Money Management

Imagine bringing home extra money that isn’t already earmarked for bills. 

Life just keeps on getting more expensive, and buying a home is no exception. According to the Federal Reserve Bank of St. Louis, the median sale price of a home in the United States was $467,700 in the fourth quarter of 2022. And just to add insult to injury, Americans are also paying much higher mortgage rates than they were during 2020 and 2021. As of this writing, Freddie Mac notes the average interest rate on a 30-year fixed-rate mortgage loan is 6.65%.

What does this mean for you? If you want to buy a house, you can likely expect to put more money down, and also make higher mortgage payments thanks to those higher rates. This certainly isn’t a cheerful state of affairs, but if it seems like buying a home will be impossible for you due to the cost, consider whether you can get a side hustle. Here’s why it’s worth thinking about.

A side hustle can help

There are a lot of great reasons to get a side gig, such as paying off debt, building job skills, or even just having something fun to do that also makes you money. But putting yourself into a better financial position to buy a home is definitely a worthy cause.

Extra down payment funds

Let’s say that in your area, you can expect to pay $400,000 for a home. The recommended down payment for a home being purchased with a conventional mortgage loan is 20%, which comes to $80,000 on this home. That is certainly a lot of money, but if you make a down payment of less than 20%, you’ll have to pay private mortgage insurance until you reach 20% equity in the home, so yet another cost to handle.

If saving that $80,000 sounds daunting, know that 20% down isn’t a hard-and-fast requirement to buy a home. But the more you can put down, the less time you’ll have to pay PMI, and you might also qualify for a better mortgage rate than if you put down the bare minimum (which could be as low as 3% for a conventional mortgage, if you have good credit).

Cash savings for other expenses

The costs of owning a home don’t end with the down payment and your monthly mortgage payment. You’ll also be responsible for paying closing costs, property taxes, maintenance, and more. Wouldn’t it be nice to go into a home purchase with a pot of money saved up to help you handle these expenses, not all of which can be planned for? A side hustle can help.

Money for debt payoff

If your side gig really takes off, you might consider dedicating some of that money to paying off debt. What does this have to do with affording a home? Quite a bit, actually. If you can pay off some or all of your other debt, you’ll free up more cash to go toward housing expenses and show your lender a lower debt-to-income ratio, which might make it easier to get approved for a mortgage. Plus, your credit score will improve as well, and you could qualify for a lower interest rate, shrinking your monthly mortgage payments.

A side hustle doesn’t have to last forever

Any way you slice it, a side hustle can do great things for your finances, especially if you’re hoping to buy a home. And if you can put yourself into a better position to buy, say by putting aside more money for a down payment and other costs, and paying down your debt, you don’t have to keep that job forever. Sometimes a side gig is just a means to an end, and getting to buy a home might be the end you’re dreaming of.

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Don’t wait until after the honeymoon to start talking about money. 

Money can be a stressful subject, and it often becomes a point of contention in relationships. Open communication is the best way for couples to avoid this, but unfortunately, research shows that many couples are making a serious mistake.

One in three couples say they waited until after marriage to discuss important financial topics, according to a recent survey by Western & Southern Financial Group. Here’s why that’s an issue and how couples can better communicate about personal finance.

Why you shouldn’t wait to talk about money with your partner

Finances are a huge part of people’s lives. If you’re in a relationship, the way you and your partner manage money affects the both of you. For couples to avoid arguing about money, both partners need to be on the same page about important financial topics, such as spending habits, how much to save, and goals.

Some people prefer to keep their finances private, and that’s normal. But once a relationship gets serious and you’re planning a life with the other person, you two should start opening up about money. This way, you can see where your financial values align and if there are any potential problems. These aren’t signs the relationship is doomed, but they are things you’ll need to resolve.

Many couples wait far too long to have these conversations. Over 60% waited until after getting engaged just to talk about spending habits or debt, and over half of couples waited until after getting married to discuss:

InvestmentsSavings goalsRetirement savings

And as mentioned above, one-third of couples didn’t talk about important financial topics at all until after their wedding. That’s a huge commitment to make without knowing whether someone has, say, $25,000 in credit card debt.

How to have financial conversations as couple

It’s not hard to guess why so many couples postpone important financial conversations. Talking about money can feel awkward and uncomfortable, especially when you’re not used to it.

The first thing to understand is that it gets easier the more that you do it. That’s one reason why you should schedule regular money talks. Another reason is that by setting aside a day and time to do this, you ensure that you’re not only discussing money when there’s a problem. If your only conversations about money are negative, you’re going to dread them, and that’s what you don’t want.

Here are some questions to discuss during these money talks:

What are our current financial challenges? These could be things like living paycheck to paycheck or paying off debt.What are our short-term financial goals? These are goals you want to accomplish in anywhere from a few months to a few years, such as saving for a vacation or building an emergency fund.What are our long-term financial goals? These are normally goals you want to accomplish in five to 10 years or longer, such as saving a down payment for a home or retirement.What steps are we going to take to improve our financial situation? You may commit to saving and investing specific amounts every month, putting a certain amount toward debt, or increasing your credit scores.

It’s important to keep these talks positive and fun. Now, you might be wondering how exactly talking about finances is supposed to be fun, but it’s doable if you follow a few tips.

First, don’t judge or criticize each other. You and your partner may have very different backgrounds and financial values. If you’re both understanding, it’s much easier to be open and to compromise on issues.

To make these conversations more fun, talk about the real-life benefits of the moves you’re going to make. There’s nothing inherently exciting about deciding to save an extra $250 per month. But there is about saving money that you’re going to use for a well-earned vacation at the end of the year.

Couples who fight about money often do so because they’re not communicating enough. When you and your partner talk about money regularly, it helps you avoid that, and it also brings you closer. You’ll be able to fix money problems and work toward goals together, and that will make you feel like more of a team.

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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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You may want to think twice before doing so. 

Amazon is an extremely popular way to shop — in fact, Zippia research found that in 2021, Amazon accounted for 56.7% of all e-commerce sales in the U.S. That represented a net sales revenue of $469.82 billion. With numbers like this, it’s a fair bet that many Amazon shoppers make heavy use of Amazon’s “Buy Now” button. But using this feature means leaving your credit card saved on file in your Amazon account. Is this a good idea? Let’s take a look at how you might spend more than you intend to — or even fall victim to scammers.

Credit cards are a very safe form of payment

First things first: Credit cards themselves are generally the most secure way to pay for purchases, especially on the internet. Most notably, when you pay with a credit card, your own money in your bank account is not connected. Instead, you’re using money borrowed from your credit card issuer via your line of credit, and then paying it back.

The best credit cards for online shopping add another layer of safety in the form of liability protection if someone uses your credit card to make unauthorized charges. If your card or its information is stolen, you will still have to take action to report the theft to your card issuer, but you will generally not be liable for any fraudulent charges made. Debit cards don’t offer this level of protection, so it’s generally better to opt for using a credit card when you’re shopping online. Unfortunately, there are still some risks to keeping your credit card info stored on websites like Amazon.

Risks of storing your credit card info on websites

Scammers and hackers are always innovating new ways to steal our financial data. While storing your card info on an e-commerce website makes it very easy for you to use, should that site suffer a security breach, your credit card info will also be available for scammers. While this sort of issue might seem unlikely with a big company like Amazon, it’s been known to happen. For example, almost a decade ago, Target was compromised in a cyber attack that affected 41 million customers.

Other threats to your credit card are closer to home. We’ve all heard the funny viral stories on social media about how someone’s young child ordered several thousand dollars’ worth of items via an Amazon Alexa device or their parent’s Amazon app. If you don’t have credit card info stored on Amazon, those orders won’t be fulfilled.

You might also want to build in some roadblocks for your own shopping habits if they tend to get you into trouble. Amazon has become many people’s go-to for everyday purchases, but it sure is easy to order things you don’t need and get a shock when you peek at your credit card statement. It might be a hassle to go find your wallet every time you want to restock your supply of paper towels, but it could save you from an impulse order of $20 worth of nonsense. Those silly orders can add up, after all.

Safety tips for online shopping

There are a few things you can do to help ensure your credit card info is safe when you use it for online shopping. Consider the following:

Don’t shop on public wifi: Public wifi is, by definition, open to the public, and it’s an easy target for hackers. Do your shopping at home on your own private (and password-protected) wifi network.Use strong passwords (and change them regularly): Even if Amazon itself doesn’t fall victim to a security breach, your own account could be compromised if someone manages to get hold of your password.Rely on virtual card numbers: Some credit cards generate a virtual credit card number for use online. This keeps your real credit card information safe.

With all this in mind, you may want to delete your credit card info off Amazon. While it will be less convenient to shop if you have to track down your credit card every time you make a purchase, it is likely the safest choice.

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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. The Motley Fool has positions in and recommends Amazon.com and Target. The Motley Fool has a disclosure policy.

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You’re not alone if you have big savings goals this year. 

Having extra savings can make it easier to deal with stressful financial situations. Many people have a big goal to build and grow their emergency funds to better prepare for the unexpected. Like many other Americans, I’ve been working to boost my emergency fund balance. In 2023, I plan to save an additional $9,000.

Saving is a popular financial goal for Americans

If you’re working to save more money this year, you’re not alone. A fall 2022 Bank of America study found that the top resolution for 2023 was to increase savings. A whopping 44% of respondents said this was a goal for the year. Even if you can only save a small amount of money, that’s okay, as every bit of extra cash saved adds up. If you have hopes to save more, it’s not too late to create a plan and make your goal a reality.

What I’m doing to save an extra $9,000 this year

You may be wondering what steps I’m taking to reach my savings goals this year. Here is the process I followed to set myself up for success. It may help you formulate your own savings strategy.

1. Consider all expenses and set a realistic savings goal

First, I figured out how much money I could afford to save without changing my spending habits. In addition to saving for emergencies, I regularly save money to cover my freelance taxes, so I also considered that expense and the cost of my everyday bills with wiggle room for inflation. I decided to set aside $350 every two weeks. I’ll have $9,100 saved at the end of 2023 — which is much better than $0 saved.

2. Automate the savings process to stay on track

Next, I made sure to automate the entire savings process, so I don’t get forgetful. After outlining my yearly goal, I set up automated transfers through my bank. My money is automatically transferred from my checking account to my savings account every two weeks, making my life easier. You can easily set up automatic transfers through your bank’s website or mobile app, which may help you stay on track with your goals.

3. Keep extra money in an interest-earning bank account

I keep my extra savings in a bank account that earns interest. Any extra money earned is a win, so I use a high-yield savings account. You’re missing out if you’re not keeping your spare cash in a savings account. I also find that keeping my savings in a separate account keeps me from touching the money, so it’s there when I need it.

4. Contribute extra when the opportunity arises

Finally, I make sure to save additional money when I get the chance. My income fluctuates as a freelance writer, and some months are much busier than others. I have extra income when this happens, so I move more of it into my savings account. Doing this keeps me from spending carelessly and helps to boost my total savings even more.

Don’t give up on your saving goals

If you didn’t start saving at the start of the year, it’s not too late to begin now. Set a goal and outline a plan now so you can make it happen. It’s okay to start with a smaller goal, as you need to do what works best for your financial situation.

If you’re starting your savings journey in March and want to save $1,500 by the end of 2023, plan to set aside $150 once a month or $75 twice a month. If you need to free up extra income to reach your goals, budgeting apps can help you avoid overspending. For additional money management tips, check out our 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.The Motley Fool has a disclosure policy.

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Are you accidentally spending car money on cheeseburgers? Here’s help. 

I remember how stressed out my parents could get when they sat down to pay the bills when I was a kid, and once I became an adult, I began to understand why. There are a lot of potential pitfalls when it comes to managing your money, and many people struggle with ensuring the bills get paid on time and the money goes to the right places. This is especially true now, with annual inflation still sitting at 6.4% overall, per the most recent Consumer Price Index report.

I recently had a conversation with a friend who hit on a great trick. She had been trying to manage paying for groceries, gas, and other variable expenses out of her checking account, and accidentally leaving herself without enough money left over to cover her regular monthly bills like housing, utilities, and her auto loan. What’s her trick? Having two checking accounts with the same bank. Here’s how this system works.

Account No. 1: Pay the bills

You probably already have at least one checking account with your bank. Chances are, this is the place where any money you bring in is deposited, like paychecks from your employer. You can use this account to set up payments for bills like your mortgage or rent, your utilities, and fixed monthly costs like a car loan. If the bill is for the same amount (or close to the same amount) and is due at the same time every month, use this account to pay it.

Based on your budget, you should have a pretty good idea of what your fixed monthly expenses are, and you can leave enough money (with some buffer, to prevent accidental overdrafts) in this account to cover them. Then take the rest of your month’s pay and transfer it to the second checking account.

Account No. 2: Variable spending and fun money

You fund checking account No. 2 with money for the expenses that fluctuate more from month to month (while you may have a rough idea how much you spend on groceries, it’s unlikely you know the precise dollar amount in advance). You can also transfer over the money you can afford to spend on fun expenses, like dining out.

The beauty of this two-checking-account system is that you don’t have to worry about accidentally spending money you intended to go toward a fixed monthly bill. And if you set up auto-pay, chances are the money comes out of your account within a few days of the due date, but it could vary from month to month (especially if the due date is over a weekend or a holiday some months). You might believe a bill has already been debited from your account and you’re safe to spend the money left there if you forget to double-check your bank account. If you’re wrong, you could find yourself coming up short for the bill, and possibly even overdraft your account.

Consider adding a savings account

If you really want to take this trick to the next level, make sure you’ve got a linked savings account in the mix, too. Set up an automatic savings transfer from the first checking account (where your paycheck is deposited), and you’ll ensure you’re saving money for emergency expenses or the future — all without putting yourself at risk of accidentally spending it.

It pays to do what you can to make money management less stressful. With the two-checking-account system, you can ensure you never come up short for your mortgage payment or utility bills, and you can more easily tell how much you can spend for the fun stuff.

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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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