Money Management

Think additional IRS funding is a problem? Read on to see why you’re wrong. 

There’s a reason IRS audit rates have been so low in recent years. The IRS has been sorely underfunded for a really long time. As a result, the agency has been forced to limit its audits because it simply lacks the manpower to conduct more.

That may soon be changing, though. As part of last year’s Inflation Reduction Act, the IRS was awarded $80 billion in funding. And while some of that money is apt to go toward addressing the agency’s staffing needs, a portion will also be earmarked for enforcement — meaning, making sure taxpayers are actually reporting all of their income and paying the IRS accordingly.

At first, this increased funding might seem like a bad thing in your mind. And if so, you’re not alone. But actually, a well-funded IRS really does have the potential to benefit taxpayers as a whole.

Most people aren’t happy with an uptick in funding

Financial guru Graham Stephan tweeted a poll last year that said “There has been a lot of noise regarding increasing budget to IRS. Fundamentally, do you think it’s a good idea in the long run?”

Surprisingly, only 30.1% of respondents said yes, while 69.9% said no. And it’s easy to see why.

The idea of an IRS audit can be scary. And so many people are probably worried that if the agency gets more funding, their chances of getting audited will rise.

But that’s by no means a guarantee. And also, one thing you should know is that if you’re honest on your tax return, that alone might minimize the chances of the IRS asking to take a closer look.

What’s more, even if you do end up getting audited, often, all that’ll happen is that the IRS will send you a letter in the mail asking for more information or proposing a change to your most recent tax return. Responding with said information or agreeing to the proposed change might settle the matter in a painless fashion.

So, let’s say you earned $200 of interest in your savings account last year, only you forgot to report it on your tax return. If the IRS has a record of that interest income, it might audit you in the form of sending you a letter asking to adjust your tax return to reflect that missing income. Say yes, and the matter is basically closed.

Why you should want more IRS funding

While nobody wants to see audit rates go up, the reality is that pumping more money into the IRS is an important thing. These days, the simple act of getting in touch with an agent over the phone can be harrowing due to lengthy wait times. If the IRS is able to boost its staff, those wait times might shrink substantially.

Also, the IRS has been notoriously slow to process paper returns in recent years, leading to delays in issuing tax refunds. If staffing increases, the agency should be able to process those returns more quickly. The result? Tax-filers won’t have to wait as long for their refunds to hit their bank accounts.

All told, there’s lots to be gained from a well-funded IRS. So rather than bemoan the agency’s influx of cash, remember that a lot of that money can be used to make the taxpayer experience more positive on a whole.

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Food pantries and soup kitchens throughout the country are feeling the strain as families struggle. Find out what you can do if you’re one of them. 

In March, states nationwide stopped paying the emergency food benefit payments that started earlier in the pandemic. The extra money helped millions of low-income families handle both the financial uncertainty of the COVID-19 lockdowns and the sky-high living costs that followed.

Now, some households face a significant hole in their food budgets. According to the Center on Budget and Policy Priorities, the drop in benefits is between $95 and $250 or more for families in states that continued to pay out emergency allotments. That drop means families are leaning more on food banks and other anti-hunger non-governmental organizations (NGOs).

Food banks gear up for increased demand

Research from the Urban Institute showed that the extra Supplemental Nutrition Assistance Program (SNAP) payments kept millions of people out of poverty. The emergency allotments were managed at a state level and some states stopped paying them in 2021 and 2022. However, 35 states continued to make the extra money available until this year.

Now that’s come to an end, it’s too early to measure the full impact on households in more than half the country. That said, it is clear that homes are feeling the pressure. One person queuing for a Kentucky food pantry told The Washington Post that she can no longer afford fresh vegetables or eggs, while another said she was having trouble keeping up with the appetites of her teenage boys.

The fallout in states like Georgia and Iowa that already stopped making extra SNAP payments last year gives us a sense of what may be happening in the rest of the country right now. Anti-hunger NGO Feeding America told us by email that:

The Atlanta Community Food Bank has seen about a 40% increase in demand. Atlanta ended SNAP emergency allotments in June 2022.Demand at the Northeast Iowa Food Bank has increased by 30%. The charity says the number of people visiting some food pantries has doubled, tripled, or even quadrupled. Iowa ended its extra food benefits in April 2022.

Vince Hall, Chief Government Relations Officer at Feeding America, says many households will struggle to handle the end of the extra assistance. “We know this will create hardship for many people — especially seniors, families with children and people with disabilities — who will then turn to the charitable food system for support,” he said.

What to do if you can’t feed your family

If you don’t have enough money in your bank account to buy food, there are no easy answers. Call United Way at 211 for information about local support and financial assistance. The organization may be able to help you navigate the immediate crisis and beyond.

Here are some other steps you can take:

Find out what food pantries and soup kitchens operate near you: If you haven’t been to a food pantry before, know that you may need to show proof of ID or other documentation. Be prepared for long lines and try to arrive early. There may be rules on how many times you can visit each food pantry, but there’s nothing to stop you visiting more than one if you need it.See if you’re eligible for other assistance: SNAP is the biggest food assistance program, but it’s not the only source of help — for food or other benefits. For example, if you have young children, are pregnant, or breastfeeding, see if you qualify for WIC. Go to benefits.gov to see if there are other programs that might apply to you.Stretch your SNAP dollars as far as possible: Find out if there are any double food dollar projects nearby. These essentially let you get two-for-one on fruit and vegetables at participating farmers markets and stores. Also know that several cash back apps work with SNAP payments, so you might be able to get something back on your spending. Look for ways to layer rewards by combining out in-store discounts and coupons with cash back bonuses.

It’s all very well to talk about looking for ways to earn extra cash or sell unwanted goods online. The trouble is that many families have already exhausted those options. Ultimately, higher living costs have been much harder for low income households to swallow, and the emergency allotments went some way to easing the pressure. Don’t be afraid to ask for support. Food charities may be handling higher demand, but if you can’t feed yourself or your family, they are still there to help.

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It’s important to invest consistently. Read on to see what might happen if you stray from that strategy. 

At this point, inflation has been wreaking havoc on consumers for well over a year. And many people have been forced to make tough sacrifices to cope with it, like raiding savings accounts they’ve worked hard to build and cutting back on leisure spending.

A recent survey by COUNTRY Financial found that 28% of Americans are now putting less money into investments to cope with inflation. But that’s a move that could hurt you in a very big way.

You might miss out on tax breaks

It’s common to save and invest money for retirement in an IRA or 401(k) plan. And the money you put into a traditional IRA or 401(k) serves as a near-term tax break. But if you cut back on funding one of these plans this year, you’ll lose out on a larger tax break.

Imagine you put $5,000 into your IRA last year, but this year, you’re thinking of only putting in $2,000. That means you’ll be taxed on an extra $3,000 of earnings by virtue of that lower contribution.

You might miss out on growth opportunities

The more time you’re able to give your money to grow, the more wealth you stand to accrue in your lifetime. So, let’s say you would normally invest $5,000 in an IRA or brokerage account each year, but this year, you only put in $2,000. It’s not just that down the line, you’ll be short $3,000. You might be short a lot more money than that when you factor in missed investment growth.

The stock market has delivered an average annual return of 10%, as measured by the S&P 500 index, over the past 50 years. So let’s say your brokerage account or IRA delivers the same return. Let’s also assume you’re investing for retirement, and you’re 30 years away from that milestone. If you account for a 10% return on $3,000 over 30 years, it means that not investing that money this year will leave you more than $52,000 short down the line. That’s a lot more than just $3,000 in lost savings.

Do your best to invest

You may need to cut back on some types of spending this year to cope with inflation. But one thing you should really try your best to do is keep pumping money into your IRA or brokerage account so you can put it to work.

If money seems too tight for that, consider picking up a side job until inflation cools off. You can use that extra money to fund your IRA or brokerage account and avoid missing out on the chance to grow your wealth.

Remember, when you’re fairly young, you have a prime opportunity to take advantage of many years of compounded returns. And that’s an opportunity you don’t want to pass up. So it pays to do what you can to avoid having to cut back on investing — even if higher living costs seem to be backing you into a wall.

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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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Rich Americans have different priorities when shopping for a credit card. Find out which seemingly important credit card number isn’t a big deal to millionaires. 

When you’re shopping around for a new credit card, there are many factors you can use to compare them and make your pick. Sign-up bonuses. Annual fees. Rewards rates, meaning the amount of cash back, points, or miles a card earns. Spending credits.

Americans at every level of wealth use credit cards, but it turns out that the wealthiest often prioritize different factors when choosing a card. In The Ascent’s recent study on how rich Americans use credit cards, there was one number in particular that millionaires were far less likely to worry about.

Little interest in interest rates

Millionaires pay much less attention to a credit card’s interest rate, or APR (annual percentage rate). When asked about the most important factor in choosing a new credit card, 40% of Americans with a net worth under $1 million chose the interest rate. Only 26% of millionaires said the same. They’re also more likely than non-millionaires to prioritize rewards rates and sign-up bonuses.

This makes sense when you consider that you only get charged credit card interest if you carry a balance. If you pay off your card’s statement balance in full every month, the card issuer doesn’t charge interest on your purchases. In that case, the interest rate on your credit card doesn’t matter, because you’re never getting charged interest.

It’s presumably easier for millionaires to pay their credit card bills in full. Since they have more money saved, it stands to reason that they’re less likely to carry a balance.

But interestingly enough, only about a third of millionaires actually followed that habit. Here’s how often millionaires reported that they pay their credit card’s statement balance:

33.07% pay it every month22.20% pay it not every month, but often24.80% pay it a few times per year19.93% pay it almost never

Over 40% are carrying a balance, and getting charged interest, more often than not. For those millionaires that do carry a balance, interest rates should be a priority.

Does your credit card’s interest rate matter?

Even though your credit card’s interest rate seems important, it might not be. If you always pay the full statement balance, your card’s interest rate doesn’t matter. You’ll never be charged interest, so it won’t come into play.

This is a great habit to follow, because you can take advantage of the perks that top credit cards offer, like rewards and building your credit. And you’ll do that while avoiding the drawbacks, namely credit card debt and expensive interest charges.

The only time credit card interest rates matter is when you can’t pay off your balance. In this situation, your best bet is to avoid interest charges entirely with a 0% intro APR card. This type of credit card has a 0% APR for an introductory period, such as 12 or 15 months. The intro APR may apply to purchases, balance transfers, or both.

So, if you have some big purchases to make and you know you’ll need some time to pay them off, get a card with a 0% intro APR on purchases. If you’re currently paying down debt, check out balance transfer credit cards that you can use to refinance that debt at a 0% intro APR.

Millionaires aren’t the only ones who don’t need to worry about interest rates. If you get into the habit of paying off your credit card bill, you can focus on other factors when picking a card, like the benefits offered.

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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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While progress has been made, financial inequalities still exist between men and women. Here are a few facts about women and money that may be surprising. 

Women are at a significant financial disadvantage compared to men. However, there has been notable progress in the fight for financial equality. Looking back at history and being aware of the financial struggles women face today can inspire women to make progress in their own lives. Below are some facts about women and money that are worth knowing.

1. More women are investing in recent years

Investing is an excellent way to build wealth. Unfortunately, women are behind men when it comes to investing. But there are some good stats that show progress is being made. More women are investing today compared to years past. That’s excellent news — especially since women live longer than men.

A 2021 Fidelity Investments study found that 67% of women now invest outside of retirement, a 44% increase from 2018. Women also get better results when compared to men. The same study found that women outperformed their male counterparts by 0.4% over 10 years.

2. Women couldn’t get their own credit cards until 1974

Today, many women use credit cards. But you may be shocked to learn that not too long ago, women in the U.S. couldn’t get their own credit cards. The 1974 Equal Credit Opportunity Act changed that. This legislation originally prohibited lending discrimination based on sex or marital status and allowed women to take out loans and credit cards in their own names.

In 1976, the law was amended to include more protections. Today, the law prohibits lending discrimination based on race, color, religion, national origin, age, the receipt of public assistance income, or exercising one’s rights under certain consumer protection laws.

3. Only 10.6% of Fortune 500 companies are led by women

The Fortune 500 list is an annual list that ranks 500 of the largest U.S. corporations by total revenue. The 2023 list features 53 female CEOs. That means only 10.6% of Fortune 500 companies are led by women.

While this may be disappointing to read, that number has been growing in recent years, and this is the first year that women lead more than 10% of Fortune 500 companies. Even if it’s a small win — it’s a notable win that will hopefully spark continued change.

What’s interesting about these stats is research has shown that women have more leadership capabilities than men. A Harvard Business Review study found that women outscored men on 17 of 19 capabilities that differentiated excellent leaders from average or poor leaders.

Below are a few areas where women scored significantly higher:

Displays high integrity and honestyInspires and motivates othersResilienceTakes initiativeChampions change

4. Women make $0.82 for every $1 earned by men

Unfortunately, the gender wage gap continues to exist globally and in the United States. Based on 2022 data, the average American woman makes $0.82 for every $1 earned by men. According to the National Women’s Law Center, it’s estimated that women who work full-time, year-round, stand to lose out on nearly $400,000 throughout a 40-year career based on current gender wage gap statistics. That number is much higher for women of color.

5. Mothers earn $0.58 for every $1 earned by fathers

Many women see wages drop after having children. According to the American Association of University Women, mothers earn $0.58 for every $1 fathers earn. The high cost of childcare in the United States pushes many women out of the workforce for lengthy periods. Many mothers also struggle to re-enter the workforce after taking time away to raise their children.

Knowledge is power

The above stats are important to know. Women can continue fighting for change by learning more about finances. Many free online resources offer guidance on essential financial topics like saving and investing. If you want to learn more and prepare financially for the future, check out these personal finance resources.

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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.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Freebies and perks can make wireless service plans more valuable. Find out which wireless company includes a free Amazon Prime membership with one of its plans. 

You’ve probably heard that an Amazon Prime membership now costs more. With this price increase, you’ll need to consider your financial situation when deciding whether to sign up or renew your membership. But there may be a way to get a free Amazon Prime membership.

Many wireless service providers include freebies in select plans to attract or keep customers. And that can provide value and may help subscribers save money. For some wireless providers, this includes access to some streaming services. But one wireless company is offering something unique — an Amazon Prime membership.

Metro by T-Mobile includes an Amazon Prime membership in its $60 per month unlimited plan. The current price for Amazon Prime is $139 per year or $14.99 per month.

With Prime’s fast, free shipping and affordable prices, you could save money when shopping for household essentials. And if you can get all that through a free membership, all the better. Check out these 10 little-known perks of Amazon Prime to decide if a membership could be valuable to you.

How to get Amazon Prime for free

Metro by T-Mobile has several service plans available that are prepaid. Here’s what the $60 per month unlimited plan includes:

Unlimited high-speed data15 GB of hotspot data100 GB Google One membershipAmazon Prime membership

The Amazon Prime perk is available to new Prime members.

If you’re not a current Amazon Prime member and want to switch phone providers, this could be an excellent way to avoid paying extra for this perk and keep a little extra cash in your bank account. Right now, this plan costs $60 for one line, $90 for two lines, $120 for three or four lines, and $150 for five lines.

Tips to trim your wireless service bill

Most of us use a cellphone every day, so paying for wireless service is necessary. However, not all plans are created equal. Wireless service prices can vary greatly.

If you feel like you’re overpaying, these tips may be helpful:

Opt-out of cellphone insurance coverage. If your phone is older and you’ve been saving up for a new one, or you have a rewards credit card with cellphone protection, you may be able to avoid paying for extra insurance coverage.Share your plan with others. Many brands offer discounts when you add lines. It may be cheaper to add multiple family members to one plan and split the cost.Ask about discounts. Some wireless carriers give discounts to eligible customers. This may include student, membership, or workplace discounts. Don’t be afraid to ask.Enroll in autopay. Your carrier may offer a discount for enrolling in autopay. Switching to autopay could save you a few bucks and ensure that you don’t forget to pay your bill.Use wifi at home. If you don’t have a plan that offers unlimited data, make sure you’re connected to wifi while using your phone at home.Switch to an unlimited plan. If you use a lot of data, committing to an unlimited plan may make sense. Charges can get pricey — especially if you pay extra for data.Review plans regularly. Companies frequently update their service plans, and it’s a good idea to compare plans annually. You may be able to stay with your current carrier but switch to a more affordable plan with similar features.

Maximize the value of your wireless service plan

No matter which wireless brand you use, make sure you know the details of your plan. That way, you can get the most out of it and can take advantage of any included freebies or perks.

If you haven’t taken a look at your plan’s details recently, now is a good time to do so. You may be missing out on benefits like free access to streaming services or a free Amazon Prime membership.

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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.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Amazon.com. The Motley Fool has a disclosure policy.

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