance of the S&P 500 can be a simple option, or you can do some research and develop a comprehensive investing plan of your own.

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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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