Money Management

Travel volumes are back up to pre-pandemic levels this Independence Day. Find out how your credit card could make your trip easier. 

What happened

Traveler numbers this holiday weekend could be double that of last year. According to travel app, Hopper, over 24 million passengers are expected to travel from U.S. airports between June 29 and July 5. Last year, that figure was just 12.9 million. According to Bloomberg, travel volumes will likely surpass pre-pandemic figures.

So what

The good news is that lower airfares are one reason so many people are flying this Independence Day. At an average $300 per round-trip, Hopper says that domestic flights cost over $100 less than they did last year. The bad news is that crowded airports can lead to long lines and disrupted flights, and make your trip more stressful.

Atlanta, Dallas, Denver, and Los Angeles look likely to be the busiest airports with over a million passengers expected to pass through each one. Thursday and Friday will be the heaviest days — Hopper predicts around 3.7 million flyers on each day.

Now what

There are a few ways you can reduce the likelihood of travel-induced gray hairs. For starters, get to the airport early and make sure your passport and travel documents are easy to access. If you’re able to travel light and avoid checked baggage, do. That’s at least one line you can skip completely.

If you have a travel rewards credit card, make sure you’re using all its perks. It goes beyond using points to reduce the pressure on your wallet when you book; several card benefits might also make your trip less stressful. Travel rewards cards could give you the following perks:

Travel insurance: Many top travel credit cards include insurance against canceled or delayed flights, assuming you used your card to book the trip. Check the fine print to learn exactly what’s covered and how you claim.Lounge access: If your card gives you free lounge access, this can make waiting around at the airport much more pleasant. Easier queuing at security: There are a few different programs that can help you speed through immigration and security checkpoints. Even better? Certain credit cards give you a statement credit towards their membership fees. Check out our guide to TSA PreCheck, Global Entry, or CLEAR to understand these perks better. Free checked bags: Only taking hand luggage may save time, but it isn’t always an option. If you do need to check a bag, it might be free with your credit card, particularly an airline credit card.

Overall, your journey may be smoother if you’re able to stick to smaller airports and fly at off-peak times. The trouble is that this often isn’t feasible, particularly if you’re trying to get to your loved ones to celebrate July 4. Credit card perks can offer low cost ways to minimize travel stress whenever and wherever you fly.

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Want to party at Barbie’s Malibu DreamHouse? Now you can! Here’s what you need to know to book an overnight stay at the iconic house for free using Airbnb. 

The movie Barbie, starring Margot Robbie and Ryan Gosling, will begin playing in movie theaters worldwide on July 21. Just in time for the upcoming movie release, Airbnb is promoting a free stay at Barbie’s iconic Malibu DreamHouse.

Four lucky guests (two at a time) will get the chance to book 1 of 2 one-night stays in the Barbie-themed home. Even better, the rental fee is $0. Here’s how to book a stay at the Barbie Malibu DreamHouse to experience the ultimate beachside getaway.

Experience fun and excitement at the Malibu DreamHouse

Airbnb and Ken are inviting guests to spend a night at Barbie’s DreamHouse in Malibu — and the best part is you won’t have to drain your checking account to stay there. In 2019, Airbnb partnered with Barbie to host a $60-per-night, two-night stay at the iconic Malibu DreamHouse. Barbie is busy being the superstar that she is, so Ken is hosting this time.

The house has been revamped to include Ken’s favorite accessories and party essentials. Two guests can book a one-night stay at the iconic one-bedroom beachside home for free. You and a friend can enjoy the beautiful panoramic views while utilizing the many amenities. Ken has included everything you need to experience the Malibu DreamHouse with your favorite pal.

The home’s most notable features include an outdoor disco dance floor, an infinity pool with loungers, and Ken’s guitar, perfect for sunset serenades. Barbie isn’t the only one with style, so check out Ken’s closet to choose a beach outfit for the ultimate Instagram-worthy photo shoot. Of course, since Barbie is the homeowner, the property is all decked out in hot pink.

Ken has also left behind some iconic souvenirs. Guests can take home sets of yellow-and-pink skates and surfboards to remind them of the good times they shared at the Malibu DreamHouse. If you’ve ever dreamt of living like Barbie for a day, this Airbnb home rental presents the perfect opportunity. While Ryan Gosling won’t be there to greet you (sorry!), Barbie’s concierge will welcome you, ensuring you have a comfortable stay.

One-night bookings will be made available for July 21 and July 22. While the home rental itself is free, guests are responsible for paying for all transportation costs. If you want to soak up the sun while pretending to be Barbie for a day, visit airbnb.com/kendreamhouse to learn more. Booking will open at 10:00 a.m. P.T. on July 17, 2023.

Use your credit card rewards to save on travel costs

Whoever books the Barbie Malibu DreamHouse may want to assess their stash of credit card points before jetting off on their fantastic adventure. Many people use rewards credit cards to earn valuable rewards. You may want to add rewards credit cards to your personal finance strategy if you’re looking for ways to travel without disregarding your budget.

You can earn rewards faster using your credit cards to pay for everyday purchases. But if you use credit cards, remember that paying your entire balance off in full is essential to avoid credit card debt. If you carry a balance, you’ll pay credit card interest fees — which can be expensive.

Travel rewards can make vacationing more affordable for everyday people and plastic dolls alike. Whether you’re planning your own Malbiu adventure or another upcoming getaway, check out our list of the best travel credit cards to learn more about the benefits of using them.

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CDs can be a good place for your money if you don’t need the money immediately. Here’s what you need to know. 

There are many different places to invest your money. Certificates of deposit are one of them.

CDs allow you to invest a set amount of money for a fixed period of time, which usually ranges from a few months to a few years. You promise to keep your money invested for that time period and, at the end of it, you get back your funds along with interest.

The interest rate you’re paid is determined upfront when you buy the CD and is typically quite a bit higher than the rate you’d get with a standard savings account. However, it’s likely lower than what you could earn if you opened a brokerage account and began buying stocks.

The big question is, when should you invest in a CD versus other investment options? Here’s what you need to know.

CDs are good when you need short-term, low risk investment options

A CD is a great option if you want to make a short-term investment and can’t afford to take on risk because you will need the money relatively soon.

Although CD rates can vary depending on many factors including the length of the time you’re tying up your money, as mentioned above, the APY is typically higher than what you’d earn in regular savings accounts. And, the APY is guaranteed for the entire time you have the CD. While your rate could drop with a high-yield savings account as rates fluctuate, you’ll know exactly what you’re going to earn when you invest in a CD.

You’ll not only be getting a higher rate with a CD, you’ll be doing it without any risk since CDs are FDIC-insured up to $250,000 per person, per account. So, you can maximize the amount of money your money makes for you without taking a chance of losing it in the stock market.

Typically, with a CD, you will have to agree to tie up your money for a minimum of three months or six months, depending on the bank — although you can also choose a CD of a longer duration. If you are setting aside money for a big purchase and your deadline for buying is more than three or six months out, a CD may be the best place for those funds as long as you’re confident you won’t decide to act early.

There are many big purchases you may be saving up for over a period of months, or even years, such as a home down payment or to buy a car. If you know you won’t be purchasing your home before the CD maturity period, investing the down payment funds in a CD to get the best risk-free returns could make sense.

Don’t use CDs as a long-term investment vehicle or when you need to be able to access your money anytime

While CDs are a great option to invest for the short-term, they aren’t the right choice for funds you might need right away, such as an emergency fund. That’s because the money can’t be accessed early if you need it unless you pay a penalty. And CDs aren’t a good option for long-term investments, since the rate they typically pay is generally well below what you could earn by investing in the stock market.

By understanding what role CDs should play in your financial life, you can make sure you’re putting your cash into them only when it makes sense. So, if you know you’re OK with tying up your money for a little while but your investing timeline is around three years or less so you can’t afford to risk buying stocks, a CD may be your smartest bet.

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Many Americans feel wealthy even though they also worry about money. Find out why so many people think wealth is about more than just their net worth. 

There are plenty of famous quotes to support the idea that money won’t make you happy. Benjamin Franklin said, “Money never made a man happy yet, nor will it.” And Franklin D. Roosevelt said, “Happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.”

But reality is more complicated. Particularly if you feel like inflation keeps eating into your paycheck faster than the very hungry caterpillar. There are certainly times when money could make life easier — such as when you’re not sure how to cover your bills or pay this month’s rent or mortgage.

It may come as a surprise, then, to learn that 48% of Americans feel wealthy, according to a recent Schwab survey. That’s in spite of the sky-high prices we’ve seen recently. And it’s at odds with another part of the survey. People’s average net worth is much lower than the amount they think they’d need to be wealthy. The reason? A lot of people feel wealthy because they have healthy relationships and a fulfilling personal life.

What is net worth?

Net worth is different from income. You can have a low income and a high net worth, and vice versa. It’s a useful snapshot of your finances and can be a good yardstick if you’re trying to build wealth.

To calculate your net worth, add up everything you own (your assets) and subtract what you owe (your debts). For example, in the following scenario, the total assets come to $559,000. If we subtract the liabilities of $267,000, this person’s net worth would be $292,000.

Knowing your net worth is a good way to track your financial situation. In an ideal world, as you head toward retirement, your net worth will increase and you’ll have more value in the assets column than you do in the liabilities one.

Does net worth equal wealth?

What’s interesting about the Schwab survey is that the average net worth of Americans who feel wealthy is $560,000. In contrast, people think they need a net worth of $2.2 million in order to be wealthy. That big disconnect makes more sense when you dig deeper into the numbers because people feel wealth is about more than money.

Many respondents say well-being and experiences are more important than the amount of money in their bank account or owning nice things. Over 60% said they view having healthy relationships with family and loved ones as a better description of wealth than having a lot of money. A similar percentage of Americans think that having time is more important than having money.

Valuing non-monetary aspects of life is important. Indeed, paradoxically, it can even help people to build wealth. If you feel wealthy because you have strong relationships, you’re less likely to spend money on things you don’t really need so you can keep up with the Joneses.

This isn’t to say that people aren’t trying to keep up with their peers. A third of survey respondents said they buy things based on what they see friends and influencers doing on social media. For Gen Zers, that number shoots up to 55%. It’s also concerning to see that only 35% of respondents have a formal financial plan.

Bottom line

Friends, family, health, and how you spend your free time are all important aspects of a wealthy life. But it is rarely an either-or scenario. Unless you’re filling in Schwab’s survey, you’re unlikely to have to choose between money and your loved ones. You can build wealth and build a meaningful life, particularly if you have a plan on how you’ll do it.

Indeed, there are many situations where money can alleviate stress and cushion you and your loved ones. For example, having money in a savings account to cover a family crisis. Or having enough in your retirement account for a comfortable old age. Or simply knowing you can put food on the table for your family and keep a roof over your heads. As Denzel Washington is quoted as saying, “Money doesn’t buy happiness. Some people say it’s a heck of a down payment, though.”

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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.Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. Emma Newbery has no position in any of the stocks mentioned. The Motley Fool recommends Charles Schwab. The Motley Fool has a disclosure policy.

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529 plans just got a lot more flexible. Read on to see what changes have been made. 

If your goal is to save enough money for college to cover your kids’ education in full, then you may need to pump a bundle of cash into a 529 plan. College costs have risen a lot over the past few decades. And it could easily take a six-figure 529 balance to leave your kids without any educational debt.

But what if you end up in the fortunate position of having too much money in your 529 plan? Because the money you put into a 529 doesn’t get any tax-advantaged treatment, the same way contributions to a traditional brokerage account don’t, you’re not penalized if you withdraw your principal contributions for non-education purposes. But if you withdraw the gains portion of your 529 for non-education purposes, you’ll be penalized on those gains to the tune of 10%.

Here’s how that might work. Let’s say you contribute $40,000 to a 529 plan and your balance grows to $75,000 because of your investments. If you were to take withdrawals for non-education purposes, only the $35,000 in gains would be subject to a 10% penalty — not the $40,000 you put in.

Now you do have the option to designate a new beneficiary for your 529 plan if you end up with more money than you need for your kids’ education. But that, too, limits you to a large degree.

The good news is that starting in 2024, you’ll have the option to roll unused 529 plan funds into a Roth IRA without penalty. And that makes 529s virtually risk free from an excess cash perspective.

When you have more options for your money

Many people do their best to save for college only to wind up falling short. But you might land in the opposite boat, especially if you give yourself many years to save for that goal and you invest your money in a savvy manner.

The stock market has, over the past 50 years, delivered an average annual 10% return before inflation, as measured by the performance of the S&P 500. So, let’s say you have one child and begin funding your 529 plan when they’re a year old, leaving you with a 17-year investment window. If you’re able to sock away $400 a month in your 529 plan during that time and score a 10% yearly return on your investments, you’ll be sitting on about $195,000.

Meanwhile, let’s say your child opts to attend a school that only costs $40,000 a year (“only” being a relative term, of course). That means you’re left with an extra $35,000 in your 529 plan that you don’t need.

Clearly, that’s a good problem to have. But it is a problem nonetheless — or at least it was until recently. Now, beginning next year, you’ll have the option to move that money over to a Roth IRA and reserve it for your retirement. And to be clear, the amount of money you can roll from a 529 plan to a Roth IRA is limited to $35,000 per beneficiary.

A good way to eliminate worry

The aforementioned 529 plan change is a great way to alleviate a big concern associated with funding one of these accounts. So if you have a child whose college education you’d like to cover, it pays to consider opening a 529 plan as early as possible. The more time you give your money to grow, the more likely you are to end up in a situation where you have extra funds to move to a Roth IRA.

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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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