Money Management

You’ve worked hard to build savings. Read on to see how you can protect them. 

As of about a year ago, the average American had $35,366 in savings, while the median savings amount was $4,500. Now, any time you have a situation with a median that’s much lower than the average, it indicates that more people have less than the average than more. In other words, $4,500 is probably a better representation of the average person’s savings account balance than $35,366.

But no matter how much money you’ve accumulated in your savings account, you no doubt want it to last. And you surely only want to build up your savings over time, not dip in constantly. But if you practice these dangerous habits, you might go from having a decent chunk of savings to having little to no money in the bank at all.

1. Not following some sort of budget

Some people will tell you that budgeting is too boring or time-consuming to make it worth their while. But if you don’t stick to some sort of budget, you might start overspending. That could create a situation where you need to keep dipping into your savings to keep up with your bills.

If you want a pretty seamless way to keep track of your finances, try a budgeting app. Many of these can be synced up with your checking account and credit card activity, so your purchases are tracked and assigned to different spending categories.

2. Committing to recurring expenses without crunching the numbers first

You might think it’s no big deal to buy a new car with a $650 monthly auto loan payment, even if your last car only had you paying $450. And you might assume you can afford to add different streaming or subscription services to your monthly bills because each one is pretty inexpensive in its own right.

But any time you take on a recurring payment, whether it’s $500 a month or $15, it’s important to make sure you can truly afford it. If not, you might end up raiding your savings frequently to keep up with your expenses.

3. Taking on too much house

Many people find that housing is their single largest monthly expense. But if you buy or rent too expensive a home, you might end up depleting your savings just to keep up with your costs.

More than 25% of U.S. homeowners are “house poor,” spending more than 30% of their income on housing expenses, reports The New York Times. So if you’re going to purchase a home, you’ll really want to make sure your monthly costs don’t exceed 30% of your take-home pay.

And to be clear, that 30% shouldn’t only account for your mortgage payments. It should also include ongoing, predictable housing expenses like property taxes and homeowners insurance.

That 30% limit should also apply to a home you choose to rent rather than buy. If you bring home $3,600 a month, you should keep your rent to $1,080 or less. Signing up for more could leave you raiding your savings to cover your rent or other bills.

If you’ve managed to build up some savings, give yourself a pat on the back, because it’s not an easy thing to do. But you also don’t want all of that effort to go to waste. So aim to steer clear of these habits that could leave you with little to no savings rather than a robust bank account balance.

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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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Many credit card companies allow you to downgrade your credit card. Learn about the most common reasons for doing this to see if it’s the right call. 

Credit cards with annual fees can be worth it, since they tend to have more benefits. But sometimes, after you’ve had a card for a while and gotten the sign-up bonus, you may not be sure if you want to keep it.

Fortunately, you don’t necessarily need to cancel your card. Many card issuers allow you to downgrade your credit card, which means switching it to another with a lower annual fee, or no annual fee at all. You get to keep the credit card account open this way, which can be good for your credit score.

A downgrade still means sacrificing some benefits, so it can be a tough decision. If you’re not sure whether it’s the right decision, here are the best reasons to downgrade your credit card.

1. It has several benefits you’re not using

It only makes sense to pay an annual fee if you’re saving even more money from the card’s benefits. If you’re not using those benefits, then it could be time to downgrade.

Now, some credit cards, in particular the top travel credit cards, have a ton of features. This isn’t to say that if you can’t use absolutely every benefit your card offers, you should downgrade it. But if half or more of your card’s perks are going unused, you might not be getting your money’s worth.

2. You’re tired of paying the annual fee — or you can’t afford it

You may just decide that you don’t want to shell out money every year for a credit card, especially if it’s a high-end card costing $250 or more. Or maybe you’re no longer able to comfortably afford the annual fee.

Whatever the reason, remember that you’re under no obligation to continue paying for a credit card. You can downgrade or cancel it at any time. And if the annual fee is causing financial problems for you, then you should definitely make a change.

3. You found another credit card you like more

There are lots of great cards out there, and new ones come out on a regular basis. That’s why it’s recommended to check out the best credit cards every now and then, even if you already have a card, to see if there’s a better option available.

If you find another credit card you like, and you start using it often, then you may want to downgrade your older card. This is often easier than trying to get your money’s worth from two cards with annual fees.

4. The card issuer has made changes you don’t like

With any credit card, features can change. Sometimes it’s for the better, but not always. A card issuer may get rid of a feature that you liked or raise the annual fee on your card. It’s disappointing when your credit card gets less useful to you, but you don’t need to just grin and bear it. You can downgrade your card and look for a new one.

5. Your lifestyle has changed

If your lifestyle has changed, the credit card that was a perfect fit five years ago might not be anymore. Maybe you’ve gone from traveling all the time to staying closer to home, so that travel rewards card isn’t as useful as before. Or you’re paying an annual fee for a credit card with big grocery rewards, but your kids have moved out and you’re no longer spending as much on food.

There’s nothing wrong with downgrading a credit card. If you decide to do so, just call your card issuer at the number on the back of your card. You’ll be able to see what your downgrade options are and switch to a card that costs you less.

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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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A trip to Disney World for a family of four can cost several thousand dollars. Read on to learn how that breaks down. 

Three days in Disney World is enough time to see all the highlights, visit three or four parks, and witness more nightly fireworks than you’ll likely see for the rest of the year. Unfortunately, three days is also plenty of time to spend what you might have spent over a normal two- to four-week period.

According to the website Mouse Hacker, a baseline Disney vacation will cost about $316 per person per night. For a family of four (two adults, plus one child 10 years or older and one child 9 years or younger), that would come out to about $3,793 for a three-day Disney World trip. This includes flights, a stay at Pop Century, three-day tickets (without Park Hopper), Genie+ at two parks, plus meals and transportation.

Mouse Hacker’s estimate of $316 per person per night is really good, but for the sake of accuracy, let’s try to calculate our own estimate using today’s prices.

Cost breakdown: Three-day Disney World trip

First, keep in mind that the cost of your trip to Disney World will depend on multiple variables, such as when you go, where you’re flying from, what hotel you choose to stay at, and whether you buy food at Disney World. A family of four flying from Anchorage, Alaska during the summer, for instance, will probably pay more than a family driving down from Atlanta, Georgia.

But for simplicity’s sake, let’s assume you’re going to Disney for three days between Aug. 24 and Aug. 28 and flying from Chicago. Let’s also assume you’re staying four nights at Pop Century, going to the parks for three full days (without Park Hopper), and have a food budget of $250 per day. Here’s an estimate of what you’d pay:

So, at the end of August, you’d pay about $4,388 for a four-night stay and three-day Disney World vacation. In the off season, your total cost would perhaps align more closely with Mouse Hacker’s estimate of $3,793. Overall, it’s safe to assume you’ll spend between $3,800 and $4,440 for a three-day Disney World trip.

Costco Travel may have better Disney World deals

When you think of Disney World tickets, Costco may not be the first place that comes to mind. But if you’re a Costco member, you could save hundreds by buying your tickets through Costco Travel.

From now until Sept. 11, 2023 (or until supplies last), Costco is offering five-day Disney World packages, which include airfare, five-day park tickets (with Park Hopper), lodging at a Disney hotel, transportation to Disney World parks, early park entrance, extending evening hours, and $250 instant savings on your travel.

For the same family traveling between Aug. 24 and Aug. 29, you’d pay — wait for it — $3,696. That’s about $100 less than Mouse Hacker’s estimate, $600 less than our own estimate, and you get an extra night. It’s hard to beat that deal if you’re a Costco member.

If you’re not a Costco member, you could make room in your personal finances for a Disney World vacation by using rewards on credit cards. In fact, there’s a slew of rewards credit cards that can help you cover airlines to Orlando, hotels in and around Disney World, and Disney expenses while you’re there. Using welcome offers on hotel credit cards, for instance, could help cover most of your lodging, while certain airline cards could reward you with low-cost tickets to Orlando.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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