Money Management

Digital payment apps are convenient, but they don’t offer the same level of protection as traditional banks. Read on to learn why. 

Mobile payment apps like Cash App, PayPal, Venmo, and Zelle have made sending and receiving money easier than ever. They allow you to transfer funds from one account to another in just a few taps. It’s hard to imagine life without them. However, there’s a crucial fact that these apps don’t advertise enough — they are not FDIC insured. What that means is that if something goes wrong, you could lose your money. Here’s why you should pull all your extra cash out of these apps ASAP and look for alternatives.

Popularity of digital payment apps

The world is changing, and digital payment apps are becoming more prevalent. It seems like everyone is using these apps to handle their finances. From peer-to-peer payments to mobile banking, these apps offer a quick and easy way to manage money.

In fact, three-quarters of Americans trust digital payment apps at least as much as they trust cash or credit and debit cards. But, there are several things you need to be aware of when using them.

The FDIC insurance safety net

The FDIC (Federal Deposit Insurance Corporation) is an independent government agency that protects depositors in case a bank or savings institution fails. FDIC insurance covers up to $250,000 per depositor, per insured bank, for each account ownership category.

However, mobile payment apps like Cash App, PayPal, Venmo, and Zelle are not backed by the FDIC. If the app fails, you could lose your money. They function as digital wallets or payment systems, not banks.

They don’t hold deposits, and they don’t use the traditional banking system. In other words, they are not part of the FDIC-regulated financial system. Additionally, these companies don’t have the same regulatory oversight as traditional banks, so there’s no guarantee your money is safe.

No interest

Mobile payment apps also don’t pay interest on funds held in the app. In contrast, bank accounts offer interest, and with the recent interest rate hikes, high-yield savings accounts are even more appealing for those looking to earn money.

Security risks

When you transfer funds from your bank account to a mobile payment app, you are essentially giving your money to a third-party provider. While these apps offer convenience and speed, most mobile pay apps don’t offer the fraud protection banks provide, and can come with other risks.

Mobile payment apps are vulnerable to fraudsters who use social engineering, phishing, and malware to steal your money or personal information. Mobile payment apps are also susceptible to hacks, especially if connected to an unsecured public wifi. If the app’s security is breached, your account information and money could be at risk.

Mobile payment apps depend on reliable internet connections, cellphone signals, and software updates. Any disruption in these areas can cause delays, or worse, the loss of your funds.

What you should do instead

Payment apps like Venmo and PayPal are a convenient way to handle your finances, but it’s important to be mindful of where you store your extra cash. For optimal financial security and savings, move your excess funds to your FDIC-insured bank account.

Keep only enough money in these apps to cover your immediate needs. If you have extra cash, transfer it to a traditional bank account. This simple step will safeguard your money, give you prompt access to it, and even earn interest.

While mobile payment apps like Cash App, PayPal, Venmo, and Zelle may seem like a convenient way to send and receive money, they come with significant risks. If something goes wrong, you could lose your money. It’s essential to be aware of these risks and take steps to protect yourself. The best way to do that is to pull all your extra cash out of these apps ASAP and look for alternatives that are backed by FDIC insurance or offer better security features. By doing so, you’ll have peace of mind knowing that your money is safe.

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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 PayPal. The Motley Fool recommends the following options: short June 2023 $67.50 puts on PayPal. The Motley Fool has a disclosure policy.

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Costco can be a great source for party supplies. Read on for some of the items you might want to scoop up ahead of your next bash. 

Now that warmer weather has arrived, you may be more inclined to host more gatherings at your home. This especially holds true if you have a larger outdoor space that can accommodate many guests.

But throwing a party can be an expensive prospect — especially if you’re planning a larger one. These days, inflation has made just about everything cost more. So if you’re looking to have a party without dipping into your savings account, you may want to make at least some of your purchases at Costco. Here are a few ways Costco can help you pull off a bigger gathering.

1. You can load up on plates in bulk

Paper plates may not be the most eco-friendly. But if you’re feeding a crowd, they might make the most sense. Costco offers bulk plates in a variety of sizes, including a 165-count of Chinet 10 3/8-inch plates for $26.99 (though do note that prices can vary by region, and also, based on whether you’re buying your items online or at a store).

2. You can purchase assorted cutlery in bulk

Just as you probably don’t want to be washing dishes for several dozen guests, so too might you need to revert to plastic cutlery when you’re throwing a bigger party. Costco sells a 360-count pack of forks, spoons, and knives for $18.99. That might easily suffice for your next shindig.

3. You can save on chips and snacks

Snacks are a staple item at parties. Your local Costco is apt to have large-sized bags of potato chips, pretzels, and tortilla chips, so it pays to browse that aisle and see what’s available. If you’d rather let your guests enjoy their own individual bags of chips (which may be a good option if you’re hosting a kids’ party), you can buy a 54-pack of Frito-Lay chips for $23.99 that includes favorites like Cheetos and Doritos.

4. You can buy beverages at a reasonable price point

You may want to offer a variety of drinks at your next gathering. And Costco’s got you covered there. You can buy a 24-count of LaCroix Sparkling Water in lime flavor for $12.69. Or, serve up some nice, chilled lemonade. A two-pack of Kirkland Signature Organic Lemonade is $7.99 for a pair of 96-ounce bottles.

5. You can make clean-up a snap

After you’ve fed your guests, had your fun, and are ready to call it a day, you’ll need to do one more thing — get your space clean and tidy. And for that, you’ll need a way to gather your trash. You can buy a 200-count box of Kirkland Signature Flex-Tech 13-Gallon Kitchen Trash Bags for $21.49 — though ideally, you’ll only go through a handful of garbage bags in the course of cleaning up after your shindig.

Shopping at Costco commonly means racking up a lower credit card bill in the process. And that’s important at a time like this. So once you’ve settled on a date for your next party, do yourself a favor and visit your local Costco to see what supplies are in stock. You may find that the prices at your local warehouse club store are even cheaper than what you see online, thereby allowing you to really trim your costs without compromising on any of the fun.

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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Worries about money can affect every aspect of your life. Read on for some of our best tips for dealing with three common financial concerns. 

Some might say that stress about finances just comes with the territory of being an adult. But knowing how common financial concerns are doesn’t make them any easier to deal with.

If you want a little less financial pressure on your plate, try to identify the specific stressors in your life and come up with strategies to combat them. Below, we’ll take a look at three of the most common sources of financial stress, according to a recent Clever survey, and what you can do about them.

1. Not having adequate emergency savings

Nearly 7 in 10 surveyed said they are stressed because they don’t have enough emergency savings. This is understandable because emergency expenses can crop up at any time, and they can sometimes cost thousands of dollars or more. Often in these situations, you have little choice but to pay the bill, and you may not have the opportunity to shop around for a more affordable solution.

Without adequate emergency savings, you could wind up with debt. This may prevent you from saving for your long-term goals or even paying for your monthly bills. So a fully stocked emergency fund should be one of your top financial goals if you don’t have one already.

At a minimum, you should aim to save at least three months of living expenses. Some people prefer to save six or more months of expenses, especially if they fear that they could be out of work for an extended period of time following a job loss.

Calculating how much you should keep in your emergency fund isn’t too difficult, but saving for it is another matter entirely. Ideally, you’d have some extra money each month you could set aside in a high-yield savings account to cover these costs. But if you’re barely able to cover your bills, this could be impossible.

In that case, you may have to consider working overtime or finding a better-paying position to get more money coming in. You could also try a side hustle. Windfalls can help too. If you receive extra money in the form of a tax refund or a year-end bonus, put that toward your emergency savings first.

2. Spending more than you earn

More than half of the respondents in the Clever survey reported stress over the fact that they are spending more than they earn routinely. This is also a common pathway to debt, and once you fall into this trap, it can be difficult to get out.

There are two ways to remedy this problem: You can either boost your income or reduce your spending. For those who are prone to a lot of discretionary purchases, the latter could be the way to go. Build a budget so you can track where your money is going and try to limit yourself to just essential purchases for a while. Put any extra cash you have toward paying off your debt or in a savings account.

Reducing your income could also involve more drastic steps, like downsizing your home or moving to a more affordable neighborhood. But it’s up to you to decide whether you’re comfortable making these moves.

Boosting your income may involve negotiating a raise, finding a better-paying job elsewhere, or starting a side hustle. If you’re not able to find many better-paying opportunities in your area right now, consider moving, looking for remote work positions, or pursuing further education. There are a lot of online learning opportunities these days that cost a fraction of traditional university courses, and some employers are willing to accept these in lieu of a degree.

3. Not having enough money to afford necessities

Going hand in hand with the previous response, many survey participants say they don’t have enough money to afford their basic necessities. Some of the tips above for boosting your income can be helpful here, but you may also want to explore assistance programs in your area to help you with your essential bills.

You may be eligible for Supplemental Nutrition Assistance Program (SNAP) benefits to help with your grocery costs, for example. And your state or local area may also offer utility and housing assistance programs for low-income families.

Explore all the options available to you before deciding how to proceed. And if you apply for any government assistance programs, be sure to note all eligibility requirements so you don’t encounter any surprises.

The financial issues discussed above aren’t the sorts of problems you solve overnight. Even using the strategies mentioned here, it will probably take a while before you achieve the security you’re looking for. But stick with it. Over time, these choices will start to stack up and they can make a big difference to your lifestyle.

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Are you approaching your 40s and want to know if you’re on the right track financially? Read on to learn how to tell. 

Do you know what your net worth is? If you’ve calculated your net worth, you might be wondering how you compare to other Americans around the same age. With that in mind, here’s a quick rundown of how you can calculate your net worth, what the average 40-year-old is worth, and how to tell if your net worth is where it should be.

What exactly is your net worth?

Net worth is defined as the sum of a person or household’s assets minus their liabilities. In other words, if you were to sell everything you own and pay off any debts you have, your net worth would theoretically be the amount of money you would end up with.

So, the first step in calculating your net worth is to add up your assets. This can include your home, your cars, investment accounts (standard brokerage and retirement), collectibles, jewelry, and more. You don’t need to add up every asset you own, just the large ones. And for things like the value of your home furnishings, it’s fine to use one number to estimate rather than adding everything individually.

Next, add your debts together. Include your mortgage, car loan(s), as well as any credit cards or personal loan debt. Subtracting the two numbers will show your net worth.

As a simplified example, let’s say you own a home worth $400,000, a car worth $35,000, and the value of your furnishings and everything else in your home is collectively $65,000. This gives you an asset value of $500,000. We’ll say you have a $250,000 mortgage and owe $10,000 on a personal loan. Subtracting $260,000 in debts from $500,000 in assets gives a net worth of $240,000.

The average American’s net worth at 40

Of course, the average American’s net worth depends on what particular study you’re looking at and what the exact methodology they use is.

Having said that, according to the most recent Survey of Consumer Finances, which is conducted every three years by the Federal Reserve, the median net worth of a household in the 35-44 age group is $91,300. However, the average net worth in this age group is $436,200.

We won’t get too deep into a statistics lesson, but the general takeaway is that half of households in this age range have a net worth less than $91,200 and half have a net worth greater than this amount. When an average is significantly higher than the median, like it is here, it implies there is a small number of households with extremely high net worth that are skewing the numbers.

Also keep in mind that net worth includes asset values minus any debts. Someone with the median $91,200 net worth could have $91,200 in the bank, rent their home, and have no debt whatsoever. And someone with the exact same net worth could have $2 million in assets but owe more than $1.9 million in mortgage and other debt. In other words, net worth doesn’t tell the whole story about a household’s financial situation.

What should your net worth be at 40?

The median and average can certainly be smart ways to gauge your progress relative to others in your age group, but there’s no single number that every 40-year-old “should” have. There are a lot of variables that play into the equation, such as your income, marital status, number of children, and where you live that can make it easier or more difficult to build net worth.

It’s also important to realize that not all debt is the same. For example, if you have $300,000 in assets and a $200,000 mortgage at 3% interest, you are in a very different financial situation than someone with $300,000 in assets and $200,000 in various debts at an average interest rate of 10% or more.

The short answer is if you’re prioritizing saving for both retirement and emergencies, keeping your debts at a responsible level, and generally living within your means, your net worth should continue to move in the right direction over time.

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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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Advertising is an important part of building a business. But you don’t need a big budget to make it work for your business. Try these ideas instead. 

You can build the greatest small business of all time. But it won’t matter one bit if nobody knows about your awesome business. So, like it or love it, advertising is a necessary part of running a small business.

However, you don’t need to fork over fistfuls of cash for a high-priced advertising agency a la Mad Men. You don’t even need to pay for a Slightly Annoyed Dude. There are tons of cheap, easy ways to advertise your business that won’t clear out your bank account.

1. Get active on social media

According to the Pew Research Center, some 69% of people use Facebook, and around 40% of people are on Instagram. Nearly a third of people are on Pinterest, and even Reddit is visited by nearly a fifth of survey respondents.

All this equates to a whole lot of eyeballs. If even a small number of those folks see — and, ideally, interact with — your business’s social media posts, then you could be seen by thousands of people.

Sure, building up a social media presence can be a bit time consuming. But, in most cases, your time is all it costs. (We’re talking just posts here, we’ll talk about paid advertising below.) So, get creative and start posting.

2. Start a podcast or YouTube channel

As popular as the rest of the social media sphere may be, it’s nothing compared to YouTube. Some 81% of adults watch YouTube, which means potentially millions of people who could be looking at your content.

Not keen on putting yourself out there in video? Then consider a podcast. While not as popular as video — only 41% of people say they listen to podcasts — it’s still quite a large pool of potential customers.

One thing to keep in mind with any kind of social media posting is to stay professional. As great as it could be to go viral, you don’t want to go viral for the wrong things. Keep your content on topic and avoid anything that could get your business into legal trouble.

3. Become a local media expert

Every local morning news program has a few segments a day offering advice from folks in the community, from tax experts to AC repair professionals. Whatever your business is, offer up your expertise to your local media outlets for some free targeted advertising.

Is your business digital and/or national? Consider branching out. Contact media outlets that share your target demographic and let them know you’re available if they need an expert.

4. Create a loyalty/referral program

Who doesn’t love those little punch cards for Buy-10-Get-1-Free? Print up some cards and invest in a hole punch, and you’re ready to rock.

If you’d rather join the modern age, of course, there are a range of tools you can use to design and operate a white-label mobile app or other digital loyalty program. These can be convenient for you and your customers, while also giving you potential access to email addresses and/or phone numbers.

And don’t forget to encourage referrals. Offering a discount to folks who refer new customers — as well as those who have been referred — can encourage word-of-mouth advertising in the community.

5. Stickers (and other swag)

People love stickers. Kids, adults, everyone — give them a sticker, and they’ll find a place to stick it. Bumper stickers, in particular, can be great local advertising if people like your business enough to slap a sticker on their car. And best of all, stickers are surprisingly cheap and easily available online.

Of course, stickers are far from the only type of swag you could get. Pens, shirts, flashlights; the options are limitless, and easy to adapt to your budget.

6. Hold a sweepstakes, raffle, or giveaway

Who doesn’t love free stuff?! Trading contest entries for email addresses can be a great way to build up your mailing list, and the contest itself will help generate a bit of buzz.

And don’t think you need to hand out free gaming systems to get people interested. Folks will happily jump through hoops for free t-shirts, let alone something more valuable. Depending on the nature of your business, you could keep costs down by offering your own goods or services as the prize.

Purchase social media ads

Ideally, a bit of creativity — and some luck — will help you boost your social media following enough that you don’t necessarily need to fork over cash to be seen. But if your social media isn’t growing as fast as you’d like, you can always purchase an ad or two.

Social media advertising can be surprisingly cost effective, with options to pay per impression, per click, or even per campaign. Plus, some small business credit cards will offer bonus points for digital advertising spend, making it even more affordable.

Be awesome, and stay awesome

No matter how great your advertising is, it’s up to you to keep your customers coming back. So while it’s certainly important to spend some time and money on advertising, don’t let that distract you from what’s most important: running a good business. In the end, it’ll be your products and customer service that count the most.

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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.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Filing taxes in the U.S. is often a guessing game that few of us win. This online tool can help you even the odds. 

Filing taxes in the U.S. has evolved into a convoluted guessing game — though I use the term “game” loosely, as it is little fun for anyone involved. Our tax system is different from many other countries.

All year long, we get to make guesses as to how much money we’ll earn. Then, come April (or February, if you’re one of the many early-bird filers), we get to see how close we were to what we actually owe. If you win the game, your prize is, well, nothing. Which is still better than losing, because the losers often get to pay hefty penalties.

If you come out of the Great American Guessing Game a loser more often than not, there’s a tool that may help: the IRS Tax Withholding Estimator. Here’s how it works.

Using the Paycheck Withholding Estimator

As the name would imply, the tool is designed for folks who get a regular paycheck from which federal income taxes are withheld automatically. (So if you’re self-employed, this tool isn’t going to be much help.)

Actually using the tool is fairly simple, provided you have the necessary information on hand. To start, click the big blue “Use the Tax Withholding Estimator” button. Then, you’ll start answering questions about your filing status, current job, income, and current withholdings. Next come the questions about your adjustments, deductions, and eligible tax credits.

Since this is just an estimator, it’s perfectly fine if you’re not 100% accurate in every answer. Of course, the more accurate your answers, the better the estimate will be, so it could be worth looking up any answers you don’t already know.

Once you’ve answered all of the questions (to the best of your ability), you’ll be given your results. This will provide your expected tax withholding, your anticipated tax obligation, and the projected refund.

The goal: Get your refund to $0

All the propaganda around tax refunds make them seem like the greatest thing ever. “Hey, look at this windfall, let’s buy a TV!”

Wrong. From a personal finance perspective, you actually want your refund (and, conversely, what you owe) to be exactly $0.

Why? Well, because your tax refund is exactly that: a refund. It’s money that belongs to you, that you essentially loaned to the government interest-free. While that’s certainly a friendly gesture on your part, it’s not exactly the best use of that money.

If you can get your refund as close to $0 as possible, you’ll have more money in your bank account every paycheck. That money can then be invested, added to your emergency fund, or used to pay down debt. Even if all you do is pop it into a high-yield savings account, you’re going to get much better than the 0% return you’re getting by loaning it to the government.

Finding the right balance

Ideally, you want to pay just the right amount of taxes throughout the year so you don’t owe any money, but you don’t get any money back. Sadly, this is easier said than done under the current system.

For many of us, the best we can do is get that refund down close to $0, while still ensuring we don’t have to write Uncle Sam a fat check every spring. That’s why the Paycheck Withholding Estimator is a handy tool. Play around with the numbers until you get to just the right withholding, and tax season — while never fun — will be a lot less of a dangerous game.

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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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