Money Management

Sometimes, taking the less expensive route pays off. 

If there are people in your life who depend on you financially, then it’s important to put a life insurance policy in place. Without one, your loved ones might struggle if you were to pass away unexpectedly.

You might assume that when it comes to life insurance, taking the cheaper way out isn’t your best bet, the same way a cheap laptop might wear out after a couple of years while a higher-end one might last for five years or more. But actually, life insurance is one situation where going the less expensive route is probably your better bet.

When cheaper is better

There’s a danger in not being able to keep up with your life insurance premiums — having your policy lapse due to you falling behind. So you’re generally better off getting less expensive life insurance you can keep up with, rather than stretching your budget to afford a costlier policy — even if that more expensive policy offers added coverage.

It’s for this reason why so many financial experts recommend getting term life insurance instead of whole life insurance. Term life insurance will only cover you for a preset period of time, and if you don’t pass away while your coverage is in place, you won’t be paid a benefit.

Whole life insurance, on the other hand, covers you for the rest of your life. And your policy does accumulate a cash value over time. Once that happens, you could have the option to borrow against your policy should the need for money arise. Or, you can even cash out your life insurance policy while you’re living. Doing so could mean forgoing your death benefit, but the option is there.

But while whole life insurance might offer more coverage than term life insurance, its cost can be astronomical. As an example, a 30-year-old healthy, non-smoking male would pay about 5.8 times more for a $500,000 whole life policy versus. a $500,000 40-year term life policy, according to Forbes Advisor. That’s a major difference.

Don’t overpay for life insurance

Buying whole life insurance could put you in a position where you end up falling behind on your premiums and losing your coverage due to affordability issues. And even if you manage to retain your coverage, paying too much for life insurance could make it so you have a hard time covering other bills.

In many cases, the coverage offered by a term life policy will more than suffice. For example, if you put a 30-year term policy into effect when your kids are infants, that’s a long enough term to protect them until they reach adulthood.

And if you’re worried about giving up the cash value component of a whole life insurance policy, what you can do instead is take the money you aren’t spending on premiums and put it into a savings account or a brokerage account. That way, you can accumulate your own pile of cash, and you’ll be the one to manage that money — not your life insurance company.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.

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.

 Read More 

The first $100,000 is often the most difficult, but these tips will help you get there faster. 

Your first $100,000 is a crucial milestone on the path to financial success. Starting from $0 and saving $100,000 is difficult, and some even say it’s the most difficult part of building wealth. But once you accomplish it, you’ll have the financial habits you need to reach bigger and bigger goals.

Former financial advisor Humphrey Yang recently shared advice on saving $100,000. The first thing he explains is extremely important for those starting out with building wealth — “getting your first $100K is rarely about investment gains.” He says the first $100,000 usually consists of about 85% savings and 15% investment returns.

As your money grows, more and more of it will come from investment returns. That’s the power of investing in the stock market and earning compound interest. In the early stages, it takes a lot of saving to get your portfolio off the ground.

It normally takes years to save $100,000 in your bank accounts and investments, but what if you want to speed up the process? Yang provided three valuable tips on how to potentially reach this milestone in 2023.

1. Be irreplaceable

The amount you can save depends on your income. As Yang correctly points out, “the more irreplaceable you are, the more money that you are going to make.”

If you’re one of few people who can do a job, then you can command a high salary. An example Yang mentions that most are familiar with is professional athletes. Some people complain about the salaries of sports superstars, but they earn those salaries because hardly anyone else can do what they do.

On the other hand, if anyone can do a job with a week or two of training, it probably doesn’t pay all that well. Since there are so many people who could fill that role, there’s no reason for an employer to pay a premium.

Nobody’s completely irreplaceable. But the better you are at what you do, compared to the average person, the more you can make. This is where Yang’s second tip comes into play.

2. Find your high-income skill

The key to increasing your income is leveraging your skills. Think of areas where you have more knowledge, experience, or natural ability than the average person. A good way to find your skills is to consider what you’re better at than your friends and family. Once you’ve found a potential high-income skill, brainstorm ways you can monetize it.

Remember that you don’t need to be the best in the world at something for it to be a skill. If you’re above average at it, then you could make money from it. That’s especially true if you’re easy to work with.

What if you can’t think of any high-income skills you have? There’s a good chance you have some that just haven’t come to mind yet. However, if you’re really stumped, dedicate a year or two to developing a high-income skill. Here are some options that Yang suggests:

Graphic designVideographyCopywritingSocial media marketingWeb design

3. Be as frugal as possible

The first two tips are all about boosting your income so you have more money to save. This final tip is about getting into the habit of living on less so you save more.

Yang recommends being as frugal as possible until you have a net worth of $100,000. When you’re going to spend money, he says to first see if there’s a lower-cost alternative available. For example, instead of going out to eat, try meal prepping.

Frugality is important, but to be honest, you don’t need to take it to an extreme. An easier approach is to simply commit to saving a certain portion of your income per month. A good target is 20% of your income to your savings accounts and retirement accounts, but this depends on your financial situation. If you can only afford 10%, then do 10%. If you can afford 50% and still maintain a good quality of life, go for it.

To set realistic expectations here, even with Yang’s advice, the average person won’t go from $0 to $100,000 in 2023. After all, the average U.S. salary is under $100,000. What this advice will do is get you on the right track toward saving that much and continuing to build wealth from there.

These savings accounts are FDIC insured and could earn you 13x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 13x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

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.Lyle Daly 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.

 Read More 

The labor market may be strong now, but will it last? 

In February, the Department of Labor released some very positive news. Not only did the economy add more than 500,000 jobs the previous month, but the national unemployment rate fell to 3.4%. That’s the lowest level on record in 54 years, and it’s even lower than where the jobless rate sat prior to the start of the pandemic.

Of course, record low unemployment is a good thing in theory — but not in the context of stimulus aid. Inflation has been surging for well over a year now. And at this point, many Americans are desperate to see stimulus checks hit their bank accounts. That’s unlikely to happen anytime soon, though, given that the jobless rate is so low.

But unemployment levels are apt to climb at some point. The question is, when?

Why the jobless rate could rise

Although U.S. jobs seem plentiful right now, it’s hard to overlook the numerous reports of layoffs we’ve seen come down the pike since the start of 2023. From big players in the tech space like Microsoft to non-tech companies like Disney, many large employers have already taken steps to reduce their headcount. And if that trend continues, we could see the jobless rate tick upward in 2023.

There’s also another factor to consider — the labor force participation rate. The national unemployment rate isn’t calculated based on the number of people who are out of work. Rather, it’s calculated based on the number of people who are out of work but don’t want to be.

In January, the labor force participation rate was 62.4%. But if more people decide they want to work and can’t find jobs, the unemployment rate could rise.

And we may see older Americans in particular try to return to the workforce and struggle to do so in 2023. Many retirees are feeling the strain of inflation, so it’s conceivable that some might try to rejoin the labor force to shore up their finances. But it can be difficult for older job applicants to get hired due to a host of factors, age being one of them (while it’s illegal to discriminate against a job applicant based on age, it’s also a very difficult thing to prove).

Will an uptick in unemployment lead to stimulus aid?

The quick answer is that it could. The longer answer is that the national jobless rate would really need to rise dramatically in order to justify a round of stimulus checks at this point. And since unemployment is sitting at a 54-year low, it’s pretty fair to assume that we’re not going to be looking at broad stimulus aid anytime soon.

Of course, that’s not what Americans who are racking up credit card debt by the day to cope with inflation want to hear. But the reality is that high levels of inflation alone aren’t enough to spur stimulus aid. If anything, a stimulus round might only make the problem of inflation even worse.

The jobless rate is unlikely to stay this low forever. But ideally, it will take a long time until it’s at a point where another round of stimulus checks is even a discussion.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If 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 review

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 positions in Microsoft. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.

 Read More 

It’s super helpful — until it isn’t. 

I have a lot of great qualities, but my memory isn’t one of them. I forget things. Regularly. So I tend to embrace tools that help me remember things — or, better yet, that do them for me so I don’t have to remember them.

That’s why I love autopay for my credit cards. Sure, I prefer to pay off my cards in full each month to avoid the interest fees. But autopay is my security blanket. I don’t have to worry that I’ll miss an important due date for my credit cards because they each automatically make the minimum payment well before the due date. Just in case.

Unfortunately, autopay isn’t for everyone. It wasn’t even for me for many years. Why? Well, autopay is great — but it has one major flaw, especially when your budget is tight.

Autopay = auto withdraw

The main drawback to automatic payments is actually the same as its greatest advantage: automation. In other words, automatic payments go through whether you remember them or not.

Now you’re saying, sure, isn’t that the point? Yes — but if you forget that an autopay is going to hit and your checking account balance happens to be low…can you see where I’m going?

For years, I lived paycheck to paycheck. That meant my checking account’s balance was pretty close to $0 in between paychecks. So, if I’d set up autopay and it hit between pay periods, well, I’d be hit with fees. And worse, it’s rarely one fee. (For some reason, when you overdraw your bank account, they always seem to come in threes.)

Consider this scenario: You have $100 in your bank account. You’ve budgeted to the last penny, and that money is dedicated to food and gas. But wait, you forgot about that autopay. The autopay pulls $50 out without a word. Throughout the day, you buy lunch, groceries, and gas. All four transactions hit your account at the same time. When the dust clears the next day, you’re $30 overdrawn and you’re watching a parade of fees appear.

Millions of people are paycheck to paycheck

This isn’t an uncommon scenario. Roughly two-thirds of U.S. adults are living paycheck to paycheck. And it’s not just low-income households, either. Studies suggest more than half of people making over $100,000 a year are also living from check to check.

If you’re one of the millions of people struggling to break out of the cycle, then autopay may be more of a hazard than a help. When you’re already budgeting to the last dollar, getting hit with overdraft fees can throw a wrench into your budget that takes weeks to work out.

The best way to use autopay is when you can keep a healthy cushion in your checking or savings account. That way, no matter when autopay hits, you have the money to pay it — and everything else you need to buy that week.

Working around the fees

All this being said, there are potential workarounds. For example, you can use your bank’s mobile app to keep an eye on your transactions and balances. This can help you avoid any potential overdrafts.

Even better, turn off your overdrafts. Most banks these days give you the ability to decide what happens when your balance gets too low. You can choose to allow transactions to go through, even if you may overdraft. Or, the better option, you can choose to have the bank simply deny transactions that would send you over your balance. (This is different from overdraft protection, which moves money from other accounts to cover your transactions. Overdraft protection generally has a fee associated with it and can make matters worse when your budget is already stressed.)

One last thing to watch out for is insufficient funds fees that might be charged by the company with which you set up autopay. For example, if your card issuer tries to autopay your card balance but your bank account doesn’t have enough money, you could potentially get hit with a fee from the card issuer.

At the very least, you’ll need to go in and manually make at least your minimum payment. That way, you’re not dealing with a late fee on top of everything else.

Top credit card wipes out interest until 2024

If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR for up to 21 months! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read our full review for free and apply in just 2 minutes.

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.

 Read More 

It’s time to get to the bottom of these myths. 

There are certain financial products that tend to be misunderstood, and life insurance is most certainly one of them. If you’ve shied away from looking into life insurance because you believe the following major misconceptions, then it’s important that you get to the bottom of things as soon as possible.

1. It’s prohibitively expensive

Many people assume that life insurance won’t fit into their budgets. But actually, if you stick to a term life insurance policy, you may find that your premium costs don’t break the bank at all.

A healthy 35-year-old male can expect to pay about $30.44 per month for a 20-year, $500,000 term life insurance policy as of February 2023, while a 35-year-old female with the same term length and policy amount can expect to pay $25.66 per month, according to Policygenius. In many cases, that’s less than the cost of buying coffee every day.

One thing you should know is that if you opt for a whole life insurance policy, your costs for that might be prohibitively expensive. That’s because whole life insurance covers you on a permanent basis, whereas term life insurance runs out on you after a period of time. Whole life insurance also accumulates a cash value you can borrow against or even cash out, whereas term life insurance doesn’t.

But for most people, the length of coverage offered by life insurance is more than enough. And while it’s true that your beneficiaries won’t get paid if you make it to the end of your term life coverage without having passed away, well, you’ll have gotten to live. So there’s that.

2. You can’t get insurance if you have pre-existing health issues

Having certain pre-existing health conditions, like diabetes or heart problems, could make it harder to get life insurance. So could certain lifestyle choices, like being a smoker. But that doesn’t mean the option is off the table.

You might need to pay more money for coverage, since your life insurance company might consider you a higher risk. Or, you might need to opt for a no-exam life insurance policy, which can also be more expensive and offer more limited coverage. But don’t assume that life insurance is off the table completely for you.

3. You don’t need life insurance if you don’t have kids

Many people put life insurance in place specifically to protect their children. But it could still pay to get a policy even if you don’t have kids.

Maybe you have a sibling you support financially. If you were to pass away, that sibling might struggle, so it’s easy to make the case for a policy. And if you’re married and have joint expenses with your spouse, getting life insurance could help them better manage the bills upon your passing — even if your spouse has a job.

There’s a lot of incorrect information about life insurance out there. It pays to educate yourself on the ins and outs of life insurance so you’re in a better place to make the right decision for your loved ones.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.

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.

 Read More 

Taking a trip without these expenses just isn’t worth it to me. 

Traveling can be an expensive hobby, especially if you have a family of four like I do.

I don’t want to drain my bank account to go on trips. I also don’t want to end up in credit card debt, which would be worse. So, there are ways I try to save — like traveling in the off-season when possible and not buying a whole lot of souvenirs to take home.

But, there are some expenses I absolutely won’t skimp on since I feel like they make a trip worth taking. Here are four of them.

1. Staying close to the attractions

When I go on a trip, finding a place to stay that’s right in the action is one of the most important things to me. In fact, I’m willing to pay a lot more money for a place where you can walk to many of the area’s main attractions — or at least get there via a quick car trip or using public transportation.

The last thing I want to do is to spend my entire vacation sitting in traffic or waste half the day driving to get to the things I want to see.

This doesn’t mean I always opt for the most expensive hotel. I don’t need a five-star resort if I’m going on vacation to explore an area. I’m happy to stay at campgrounds in our RV, or even to choose a motel over a hotel as long as the place is clean, safe, got good reviews, and is in a prime location. But I absolutely will pay more for accommodations that are in the thick of things rather than on the outskirts.

2. A generously-sized rental car

If we have to rent a car, I will not skimp on getting a comfortable one that I feel safe in.

My in-laws have always rented the smallest car available to try to save money, but we usually opt for a minivan or an SUV so we can easily fit car seats in and so I don’t worry as much about the safety of my kids on the road. I also like the fact a bigger vehicle is just more comfortable to ride in — even if it does cost more to rent.

3. The right flight

If we are flying to our destination, I am absolutely willing to pay more for a plane that leaves at a reasonable time — and that provides a direct flight to my destination. I’ve paid substantially more for a plane leaving at noon compared to one that would depart at 6 a.m. I don’t want to get to my vacation and be a zombie all day because I had to fly at such an early hour, and it’s simply not worth being exhausted to save a little money.

4. Local food and experiences

Finally, I’m happy to splurge to enjoy local restaurants and unique experiences. After all, to me, the point of traveling is to see the sights at the places I visit — and if that comes at a cost, I’d rather pay it even if that means I have to travel a little bit less in order to afford it.

Ultimately, everyone will need to make their own assessment on what trade-offs they’re willing to make. But be sure you think carefully about where you’re willing to splurge versus save so you can get the most bang for your travel buck.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If 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 review

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.

 Read More