Money Management

Pinching pennies doesn’t always mean doing without. 

The basic tenet of personal finance is to spend less than you make. But it’s not always easy to spot the ways we’re overspending when we live in it day after day. Here are a few little tips for saving money this year that may help inspire some big changes.

1. Switch to generics

This move can work for everything from cereal to prescription medications (with your doctor’s approval). And it doesn’t have to mean dealing with substandard substitutes. Many generic or store-brand products can be just as good as their name-brand counterparts. (In fact, they may be the same exact product, a la Costco’s Kirkland Signature brand!)

My advice? Try it one item at a time. Some of them may not be worth the savings, but you might be surprised how many pricey name-brand products you can replace with something a little more cost effective. And try store-brand options; the store brand at your local supermarket may be better — or worse — than the name brand at the local big-box store.

2. Download (and use) coupon apps

You can save a ton of money with just a few taps on your smartphone. First off, most stores have their own apps now. And those apps are usually full of digital coupons you can clip. Then, just put in your phone number at checkout and they automatically get applied to your bill.

If you’re comfortable with sharing your receipts, there are also some good saving opportunities in third-party coupon apps. These apps give you lists of products with digital “coupons” — they’re actually more like rebates, since they apply after you shop — that you can activate. Then, you take a photo of your receipt and submit it in the app for that sweet cash back.

3. Adjust your tax withholdings

While it can feel nice to get a tax refund each spring, it’s not actually a good thing. It really means you paid too much in taxes the year before. This is essentially like giving the government an interest-free loan.

If you got a big refund this year, consider adjusting your tax withholdings for next year. This can give you more money each paycheck, which you can use to pay down debt, invest, or do whatever else you need throughout the year.

4. Prioritize paying off high-interest debt

Most of us carry at least some kind of debt, be it a mortgage or an auto loan. But if you’re carrying high-interest debt, like credit card debt, it could be costing you way more than you realize. (The average credit card APR is around 20%, which is more than three times the average mortgage rate.) Once you’ve made all your other debt payments, put any cash you can spare into paying down that high-interest debt. The money you save on interest will add up fast.

5. Open a new bank account

There are a few ways opening a new bank account can help you save money. First off, going from an account with fees to one without fees is an easy $10 to $25 a month in savings. But that’s just the tip of the iceberg.

Another big thing? New account bonuses. Many banks offer cash bonuses when you open a new checking account (and some savings accounts, though those aren’t as common). You may need to hit a certain minimum deposit or transaction amount, but it’s usually doable.

Last, but certainly not least, consider your savings account. If your interest rate is near average — a measly 0.35% — then you’re losing money. Aim for a high-yield savings account with an APY in the 3% to 5% range. The extra interest will grow faster than you think.

6. Open a new credit card

This is another easy move that can save you money in multiple ways. For one thing, unless you’ve already optimized your card collection, a new card will probably help you maximize your rewards. Going from 1% back on grocery store purchases to 6% back, for instance, can mean hundreds in cash back over the course of a year.

And let’s not forget the sign-up bonuses. Most cards come with a sign-up bonus worth at least a couple hundred bucks — and some can get into the four figures. Just make sure you can meet the spending requirement without going over your regular budget.

7. Insulate your home

If you own your home and haven’t yet addressed the insulation, you could be basically leaking money. More than half — 55%, on average — of your energy bill goes to heating and cooling your home. The more efficient you can make this, the less money you’ll waste.

Experts recommend insulating from the top down. So, start in your attic. Address the walls, the floor, and the rafters. Once the attic is set, move on to exterior walls in the rest of the house.

8. Upgrade to reusables

Sure, there are some things that you can’t reuse. (Nobody wants reusable bandages.) But many, many products that we tend to buy just to throw away can be replaced with reusable versions. Everything from sandwich bags to menstrual products now have reusable alternatives — many of which are more enjoyable to use than their trash-destined forebears.

9. Love your local library

If your mental image of your local library is a bunch of musty old books, it’s time for a wake-up call. Libraries are fantastic resources for saving money — and they’re free! Here are just a few things on offer at many libraries:

E-booksAudio booksMoviesTV showsMagazinesComic books

And that’s just the beginning. Some libraries offer online classes, homework help, and even job resources. Many also offer things like tools you can borrow or free seeds for your garden!

10. Cycle your streaming services

Although the library is the best place for free content, sometimes you really want the convenience of a popular streaming service. No problem! Enjoy your streaming video while saving money by simply cycling your services.

What does that mean? Choose one service each month to subscribe to, then cancel before moving on to the next. This ensures you always have something new to watch, without spending hundreds each month for services you never have time to use.

11. Adopt Meatless Mondays

While Meatless Mondays may be considered little more than a hashtag fad, there’s some sound science behind it — and not just environmental science (though reduced meat consumption has also been shown to be good for the planet). Replacing costly meat with more affordable alternatives, like beans and lentils, can be good for your grocery budget, too.

12. Shop around your insurance

It’s easy to get stuck in the habit of simply forking over the money each time your insurance renewal comes around. But if you take twenty minutes to actually shop around a bit, you could very well save hundreds on lower premiums alone. For example, one survey found that more than 90% of people who switch auto insurance providers saved money by doing so.

This trick isn’t limited to auto insurance, either. Your homeowners insurance, dental insurance, even pet insurance could all be cheaper with another provider.

13. Join a parenting group

Raising kids is a major expense. But you can trim a bit of that cost by sharing it with friends as part of a parenting group. Swap new or gently used clothes and toys, or pass along sporting gear that’s been outgrown. You can even swap something else important: time. Trade babysitting duties among the group to give everyone a free night that doesn’t require forking over $100+ for a sitter.

Small savings add up

Don’t assume you need to make big moves to save big. Trimming a little here and there can add up to huge savings throughout the year.

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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 Costco Wholesale. The Motley Fool has a disclosure policy.

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Image source: Getty Images
What HappenedThe FTC has issued a consumer alert about a new trick phone scammers are using to steal money. Scammers are now using advanced AI (artificial intelligence) to clone the voices of people you know. They then call, using the cloned voice, claiming to be a loved one who needs money.As the FTC notice describes it, “A scammer could use AI to clone the voice of your loved one. All he needs is a short audio clip of your family member’s voice — which he could get from content posted online — and a voice-cloning program. When the scammer calls you, he’ll sound just like your loved one.”So WhatPhone scammers have been using the “your loved one is in trouble” scam for years. But this new version is much more sinister, since it uses your loved one’s actual voice. This can make it extremely difficult to tell you’re being fooled.These thieves are also good at choosing methods of payment that are very hard to reverse, such as gift cards, cryptocurrency, and money wires. If you get caught in one of these scams, there’s very little chance you can get your money returned.Now WhatThe best way to keep your finances safe from scammers is to think, instead of just reacting. As the FTC says, “Don’t trust the voice.”If you get a call like this, verify everything before you act. Hang up, then call your loved one directly using a phone number you are certain belongs to them. If you can’t get through, try other methods, such as reaching out to family members or friends.For those occasions when your loved one really does need money, stick to more mainstream methods. A paper check in the mail is considered to be fairly safe, though it can take a few days so it’s best for non-emergency situations.When they need money quicker, you can use Zelle to transfer money directly to their bank account. (Zelle transfers aren’t usually reversible, so make extra sure the number belongs to your loved one before using Zelle.)If you do fall for one of these scams, report it to the FTC right away. While you may not get your money back, you could help prevent the thieves from scamming someone else.Alert: highest cash back card we’ve seen now has 0% intro APR until 2024If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee. In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes. Read our free reviewWe’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. 

What Happened

The FTC has issued a consumer alert about a new trick phone scammers are using to steal money. Scammers are now using advanced AI (artificial intelligence) to clone the voices of people you know. They then call, using the cloned voice, claiming to be a loved one who needs money.

As the FTC notice describes it, “A scammer could use AI to clone the voice of your loved one. All he needs is a short audio clip of your family member’s voice — which he could get from content posted online — and a voice-cloning program. When the scammer calls you, he’ll sound just like your loved one.”

So What

Phone scammers have been using the “your loved one is in trouble” scam for years. But this new version is much more sinister, since it uses your loved one’s actual voice. This can make it extremely difficult to tell you’re being fooled.

These thieves are also good at choosing methods of payment that are very hard to reverse, such as gift cards, cryptocurrency, and money wires. If you get caught in one of these scams, there’s very little chance you can get your money returned.

Now What

The best way to keep your finances safe from scammers is to think, instead of just reacting. As the FTC says, “Don’t trust the voice.”

If you get a call like this, verify everything before you act. Hang up, then call your loved one directly using a phone number you are certain belongs to them. If you can’t get through, try other methods, such as reaching out to family members or friends.

For those occasions when your loved one really does need money, stick to more mainstream methods. A paper check in the mail is considered to be fairly safe, though it can take a few days so it’s best for non-emergency situations.

When they need money quicker, you can use Zelle to transfer money directly to their bank account. (Zelle transfers aren’t usually reversible, so make extra sure the number belongs to your loved one before using Zelle.)

If you do fall for one of these scams, report it to the FTC right away. While you may not get your money back, you could help prevent the thieves from scamming someone else.

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In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

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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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If it’s a situation you’ve landed in, you’re far from alone. 

These days, many tenants are struggling to cover their rental costs — and their bills in general — due to soaring inflation. And unfortunately, a lot of people don’t have savings to fall back on after having depleted their personal cash reserves to get through the pandemic.

But you may be shocked to learn that more than 5.2 million U.S. households are currently behind on their rent, according to data by the National Equity Atlas. And all told, tenants owe their landlords almost $11 billion. As a result, millions of renters are now at risk of eviction.

If money has gotten tight for you, you may be reaching the point where you don’t think you’ll be able to pay your rent this month. If that’s the case, it’s imperative you don’t ignore the problem, but rather, reach out to your landlord immediately.

It’s important to communicate

If you’re pretty certain you won’t be able to come up with this month’s rent, the most important thing to do is talk to your landlord about that. If you’re a tenant in good standing who’s been timely with all other payments to date, your landlord might cut you some slack until your financial circumstances improve.

This doesn’t mean you should expect to be let off the hook completely. Remember, your landlord has a mortgage to pay and may be reliant on your rent to cover their payments. But one thing your landlord might do is give you extra time to pay, or reduce your rent temporarily with the understanding that you’ll pay your rent in full at a later point in time.

For example, let’s say your hours just got cut at work, and so your wages have followed suit. If you can’t pay your $900 monthly rent by April 1, but you’re able to come up with $500 by then, your landlord might agree to accept that for now with the understanding that you’ll pay the missing $400 by May 1 or June 1.

Understand your options and rights

Many tenants struggled to pay rent in the wake of the pandemic. At this point, the rental assistance programs that popped up to provide pandemic relief are largely over, or aren’t accepting applicants. But you never know what program your state might be running, so consult this list of rental assistance resources to see if there’s an option available to you.

It’s also important that you understand your rights as a tenant and how the eviction process works. Your landlord has to give you fair warning about an eviction, and there are protocols to follow. If you’re being threatened with eviction, you may want to contact an attorney for guidance. LawHelp.org could be a good resource for low- or no-cost assistance.

It’s not all that surprising to learn that a large number of Americans are behind on rent. But that 5.2 million number is pretty staggering. Just know that if you’re struggling to pay your rent, there are options at your disposal that don’t automatically mean losing your home.

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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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There’s a way out if you make it your top financial goal. 

While credit cards can be useful, they can also get you into serious financial trouble. If you owe a lot of money on your credit cards, you’ll get hit with expensive interest charges every month. Considering the average credit card charges about 20% in interest per year, those extra charges can be tough to manage.

That makes trying to pay off credit card debt feel like being stuck in quicksand. But even when you owe a large amount, it’s still something you can solve. It’s not going to be easy, but if you follow the right approach, you’ll get it paid off.

Cut back on spending everywhere you can

Having a large amount of credit card debt is a financial emergency, so it’s important to treat it that way. Do everything you can to pay down card balances as quickly as possible. If you don’t take drastic measures, it’s going to be difficult to get out of debt.

You’ll need to get strict about your spending habits. Going forward, if it’s not an absolute necessity, you probably shouldn’t spend money on it. This means:

Cancel your streaming services. Switch to free streaming services for the time being.Stop going out for food and drinks. Stick to preparing meals at home, and find free ways to hang out with friends.Don’t go shopping in stores or online. Stay away from Amazon and any other stores you frequent.

Follow this same approach with any other expenses you don’t need. It may seem extreme, but it will significantly increase how much you can put toward your debt.

Start putting every spare dollar toward your credit card debt

Now that you’re only spending on the bare necessities, you’ll have more extra cash than usual. Use all of it for your credit card payments; don’t set any of it aside for savings goals or investing.

You might be tempted to divide your money among multiple financial goals. There are situations where that works, but in this case, your credit card debt is by far the most pressing issue. When you have debt costing you 20% in annual interest, paying that off is like getting a 20% return on your investment. That’s better than you’re going to get using your money for anything else.

Look into debt consolidation options

One of the ways to make high credit card balances more manageable is debt consolidation. You can do that with either of the following:

Balance transfer credit cardsDebt consolidation loans

The idea is that you get a balance transfer card or loan and use it to pay off your credit cards. Then, you only have one payment per month going forward. You could also save on interest charges this way. Balance transfer cards have a 0% intro APR, and some of them offer this for 18 months or longer. Debt consolidation loans don’t, but they tend to have lower interest rates than credit cards.

Debt consolidation isn’t an option for everyone, though. There are a few potential obstacles that could get in your way:

You need a good credit score to qualify for the best options. If you don’t have one, you likely won’t qualify for balance transfer cards or low-interest loans. You may still be able to get a debt consolidation loan, but make sure the interest rate is lower than what you’re paying on your credit cards.You may not be able to borrow enough to cover significant credit card debt. Balance transfer cards have credit limits, and lenders will only let you borrow a loan up to a certain amount. If it’s not enough for all your debt, use debt consolidation to pay off the cards with the highest interest rates first.

Find a repayment plan you like

There are lots of methods people use to pay off credit card debt. Two of the most popular are the debt snowball and debt avalanche. With the debt snowball, you put all your extra money toward paying off your card with the lowest balance first, so you pay off an account more quickly and get a “win” to keep you motivated. With the debt avalanche, you put your extra money toward your card with the highest interest rate first, then move on to the next-highest interest rate. This results in paying less interest in the long run.

If you’re able to consolidate all your debt, you won’t need to worry about that. But there are still payment tricks that may help. For example, some people like making multiple credit card payments per month so they aren’t tempted to spend their extra money.

Remember, paying off a lot of credit card debt is a process. It’s going to take time, but you’ll see the progress as your balances drop. Keep chipping away at what you owe, and you’ll bring those balances down to $0.

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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. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.

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This decision will affect just about everyone with a bank account. 

The Federal Reserve announced yesterday that it was raising the federal funds rate by 0.25%, as many speculated it would. It hopes that doing so will help curb inflation, but many Americans aren’t clear as to how this works or how it will affect them personally. So here’s a quick rundown on what you need to know.

What is the federal funds rate?

The federal funds rate is the rate that financial institutions charge each other in order to borrow money. Prior to this most recent meeting, the federal funds rate sat between 4.50% and 4.75%. It’s now at 4.75% to 5%. So essentially, it’s becoming more expensive for banks to borrow money from one another.

The reason that matters for you is because the interest rates on consumer-facing products, like savings accounts and loans, are based on the federal funds rate. A Fed rate hike typically leads to:

Higher yields on savings products: Annual percentage yields (APYs) on savings accounts, money market accounts, and certificates of deposit (CDs) generally rise after a Fed rate hike. This enables savers to earn more interest on their extra cash.More costly loans: A Fed rate hike also raises annual percentage rates (APRs) that borrowers pay on loans. That means you’ll pay more in interest over the course of your loan term. This can also discourage some from borrowing money in the first place.

These changes won’t happen overnight. It typically takes a few days to a few weeks for consumers to start seeing these changes to their banking products. But it’s still useful to know what might be on the horizon.

Why is the Fed raising rates again?

The Federal Reserve has raised the federal funds rate nine times since March 2022 in an effort to curb the high inflation we’ve all been dealing with. The logic here is that raising the federal funds rate — and by extension, loan interest rates — will help curb borrowing and spending. This will in turn slow down the economy, and with lower demand for goods and services, the inflation rate will also slow down.

But not everyone agrees that this is the right move. When the Fed raises rates too much too quickly, it could trigger a recession, which could be devastating to Americans of all backgrounds.

We can’t know at this point whether this will happen. We have to wait to see what the effects of this most recent rate hike are and what the Fed decides to do in subsequent meetings throughout 2023. But consumers should be aware that borrowing money could be more difficult and expensive in the future. And those with credit card debt could also find themselves struggling more under the weight of rising APRs.

In situations like these, it’s best to build up your personal savings as much as you’re able to. Aim to have an emergency fund that can cover at least three months of living expenses. And if you plan to take out a loan, try to save up as much as you can on your own to reduce how much you need to borrow.

You should also consider opening a high-yield savings account if you don’t already have one. These accounts are already offering interest rates well above the national average, and they could climb even higher in the coming months. It’s possible to earn tens or even hundreds of dollars a year in interest with one of these, and that could help to partially offset the rising cost of borrowing money for some.

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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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