Money Management

Experts recommend saving two to three times your salary — but there’s still time to catch up! Read on to learn how to boost your savings. 

Saving money for retirement is often a multi-decade affair. And with many Americans needing over $500,000 to retire comfortably, it pays to check in long before you’re ready to clock out. Keep reading to find out how much you should have saved by age 40 — and how to catch up if you’re behind.

The benchmark

Unfortunately, there is no single number that guarantees retirement readiness. Personal financial circumstances are unique, and countless factors can affect your retirement plan. However, rules of thumb can give you a general idea of whether your savings are enough.

Most sources recommend saving between two and three times your annual salary. With this approach, a 40-year-old American earning $50,000 per year would be on track only if they had over $100,000 in savings. Note that everyone’s benchmark is different, and this multiplier of income approach is in part guessing at post-retirement spending.

But the rule leaves out many factors that could change how much you need to save to keep on track. For example, those with pensions may not need to rely on 401(k)s and IRAs as heavily as other Americans. Understanding your post-retirement budget, and how much you will need to rely on savings, can give you a good idea of whether you should aim higher or lower than the benchmark.

How to boost your savings

If you fall shy of the benchmark, you’re not alone — and with the right strategy, you can make up for lost savings. Time is on your side, and you can still live a full retirement by both increasing the amount that you are saving and getting more out of your savings.

The first step toward boosting your retirement savings is getting serious about budgeting. Set a goal to save 15% of your income — but don’t worry if you can’t do it right away. Many retirement plans offer escalating contributions, where your deferral rate goes up by a certain percentage every year. Taking advantage of this feature can help to gradually increase your savings rate — without throwing you off of a cash flow cliff.

There are a few other ways to get the most out of your savings. This includes ensuring that you are getting your employer match and paying attention to your vesting schedule. Additionally, negotiating your salary is always a good idea, but can increase your savings without reducing your take-home. Finally, saving in a Roth IRA can allow your savings to grow and you can withdraw them tax-free in retirement.

Make a plan

Planning for retirement can be a complicated process full of unknowns, but you don’t have to go it alone. Working with a qualified professional is a great way to get an objective opinion on your financial picture.

A fiduciary financial planner can provide insight into your unique financial situation, and offer actionable advice to get you from where you are to where you want to be. An experienced planner can keep a lookout for common pitfalls and even quantify your risk along the way. No one is better versed in your personal finances than yourself — and combining your insight with a planner’s expertise can help lighten the burden of planning your financial future.

Although many sources recommend having over double your salary saved by the age of 40, that’s not the entire story. How much is enough is a very personal and difficult to answer question. Luckily, by boosting how and how much you’re saving today, you can feel more confident in your ability to retire. And if in doubt, seek qualified help. As the saying goes, “If you want to go fast, go alone; if you want to go far, go together.”

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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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Millions of kids in the U.S. live in food-insecure households. Some states are offering free school meals to students. Find out if your state is one of them. 

Food insecurity is a serious issue that impacts millions of people worldwide, including right here at home. Nearly 34 million Americans lived in food-insecure households in 2021, according to the U.S. Department of Agriculture (USDA). In addition to adults, millions of children are impacted.

Several U.S. states are taking action to ensure children get the food they need. Some states have recently passed laws to enable students to get free meals when school is in session.

Free school meal programs like this can help families keep more money in their bank accounts. Below, we’ll share some states offering free breakfast and lunch to K-12 students.

1. California

California was the first state to establish a statewide universal meals program for its students. All public schools, county offices of education, and charter schools are required to provide breakfast and lunch free of charge to any student who requests a meal. This year, California students will continue to receive free meals. With 6 million public school students in the state, this initiative is likely making a significant difference for many families.

2. Colorado

Colorado is another state prioritizing the health and well-being of its children thanks to voters who approved the Healthy School Meals for All ballot measure in November 2022. Public school students will now have the opportunity to be provided with free meals during the school day starting in the 2023-2024 school year.

But unlike some states, schools aren’t required to participate. Public schools participating in the National School Lunch and School Breakfast Programs will be reimbursed for meals provided to program-enrolled students who would otherwise pay full price.

3. Maine

In 2021, Maine passed legislation that would provide free meals to all public school students throughout the 2022-2023 school year. Breakfast and lunch are available to all students, regardless of their household income. The state has made this a permanent policy, so free meals will remain available to students throughout the 2023-2024 school year.

4. Michigan

Students in Michigan will qualify for free school meals during the 2023-2024 school year. On July 20, 2023, Governor Whitmer signed the state education budget for the 2024 fiscal year into law. $160 million was allocated to provide all 1.4 million public school students free breakfast and lunch through the Michigan School Meals Program. Schools will be reimbursed for meals served to students who don’t qualify for free or reduced-priced meals.

5. Minnesota

On March 17, 2023, Governor Walz signed the Free School Meals bill into law. Students in the state will be eligible to receive free meals at school during the 2023-2024 school year. The program will provide reimbursement for meals served to students who don’t qualify for free or reduced-price meals. However, to participate in the Free School Meals program, schools must participate in the National School Lunch and School Breakfast Programs.

6. New Mexico

New Mexico joins the list of states that will provide free meals to students during the 2023-2024 school year. The Healthy Hunger-Free Students Bill of Rights Act will ensure that all K-12 students in the state have access to free breakfast and lunch. About $30 million will be used to cover this initiative yearly. The legislation also includes an incentive program to encourage schools to serve local, high-quality products.

7. Vermont

Vermont began offering free meals to all public school students during the pandemic. In June 2023, the Universal School Meals bill became law, making the policy permanent. Through this legislation, independent schools can also opt into the program to provide free meals to students who attend on public tuition.

Free school meals are a win for kids and families

Many Americans are struggling to afford rising living costs. Free meal programs like this are a win for families because they help ensure that children receive the nutrition they need to thrive and can also help trim grocery spending during the school year. For additional financial tips, check out these free personal finance resources.

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When you pay your mortgage, the money doesn’t necessarily all just go to one place. Read on to learn where it ends up. 

After you buy a house, you’ll likely begin writing a monthly check to your mortgage lender (unless you paid cash for the property).

When you pay your mortgage, though, the money you’re sending in doesn’t just go to one place. There are different uses for the funds you’re sending out of your bank account.

So, where exactly is your monthly mortgage payment going? Here are three potential places the funds could end up.

Principal

Your monthly payment goes toward paying down the principal balance on your mortgage loan. This is the best use of these funds for your interests, because as you pay down the principal, you gain equity in your home.

Unfortunately, when you first start paying your mortgage, very little of each payment goes toward the principal since most of the interest you owe is front-loaded (you pay a lot more interest upfront than later on since you’re paying it on a larger balance).

Say, for example, if you borrow $200,000 over 30 years on a mortgage loan at 7%. You’d have a monthly principal and interest payment of $1,330.60. The table below shows how much of that payment would go to principal versus interest at different times in your loan.

As you can see, it would take you until your 242nd payment before more of your monthly payment ends up going toward the principal in this loan scenario. Eventually, though, you will pay down your entire principal balance and will be left owing $0.

Interest

As the table above shows, most of your monthly mortgage payment is going to go toward interest for a very long time. Interest is the amount you pay to borrow. The higher your rate, the higher your monthly payment and total borrowing costs will be.

Over time, you’ll usually pay more in interest than it costs you to buy the house in the first place. For example, with our $200,000 loan at 7% over 30 years that we used as an example above, you’d end up paying a total of $279,017.80 in interest over the life of the loan.

The good news is, you can try to reduce the interest costs you owe by aiming to qualify for the best mortgage rate possible. To do that:

Shop around among different lenders. Get quotes from several lenders, including banks, online lenders, and credit unions. Find out which will offer you the best terms.Improve your credit score. Before applying for a loan, check your credit report to remove any errors. You can also try to improve your credit score by paying down existing debt, which will improve your credit utilization ratio. It may be worth taking on a side job for a while to find extra money for timely debt repayment before getting a loan.Make a larger down payment. The more you put down, the less risk the lender takes on. Borrowing less can not only help you qualify for a better rate, but you will also pay less interest since your interest is being charged on a smaller balance.

If you itemize on your taxes, your mortgage interest may also be deductible on loans up to $750,000.

Taxes and insurance

Finally, your mortgage lender may also require you to make payments toward property taxes and home insurance. That’s not because the lender provides insurance or taxes your home. Instead, this money is collected in an escrow account and used to pay the tax and insurance bills when they come due.

Lenders require you to put money into escrow because they want to ensure there are funds available to pay to keep the home insured and to pay the property taxes. This is important since the home is the collateral for the loan and they don’t want a tax lien on it or for the house to be destroyed with no insurance.

Now you know where your monthly mortgage payment goes: principal, interest, taxes, and insurance (PITI). It’s important to understand this, and to make sure you keep your total housing costs affordable by aiming to keep your PITI below 28% of your income and your total debts, including PITI below 36%. If you can do that, you can avoid being “house poor” and should be able to make monthly housing payments without compromising other financial goals.

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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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A good emergency fund is one you can access at a moment’s notice. It also isn’t at the mercy of inflation. Here’s how to meet both needs. 

One of the best things you can do for your personal finances is set up an emergency fund. Opinions on how much you need to set aside vary, though most experts agree on at least three to six months’ worth of vital expenses.

Even on the low end, however, three months’ worth of money is going to get into the thousands of dollars. So what do you do with all that cash?

Never invest your emergency fund

When you have a pile of money just sitting there, it seems a shame not to do something productive with it. Unfortunately, investing your emergency fund is a bad idea. You may need that money in a hurry one day, and stocks or bonds are far from liquid.

That leaves the bank as an option.

Your checking account is out, since checking accounts have infamously abysmal interest rates. (The current national average APY on a checking account is 0.07%. Ouch.)

You could go with a short-term CD; they tend to have good interest rates (many of our favorites are offering 5% or more at the moment). However, CDs have a similar problem as stocks and bonds: They tie up your money. An emergency fund needs to be accessible at all times or it isn’t as useful.

Right now, a high-yield savings account could be a good option. Although the average savings account rate is currently 0.43% nationally, a lot of the best online banks have APYs in the 4% to 5% range. This can at least make sure your savings isn’t obliterated by inflation.

For a long time, my emergency savings lived in my high-yield savings account. But then I realized that account had a big flaw: accessibility. Some emergencies require cash in hand — but many savings accounts don’t come with ATM access or the option to write a check.

That’s when I made the change to a money market account.

The magic of a money market account

A good money market account seamlessly marries the utility of a quality checking account with the beefy APY of a high-yield savings account. In other words, your money stays accessible while still earning a competitive rate.

And I really do mean it about the rates. Our favorite money market accounts are offering APYs directly comparable to the best high-yield savings accounts, with rates in the same 4% to 5% range.

At the same time, you’ll get a proper debit card, so you can make ATM withdrawals and debit card purchases. The best money market accounts even include paper checks in case you need to go old-school during your emergency.

Look for low minimums, no fees

Like anything, not all money market accounts are good money market accounts. Avoid anything with ridiculously high monthly service fees (unless the bank offers a reasonable way to get the fees waived).

You also need to watch out for account minimums. Some may require you to deposit a certain amount of money to open the account or to keep the account open.

The really sneaky ones will have different APYs depending on your balance. Make sure you qualify for the best rate by checking their balance requirements.

Finally, keep an eye out for introductory rates. Some banks offer a higher APY for an introductory period — typically the first year — then your rate will drop, sometimes significantly. If you don’t mind moving your money later, this could be a good deal, but make sure you know when the rate will change so you can move on.

Having an emergency fund is, in my opinion, absolutely vital. And choosing the right place to keep that fund is almost as important. I made the move to a money market account, and I don’t think I could keep my emergency fund anywhere else.

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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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Some card perks can offer a lot of value under the right circumstances. Here’s one example. 

Alright, so it’s no secret I love credit card rewards. (I can wax poetic about them even when I’m not being paid to do so.) But I have to admit, some of my absolute favorite credit cards aren’t actually that great in the rewards department.

You know what they do have? Perks. And I like perks almost as much as I like rewards — especially when they can save me a lot of money.

The backstory

This year I decided to buy a house. And in my infinite wisdom, I bought a house in a state on the other side of the country (worth it in the end, but whoa has it been a time!).

Particulars aside, let’s just say that I spent an irrational amount of time flying back and forth during the home-buying process and the move itself. As a result, a lot of valuable work time was spent not in my cozy home office, but in the cacophonous halls of some of the country’s busiest airports.

If you can manage to get work done sitting at an airline gate, you are made of sterner stuff than I. It simply wasn’t going to happen. And luckily, it didn’t have to; that’s exactly why we have airport lounges!

The credit card perk

Airport lounges are absolutely excellent places to not just get work done, but also find decent food and even free drinks. But they are also very expensive. On average, we’re talking about $50 (or more) per person, per visit. This adds up quickly when you’re doing a lot of traveling.

That’s why airport lounge access is one of my favorite card perks. A lot of the best travel rewards cards offer some kind of lounge access. That said, it’s hard to dispute that The Platinum Card® from American Express has fantastic lounge access.

I used my card to get into all sorts of lounges. While flying Delta through Atlanta, I was able to visit several different Sky Club locations (I recommend the egg bites). My layover in Florida included a trip to a Plaza Premium lounge. And the Centurion lounge in Charlotte was busy, but made for a nice place to get some work done.

The value

I gave you the backstory earlier to explain that I absolutely would have been paying cash for this perk either way. (In fact, there was one occasion when my only option was a lounge outside my card’s network, and I did actually pay cash to enter the lounge for my three-hour layover. I do not regret this purchase.)

Why is this important? Because perks you wouldn’t otherwise pay for shouldn’t be valued at full cost. Credit card perks are only truly worth what you would reasonably pay for the privilege.

In my case, since I would have (and did) pay for lounge access anyway, I value the complimentary lounge access at the full cost of what I would have paid in cash. Since I visited no fewer than 10 different lounges over the course of the year, that easily amounts to at least $500 in savings from this one perk.

However, I wouldn’t value airport lounge access as a $500 perk in general. Chances are good I won’t travel nearly as much next year (buying a house kind of hurts your vacation budget!), so I won’t get the same use out of my lounge pass.

This is why it’s important to reevaluate all of your cards each year to make sure you’re still getting value from them. An annual audit can help you avoid paying annual fees for cards you simply aren’t using to their full potential.

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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.American Express is an advertising partner of The Ascent, a Motley Fool company. Brittney Myers has positions in American Express. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Is it possible to have two, or even three personal loans at a time? Keep reading to find out. 

Personal loans can be excellent financial tools to consolidate high-interest debt, pay for home improvements, or finance large purchases. But what if you consolidate your debts and then need money for a home improvement or something else? Is it possible to have more than one personal loan at a time?

The short answer

Yes, you can have multiple personal loans at once. If you apply for a personal loan and the company sees another personal loan when performing a credit check, it doesn’t necessarily prevent you from getting approved.

Having said that, keep a couple of things in mind. Personal loan approval is generally based on two main factors — your credit history, and your income relative to your debts.

If you apply for a second (or third, or fourth) personal loan, your income must be sufficient to justify all of your current monthly debt payments plus the new loan. Many lenders have a maximum debt-to-income (DTI) ratio they look for. For example, if a lender’s maximum DTI is 45%, this means that all of your existing debts plus the new personal loan payment can’t exceed 45% of your pre-tax income. Most personal lenders don’t publish a maximum DTI ratio, but that doesn’t mean they don’t have one.

Second, it’s likely that a personal lender will want to see an excellent credit history if you’re applying for a second or third personal loan. In other words, you’re less likely to get approved for a personal loan if you have a relatively low credit score and you already have a personal loan account.

Having said all of that, individual lenders can set their own policies. Some may not approve you for a personal loan if you have another one outstanding. Others might be fine with multiple personal loans, as long as they don’t have another with the same lender. Some lenders might allow you to open more than one personal loan account with them at the same time. So, while there is no industry-wide rule that says whether you can have multiple personal loans, don’t be shocked if a particular lender has its own policy on the matter.

One thing to keep in mind is that just because you can qualify for multiple personal loans doesn’t necessarily mean that it’s a good idea. Personal loan payments are typically much higher than the required minimum payments on credit cards. So if you’re using them to consolidate credit card debt, it’s especially important to be sure that the monthly payment obligations of all your personal loans won’t be too much to handle.

Is having multiple personal loans a good idea for you?

Like most financial topics, there isn’t a one-size-fits-all answer here. But in many cases, having multiple personal loans can make a lot of sense.

Here’s an example. Let’s say you have $50,000 in various credit card debts and higher-interest installment loans you want to consolidate. You shop around for a personal loan by pre-qualifying on several lenders’ websites, but the loan company that offers the lowest interest rate with no origination fee only makes loans of up to $40,000. In this situation, it can make sense to accept a $40,000 loan with a lower interest rate and then get a $10,000 personal loan from the lender with the next-lowest rate offer.

Of course, this is just a hypothetical example. But the point is that as long as you can qualify and comfortably afford the payments, getting more than one personal loan could make sense.

Finally, there are alternatives to obtaining multiple personal loans that you might want to look into. For example, if you need to consolidate debt, you could try a credit card with a balance transfer offer. If you need to finance a major purchase, you can find a credit card with a 0% intro APR. You could also consider a home equity line of credit, or HELOC if you’re a homeowner.

Our picks for the best credit cards

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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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