Money Management

Getting rich may not be easy, but it’s definitely achievable. Following these rules can make it easier, though. Read on to learn more! 

Becoming rich is something that most people aspire to, yet only a few ever achieve it. Creating wealth requires a combination of hard work, discipline, and adherence to certain rules. Good news! We have identified five rules to make your journey to becoming wealthy more comfortable.

And the even better news is that you don’t have to be a genius or even have a college degree to make it happen. All you need to do is follow the right money rules and you’ll be on your way to financial freedom!

Money Rule No. 1: Invest in yourself

Investing in yourself is the most important investment you can make. Even if Bill Gates, Warren Buffett, and Jeff Bezos lost all of their money overnight, they have the expertise and knowledge to regain their wealth.

Investing in yourself can include learning new skills, expanding your money knowledge, building your network, and improving your health and well-being. By constantly investing in yourself, you increase your value as a person, which in turn can lead to better job opportunities and higher salaries.

Money Rule No. 2: Save and invest consistently

Saving and investing consistently is one of the fundamental rules of getting rich. According to the largest survey of millionaires ever conducted, the key to financial success and becoming a millionaire was through disciplined investing.

A whopping 75% of those surveyed attributed their success to the power of regular and consistent long-term investing. “So, the story about the young computer genius who developed an app that earned millions overnight is the exception, not the rule,” the survey stated.

In addition, 8 out of 10 millionaires invested in their workplace retirement plan, taking advantage of the free matching from their employers and the tax benefits. Plus, 3 out of 4 also invested in their brokerage accounts, Roth IRA, or a traditional IRA. You can do this too, and over time, compound interest will work in your favor, and your investments will grow.

Money Rule No. 3: Diversify your investment portfolio

Investing is not a one-size-fits-all approach, and one of the keys to becoming rich is to protect your wealth. This means you want to minimize unnecessary risk. Diversifying your investments spreads your risk so you don’t have all of your eggs in one basket.

Investing in stocks, bonds, real estate, precious metals, and other assets can generate passive income. By diversifying, you’re less vulnerable to the ups and downs of any one investment, and you also have the opportunity to take advantage of different market conditions.

Money Rule No. 4: Live below your means

This is the basic financial principle that you must always bear in mind. It’s simple — spend less than you earn, and you will always have money left over to save. Unfortunately, many people don’t follow this principle, which leads them into financial trouble.

To prevent this, you need to create a budget, track your spending, and ensure that you stick to it. Becoming rich means prioritizing your spending and focusing on the things that truly matter. By living below your means, you will have more money to save, invest, and grow your wealth.

This doesn’t mean that you should deprive yourself of things that make you happy, but rather, be intentional about your spending. It doesn’t matter how much you earn; what matters is how much you keep and save for the future.

Money Rule No. 5: Create multiple income streams

Creating multiple streams of income, especially passive income, is a great way to build wealth over time. Passive income includes that from investments, rental properties, royalties, and any other income that you earn without being physically present.

You don’t have to be an entrepreneur to start building multiple income streams. For example, you can invest in stocks, bonds, or real estate to diversify your earnings. Another option is to leverage your skills and talents through freelancing or consulting.

By creating multiple income streams, you can not only increase how much you earn, but also safeguard against unexpected financial setbacks. Over 60% of the world’s billionaires are self-made, earning their billionaire status by starting their own companies. You may not become a billionaire by starting a small business, but having one could shield you from money loss if you lose another income stream.

Building wealth doesn’t involve a get-rich-quick scheme; it’s a long-term process that requires patience, perseverance, and discipline. You will face hurdles, setbacks, and challenges along the way, and it’s essential to be mentally prepared for them. Remember, wealth creation is a journey, not a destination. Follow these five money rules, and you’ll be well on your way to building wealth and financial freedom!

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We’re deep in the throes of Home Depot season. Read on for some traps to avoid. 

There are certain stores my husband and I tend to frequent. Costco is one of them, as it allows us to keep our credit card bills down in the course of feeding our family. And we also visit our local ShopRite at least once a week for food items Costco doesn’t carry, or items we don’t want to purchase in bulk.

We don’t shop at Home Depot as frequently as we do Costco and ShopRite. But during the spring in particular, we tend to go there a lot — namely, to tackle seasonal home maintenance tasks.

But like many Home Depot shoppers, there are certain pitfalls we tend to fall into. Here are some you should try to avoid.

1. Not getting the right materials in the first place

When I say that my husband and I shop at Home Depot, what I really mean is that he makes a shopping list and picks out what he needs, and I go along for the company. I’m admittedly pretty clueless about most home maintenance and repair items (but hey, at least I can cook).

But what inevitably happens is that we’ll go to the store, pick up supplies, start a project, and realize we either bought the wrong things, or we didn’t buy enough of the right things. That generally means a return trip to Home Depot — and delays in finishing the work around the house that needs to get done.

Before you head to Home Depot, do your research. That could mean taking measurements at home or even calling a handy neighbor and asking for their input.

2. Buying equipment we don’t have room for

Home Depot has many tools you can rent for reasonable prices. But in the past, we’ve purchased tools because we expected to use them multiple times, and buying them outright was more cost-effective than renting them.

In doing so, however, we overlooked one key issue — storage. Now, our garage is so overloaded with equipment we rarely use that we can’t even fit the smaller of our two cars in there.

As an example, you can rent a gas-powered pressure washer at Home Depot for $62 for four hours, which is generally enough time to clean a deck and patio like we do every spring and often in the fall. You can buy a comparable pressure washer for $400, so by your seventh use, it pays for itself. But it’s not a small item to store, so for us, renting would’ve made more sense.

3. Not comparing prices

You might assume that Home Depot has the lowest prices for home maintenance items. But that’s not always the case.

Home Depot sells the Kohler Sous Pro-Style Single-Handle Pull-Down Sprayer Kitchen Faucet for $289. Amazon has it for $239.99.

That’s just one example, but the point is that in the past, we’ve purchased items at Home Depot only to find a lower price elsewhere. That’s a trap worth avoiding if you don’t enjoy emptying your savings account for no reason.

Given the number of times we’ve been to Home Depot, you’d think my husband and I would be immune to these pitfalls. But sometimes we still fall victim to them — particularly the first. So do yourself a favor and try not to follow in our footsteps.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon.com. The Motley Fool has positions in and recommends Amazon.com and Costco Wholesale. The Motley Fool has a disclosure policy.

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The three-fund portfolio provides a balance between growth and risk management. Check out how this investing strategy works and see if it’s right for you. 

One of the biggest decisions you’ll make as an investor is your investing strategy. There’s a near-endless number of approaches out there. It’s important to find one that you’re comfortable using so you’re happy with the results and not second-guessing if you should stick with it.

The three-fund portfolio is a strategy that gets lots of love from investors, and for good reason. It can deliver strong growth and low risk over long time periods, and it’s easy to manage. If you’re trying to figure out how to set up your investments, the three-fund portfolio could be the solution.

What is the three-fund portfolio?

The three-fund portfolio is an investment portfolio with U.S. stocks, international stocks, and U.S. bonds. As the name suggests, it contains three investment funds:

Total stock market index fundTotal international stock index fundTotal bond market fund

Exact asset allocation depends on each investor’s age and risk tolerance. Younger investors may put more of their portfolios in the stock market funds. Older investors who are closer to retirement will likely want more money in bonds.

The Bogleheads, a term for investors who follow the investing philosophy of Vanguard founder John Bogle, popularized the three-fund portfolio. It’s now the portfolio of choice for many investors.

How to build a three-fund portfolio

To build a three-fund portfolio, invest in a total stock market index fund, a total international stock index fund, and a total bond market fund. These can be either mutual funds or ETFs (exchange-traded funds). What’s most important is that they have low fees — an expense ratio of under 0.10% is ideal, without any transaction fees for buying and selling.

You can find these three types of funds with all the popular stock brokers. Some have their own version of these funds, but there’s little difference between them. You don’t need to worry about whether a total stock market fund from Vanguard or Charles Schwab is better. Choose whichever is most convenient for you and available with the broker you use.

The other consideration is your asset allocation between these funds. Here are a few popular options:

An 80/20 three-fund portfolio with 64% U.S. stocks, 16% international stocks, and 20% bonds. This option prioritizes growth and is good for investors with high risk tolerance.An equally weighted three-fund portfolio with 33% to 34% in each asset. This option is balanced, with moderate growth potential and risk.A 20/80 three-fund portfolio with 14% U.S. stocks, 6% international stocks, and 80% bonds. This option is highly conservative and designed for preserving wealth.

Pros and cons of the three-fund portfolio

There are quite a few benefits to the three-fund portfolio. Here are some of the biggest advantages of this strategy:

You have a diversified portfolio containing over 10,000 securities.It keeps fees to a minimum, since you’re investing in index funds with low expense ratios.It performs well for long-term investors. U.S. and international stocks have strong growth potential, and bonds provide stability.You can set up the asset allocation to fit your needs, so you have some control over how your portfolio is set up.It doesn’t take long to build or to maintain. All you need to do is keep your asset allocation where you want it.

No investing strategy is perfect for everyone. Here are the most notable drawbacks to the three-fund portfolio:

Although it’s not too time-consuming, you can’t “set it and forget it.” If you’re looking for a completely hands-off portfolio, a target-date fund may be a better choice.You don’t have full control over your portfolio if you follow this strategy as intended. You only invest in those three types of funds, meaning no stock picking or alternative investments, such as real estate or crypto.Bonds can limit your portfolio’s growth. While you can keep bond allocation to a minimum with the three-fund portfolio, some may prefer to hold off on bonds entirely when they’re decades from retirement.

Is a three-fund portfolio right for you?

The three-fund portfolio is a sound investing approach, and you can’t go wrong with it. If you set up asset allocation appropriate for your age, a three-fund portfolio will most likely perform well. I say “most likely” because nothing is guaranteed with investing, but this strategy is one of the safer options.

There are situations where another approach could be a better choice. If you aren’t interested in bonds for the time being, then the three-fund portfolio isn’t for you. If you want full control over your portfolio, stock picking may be the way to go. But if you’re looking for a straightforward strategy with good performance and no glaring flaws, the three-fund portfolio fits the bill.

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Money shame can become a vicious cycle and stop us from building strong financial foundations. Find out how to change the way you think about money. 

Let me start with a confession. I may write about personal finance, but I don’t always make good money decisions. I’ve used my credit card to buy flights I can’t afford. I’ve dipped into my savings to buy things I don’t need. I often pick up the bill for drinks even when it stretches my budget. Some of those decisions were driven by shame, others are sources of shame. None of them help me much in terms of building wealth.

The good thing about this job is that I have learned I’m not alone. Indeed, I know a lot of people who are ashamed of aspects of their finances. The other good thing about writing about money is that I’ve learned how to make more decisions that strengthen my financial position over time. Here are some of the ways you can do the same.

What is money shame?

A lot of money advice centers around practical steps you can take. (I’m carefully not using the dreaded “should” word.) You’re told to make a budget, avoid debt, put money into your emergency fund, and plan for your old age. It’s all logical, and most of us know that living within our means would make life easier. But there are often psychological factors that stop us from doing those things. Shame plays a large part.

Money shame is a painful feeling of embarrassment or distress caused by aspects of our financial lives. It can show itself in different forms. Some people feel ashamed that they don’t have as much money as their peers, while others feel guilty that they have too much. Some are ashamed of their debt or believe they can’t manage their money and don’t want to tell anyone.

Ignoring those feelings can push us into a vicious cycle. When we’re ashamed about our finances, we might cover up those feelings by, say, buying things we don’t need, splurging on nights out, or taking on debt. This can make us more ashamed and more likely to spend more. Money issues can contribute to stress, addiction, and depression.

How to overcome money shame

The biggest step to getting past feelings of shame around your finances is to recognize them. Try to understand why you feel ashamed and why you have trouble, say, sticking to a budget. In a TED Talk, money coach Tammy Lally, said, “We have to get honest with each other that we’re suffering with money issues, and let’s get real — we have to stop numbing out our pain.” Here are three steps to take.

1. Share how you feel about money

It isn’t always easy to talk about money. I have a friend who has shared bedroom stories that would make you blush, but doesn’t tell anyone about her credit card debt. Unfortunately, like many negative feelings, shame grows stronger in silence. See if you can start a conversation about money with people you trust. If you’re not ready to talk to friends or family, look for supportive communities online or even consider professional help.

When you start to drag those uncomfortable feelings into the light, you might discover that other people have had similar experiences. You might find they also worry about their bank account balances and spending habits. They might tell you how they overcame their own money stresses. Talking can be a powerful tool.

2. Understand your money triggers

Think about what’s behind your money shame. We often have deep-seated beliefs about ourselves that we don’t question — maybe we grew up being told we were bad at math and that’s stopping us from making a budget. Or perhaps we overspend because we don’t feel confident. Maybe you are ashamed of carrying a credit card balance and think people will judge you for it.

Try to separate your bank balance and money habits from your feelings of worth. If you are in debt or are living paycheck to paycheck, it doesn’t say anything about who you are as a person. Not only that, but that balance isn’t set in stone, and those habits can change. When you’re conscious of the sources of your financial shame, you can build a different relationship with money.

3. Focus on ways to move forward

As you explore what you’re feeling, think about how you can change the narrative. If you believe you can’t budget, would an online tutorial ease the fear a little? Or might a budgeting app help? If you know what triggers any impulse purchases, how can you break that cycle? You might not manage it every time, but small changes add up.

Here’s the thing: We weren’t born knowing how to manage money. And like everything else in life, we will make mistakes. Try to be compassionate with yourself and don’t spend energy on what has already happened. Instead, think about the choices you can make today that will make a difference to your finances tomorrow.

Bottom line

Shame is a horrible feeling. Whether it’s about money or other aspects of life, it can consume us. The good news is that you can break the cycle. You can push shame out of the driver’s seat. In fact, when you are able to understand what’s making you ashamed, and even forgive yourself, you can start to do things differently.

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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.Discover Financial Services 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 Discover Financial Services. The Motley Fool has a disclosure policy.

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Online home searches have helped Redfin discover where buyers hope to move. Keep reading to learn where they’re coming from and where they’re going. 

The real estate company Redfin recently found a pattern: Large groups are looking to leave their high-cost, urban areas and relocate to sunnier, less expensive parts of the country. Here, we’ll look at the cities people are flocking away from and the cities in which they hope to land.

Taking flight

Redfin employed a brilliantly simple way to determine which city dwellers were most anxious to leave their current living situations. To do so, they checked internet searches. Here are the cities where the most internet searches were conducted by users looking for relocation information:

San Francisco, CaliforniaNew York, New YorkLos Angeles, CaliforniaWashington, D.C.Boston, MassachusettsSeattle, WashingtonChicago, IllinoisDenver, ColoradoHartford, ConnecticutMinneapolis, Minnesota

Not surprisingly, seven of these cities are also listed among the Top 10 U.S. Cities with the Highest Cost of Living. Only Chicago, Hartford, and Minneapolis did not make the list.

Where people want to go, according to internet searches

The most popular cities for relocation searches are currently in the South. Here’s a list of the Top 10, according to Redfin:

Miami, FloridaSacramento, CaliforniaLas Vegas, NevadaPhoenix, ArizonaTampa, FloridaDallas, TexasCape Coral, FloridaOrlando, FloridaNorth Port-Sarasota, FloridaHouston, Texas

Relocation does not appear to be all about costs. For example, living in Miami is not cheap. Nationally, the median home price is just shy of $385,000, while the median sold price in Miami is nearly $510,000. Still, Miami is the top dream destination for those leaving New York, New York, Washington, D.C., and Boston, Massachusetts.

While expensive, home prices in Miami are still lower than they are in these three major cities. For example, the median price of a sold home in New York, New York, is $843,000. In Washington, D.C., it’s $668,000; in Boston, MA, the median price of a sold home is $779,000.

Buyers are also attracted by the fact that Florida has no state income tax, lowering their overall cost of living. Those who migrate with a checking account full of cash thanks to the sale of more expensive property are less put off by the current interest rates.

Where people are landing

Sometimes the dream does not match the reality. By the time buyers are ready to take out a mortgage, it’s sometimes in a different spot than they expected. The moving and storage company PODS tracks where people are actually moving. Here are the 10 most popular destinations so far this year:

Myrtle Beach, South Carolina/Wilmington, North CarolinaSarasota, FloridaOrlando, FloridaOcala, FloridaHouston, TexasDallas-Fort Worth, TexasKnoxville, TennesseeJacksonville, FloridaTampa Bay, FloridaGreenville-Spartanburg, South Carolina

The market overall

Despite the spike in people heading South, Redfin reports that home-buying demand is coming down from its apex, including eight of these ten cities. The National Association of Realtors (NAR) reports that existing home sales decreased by 3.4% in April. Each of the four major U.S. regions has registered sales declines month-over-month and year-over-year. This figure includes single-family homes, co-ops, and condos.

Over the past few years, the housing market has caused a sort of whiplash. We were sailing along with low interest rates and just enough homes on the market to keep prices steady. And then the COVID-19 pandemic turned everything on its head. We watched prices soar, followed by mortgage interest rates.

At this point, all most of us will do is wait and watch for what happens next. Others will use this time to sell their homes for more than they ever thought possible and migrate to a region where the sun always shines, and cost of living is low.

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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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SNAP benefits help millions of American families put food on the table. Here, we share whether those benefits can be used at Costco. 

You’re allowed to use your SNAP benefits at Costco, but the question is, do you want to? Only you can determine whether your SNAP dollars will go further at Costco than at another area store. Here, we break down three things you should consider before using SNAP benefits.

Balancing membership fees

Costco accepts payments via Supplemental Nutrition Assistance Program (SNAP) benefits. But first, you’ll need to be a club member. Currently, the least expensive annual membership is $60, but you can pay for a Costco membership using SNAP benefits.

While you may not be able to pay directly using benefits, you can use your EBT (Electronic Benefit Transfer) card to purchase a Costco Shop Card, then use the cash card to pay for a membership.

Given that SNAP benefits per person average about $182 per month, whether you’ll want to purchase a membership may hinge on these three questions.

1. How large is your household?

If you’re single without dependents, you probably receive somewhere around $182 monthly in SNAP benefits. Whether it’s a bit more or a bit less, you’ll need to determine whether you can save enough at Costco to make up for the $60 you’ll spend on an annual membership.

Of course, the larger your household, the larger the SNAP benefit. If you have a family of four and receive $728 in SNAP benefits monthly, a Costco membership may make sense, but only if the annual savings surpasses the cost of becoming a member.

2. Will you buy in bulk?

And that leads to the question: Do you plan on buying in bulk? And if you buy in bulk, does your family need a 20-pound bag of rice, or will some of it go to waste?

Insider tip: Buying in bulk only makes sense when the per unit price is lower than you can find at another store. All Costco members owe it to themselves to do a little comparison shopping before heading to the store, and that’s especially true if your monthly budget doesn’t have much wiggle room.

3. Can you find a better deal elsewhere?

The goal is to have an emergency savings fund and a little money to save each month. Costco may be the retailer that does that for you, or you may be better off shopping at a store that doesn’t charge a membership fee. It only took a few moments of comparison shopping to identify examples of when Walmart would have provided more bang for your buck:

Items you can (and cannot) purchase using SNAP benefits

Keep in mind that SNAP benefits cannot be used to buy absolutely everything your household might need and want.

Covered by SNAP

Meat, poultry, and fishFruits and vegetablesDairy productsBreadsCerealsSnack foods and non-alcoholic beveragesSeeds and plants that produce food for the household

Not covered by SNAP

Beer, wine, and liquorCigarettes or tobacco productsLive animals, except shellfish, fish removed from water, and animals slaughtered prior to store pick-upVitamins, supplements, and medicines. Foods that are hot at the point of saleNon-food items, including pet food, paper products, cleaning supplies, hygiene items, cosmetics.

Ultimately, the decision is yours. If you’re not quite sure whether a Costco membership is right for you, ask a friend or family member if you can tag along the next time they visit the warehouse club. Think about how you currently shop and what you normally buy. Then, take a look around to get a better idea of whether Costco can help you save money.

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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.Dana George has positions in Walmart. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.

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