Money Management

MMAs aren’t always your best bet for every situation. 

Chances are, you know how checking accounts and savings accounts work. Your checking account is intended to hold money you’ll be using in the near term, such as the funds you need to pay your monthly bills. And your savings account is where you keep money in reserve for big goals you’ll be meeting in the next few years, like a home down payment, as well as extra cash for unplanned expenses. But if you’d like to earn interest on a pool of money you’re saving, as well as have easier access to it than you’d get from a typical savings account, you might consider opening a money market account (MMA).

MMAs come with some very cool features, including the ability to withdraw your money via check or debit card, as well as a higher annual percentage yield (APY) than you’d find on a typical savings account from a traditional bank. That said, there are a few things you need to know about money market accounts so you’ll be able to decide if one is a good place for your money.

1. You may need to maintain a minimum balance

Generally, you can open a high-yield savings account with any amount of money. The same may not be true of all MMAs, as some banks have a minimum balance requirement to open an account. In some cases, you may also have to maintain a certain minimum balance to qualify to earn the highest rate of interest being offered.

There are certainly plenty of MMAs without this requirement, however. So even if the account you’re considering has it, shop around and see if you can find another option that offers the APY you’re looking for and won’t penalize you for keeping less in the account.

2. The interest rates offered won’t beat inflation

While money market accounts (and indeed, high-yield savings accounts) are paying pretty generous interest rates these days, those rates aren’t high enough to beat the inflation we’ve all been living with. The Consumer Price Index Summary released Jan. 12, 2023 found that inflation was sitting at 6.5% over the previous year. Meanwhile, the best MMAs are paying around 4% interest right now, so the money kept in one is still losing some value to inflation. This is unfortunate, but it’s the price you pay for keeping money as easily accessible cash in a bank account, as opposed to investing it in the market for long-term growth.

If you currently have money in an MMA and it isn’t paying as much as the highest APY available, you might consider changing banks to get a better deal, but there’s not much any of us can do at this point to mitigate the effects of higher inflation by way of our bank accounts. Having your cash savings in an interest-earning account does help some, however (and it’s important not to lock your emergency fund up in the stock market, where it could lose value in the short term).

3. You may be limited in free withdrawals

Since an MMA gives easier access to your money than a savings account would, you may be thinking that you can take regular withdrawals from it like you would your checking account. Not so fast. MMAs (as well as savings accounts) are subject to Regulation D, a federal regulation that governs how many withdrawals you can make from these accounts. There has been some upheaval with this rule’s enforcement, however.

In April 2020, at the start of the COVID-19 pandemic, the Federal Reserve removed its requirement that account holders are limited to six “convenient” transactions per month. Convenient transactions include automatic and electronic transfers, check payments (as some MMAs do come with check-writing capabilities), and online banking transactions. As of this writing, the Federal Reserve hasn’t put the rule back in place, but some banks and credit unions are still enforcing it. So check with the bank where you’re considering opening an account to find out what its rules are for MMAs.

For this reason, don’t plan to use your new MMA as a checking account, as you could incur transaction fees or even have your account closed or converted into a checking account by your bank. Think of it as a super-charged savings account that gives you the option to access your money in a pinch — when you really need it. For this reason, a money market account can be a great place to keep your emergency fund.

Money market accounts are an interesting type of bank account with features of both checking and savings accounts. If you want to open one, consider all the possible drawbacks listed above to help you find just the right place for your money.

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Owning isn’t right for everyone at every stage of life — and that’s okay. 

If you’re a renter, you might be itching to get a mortgage loan and buy a home sooner rather than later. This is certainly understandable, but given the high costs of homeownership, I’d urge you not to rush into a home purchase. Examine your motivations for buying and your actual life carefully before taking the plunge. You don’t want to end up stuck underwater on your mortgage or taking on debt to pay for home repairs if renting is actually a better fit for you right now. If you can say “yes” to the following four conditions, you can go into a home purchase with more confidence that you’re making the right move.

1. You’re not planning to spend a ton of time away from home

This is not to say that you must be a total homebody if you aspire to homeownership. Plenty of homeowners take regular vacations and spend time away from home, and can manage to meet their maintenance and upkeep obligations. But if you’re preparing to take a six-month sabbatical from your job and go backpacking through Europe, you might want to rethink buying a home right now. Why pay a mortgage and related costs now if you can save money by renting until you get back?

2. You have a lot of money saved

One of the best things you can do for your peace of mind and your finances is to go into a home purchase with as much cash saved up as possible. Not only will you save money on mortgage insurance and possibly your interest rate by making a larger down payment, but if you have money set aside for emergency maintenance and repairs, you can avoid going into debt when something inevitably goes wrong with your home. Give yourself the best chance of success with homeownership by saving as much financial cushion as possible.

3. Your career and personal life is stable

One of the reasons my first home purchase years ago was a mistake was that my work life was in no way settled and I needed to relocate a lot for my old career. I ended up losing my job in that city and going through a divorce just a little more than two years after buying the home.

Learn from my mistake and ensure that your career and personal life are as stable as possible before you consider buying a home. Of course, no one can predict the future, but if your marriage is rocky or you’re feeling as if you might want to change careers sooner rather than later, wait to buy. You don’t want to get stuck selling a house in a hurry (or worse, having your bank sell it for you because you can’t afford it anymore).

4. You love the area you live in

Finally, it’s important to be really sure about the place where you want to buy a home. After all, it’s not as if you can just pick up a house and move it on a whim, and selling a home is much more difficult than breaking a lease. Plus, you’re more likely to lose money on selling your home if you haven’t lived in it for long.

Remember, it’s not free to sell a home; you’ll have to pay a real estate agent’s commission and closing costs to transfer ownership, and you may even owe taxes. So if you sell before you’ve got significant equity or before the home has had a chance to appreciate in value, you could find yourself in the red. Be as sure as you can about the home you’re buying, as well as the area it’s in.

You never know what life will throw at you, but if you don’t meet the conditions above, rethink that home purchase you’re considering and try renting a home until you are more sure about how you want your future to look. Your finances will thank you.

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Whether it’s saving more, going on a dream honeymoon, or refinancing a home remodel, there’s a credit card that can help. 

Newlyweds often have a lot going on. Even when you’ve already built a life together, getting married is still a big step. While you may be busy, one important step you and your spouse shouldn’t ignore is figuring out which credit cards you’ll use.

Credit cards can be extremely useful, as they allow you to build credit and save money through rewards, among other perks. You could do this on your own, but after getting married, it makes sense for you and your spouse to take advantage of credit card benefits together.

There are lots of great credit cards for couples available. Here’s exactly how you and your spouse can choose the right card — or cards.

Go over your financial goals

Credit cards have a variety of features and perks. Before you start looking for cards, talk with your spouse about financial goals. This way, you can choose a card with perks that best match those goals. Here are some of the most common examples:

If you want to take amazing vacations, look at travel credit cards to help cover the cost of your trips.If maxing out your savings is the priority, check out cash back credit cards that give you money back on every eligible purchase.If you have a big expense coming up that your savings won’t cover, compare 0% APR credit cards that don’t charge interest during an introductory period.

That narrows it down to a type of credit card. Now, we’ll cover features to look at based on the type of card you want.

Travel credit cards: Redemption options and bonuses

For couples with a serious case of wanderlust, travel cards are a natural fit. The only thing better than travel is free travel, and you could do that with credit card points.

The tricky part about travel cards is that redemption options vary. That means the way to use your points could be completely different from one card to another. Here’s a quick rundown of the typical card and redemption options:

Airline credit cards earn miles redeemable for air travel.Hotel credit cards earn points redeemable for hotel stays.Some travel cards, in particular no annual fee travel cards, earn points you can redeem at a fixed rate (normally $0.01 per point) toward travel spending.Travel cards that are part of major credit card rewards programs provide a combination of the above options. They let you transfer credit card points to airlines and hotels, or redeem them at a fixed rate.

The last type of credit card is usually best for starting out, especially if you value flexibility. In that case, look for a card in any of the following rewards programs:

Chase Ultimate RewardsAmerican Express Membership RewardsCapital One Venture Rewards

As you compare credit cards, pay attention to the bonuses they offer. Most travel cards include sign-up bonuses, which are introductory offers available to new cardholders, and bonus rewards on certain types of purchases. The more bonus points you earn, the faster you and your spouse will earn free travel.

Cash back credit cards: Rewards rates in your top spending categories

Cash back credit cards make it easy to save more money. How cash back cards work is as simple as it gets — pay for purchases with your card, earn a percentage back.

This means comparing credit cards that earn cash back isn’t too hard. All you need to do is pick the card, or cards, that will earn you the most back. There are three types of cash back cards:

Flat-rate cash back: Cards that earn an unlimited, flat rate on purchases. A few of the most popular cards offer an unlimited 2% cash back.Bonus categories: Cards that earn higher rates in bonus categories, such as groceries, gas, or dining.Rotating bonus categories: Cards that earn higher rates in bonus categories that change every quarter. You must activate bonus categories every quarter to earn the higher rate.

Compare cash back rates to your spending habits to see which card is a good fit. If you and your spouse handle different expenses, then it’s probably best to get separate cash back cards. For example, if you always pay for gas and groceries, look at gas and groceries credit cards for yourself. If your spouse pays for more meals out, they’d be better off with a dining credit card.

0% APR credit cards: How long the 0% intro APR lasts

Sometimes big expenses come up shortly after marriage. Maybe you two are moving into a new place and need furniture, or you want to upgrade your kitchen, to give two examples. If an expense will be hard on your wallet, but you can’t avoid it, a 0% APR credit card is a great solution.

This type of credit card has a 0% APR on purchases during the intro period. After the intro period is over, the card’s standard APR applies to new purchases and any balance you have left over. That means you save the most money if you pay off everything before the intro period ends.

Look for a 0% APR card with an intro period long enough to pay off what you plan to purchase. If you estimate that it will take you 18 months, get a card with at least an 18-month 0% intro APR. If you can’t find a card with a long-enough intro period, go with the longest one you can find.

Once you’re ready, decide how you’ll apply

After you and your spouse pick one or more cards that you want, the final step is deciding how to apply. Most card issuers don’t allow joint credit card applications anymore, so you have two options:

One of you applies for the card and adds the other as an authorized user. This works well if you want to share a credit card.Both of you apply for your own credit cards. This could be a better choice if the card has a sign-up bonus. By applying separately, you two could each qualify for the bonus and get double the rewards.

Both are good options. It just depends on which is better for you and your spouse, based on your financial needs and the card you’re getting.

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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.American Express is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

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It’s a habit I’m not about to break. 

Have you ever gone to the store with a list of products to buy, only to wind up with extra items in your shopping cart by the time you’re done? If you have a tendency to make impulse purchases, you’re not alone.

A 2021 SWNS survey found that the average American makes 12 impulse purchases a year. Since I typically shop at Trader Joe’s once a month, I can say with certainty that I, too, make at least 12 impulse purchases a year — especially because I commonly buy at least one unplanned item, if not more, every time I visit that store.

Now generally, I try to avoid impulsive purchases to some degree — especially ones that don’t end up giving me a lot of value. But if there’s one type of impulse buy I’m really okay with, it’s new food products at Trader Joe’s.

I plan for those impulse buys

To say that I constantly make impulsive purchases at Trader Joe’s is a bit misleading. It’s true that I’ll often come home from Trader Joe’s with products that weren’t originally on my shopping list. But those purchases aren’t so impulsive in the sense that I expect to make them.

See, one thing about Trader Joe’s is that it’s constantly evolving its product line. When I head out to the store, I know full well that I’m going to buy at least one item, if not more, that’s recently hit the shelves. I just may not know what that item is until I get to the store.

But I specifically carve out room in my grocery budget to allow for those impulse buys at Trader Joe’s. And as such, I don’t bust my budget and end up with a credit card tab I’m uncomfortable with.

I can let myself make impulse purchases without worry

For some people, giving in to impulse purchases means not meeting their savings goals. But that’s not really a concern of mine for one big reason — I make a point to automate my savings.

At the start of the month, a certain sum of money will leave my checking account and land in my savings account before I have a chance to spend it. And that automatic transfer is equal to the amount I want to save that month. So even if I spend the rest of my paycheck and don’t save beyond the amount that comes over at the start of the month, I’ve still met my goal and am still in decent shape.

That’s why I really don’t sweat any of the impulse purchases I make. They don’t cause me to land in debt and they don’t impede my savings goals.

And I’m especially okay with my Trader Joe’s impulse purchases. Those almost always end up proving to offer good value because I’m someone who enjoys tasty food.

Plus, let’s say I buy a couple of new snack items at Trader Joe’s that I wasn’t planning to. Well, in that case, I’ll just buy two fewer snacks at another store. So all told, my Trader Joe’s habit isn’t really so harmful to my wallet. Whether it’s good for my waistline is obviously another story.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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You could go either way, so here’s how to figure out what’s right. 

If you have money set aside for emergencies, it’s generally best to keep that cash in a savings account. That way, you have access to it at all times.

But you may have money available beyond what you need for your emergency fund. If you don’t feel comfortable investing it in a brokerage account, you may be inclined to put it into a certificate of deposit, or CD, instead.

CDs tend to pay more interest than savings accounts do, but in exchange for those higher rates, you need to commit to tying up your money for a preset period of time. That could be six months, a year, two years, or longer. If you cash out a CD early, you’ll generally lose several months’ worth of interest as a penalty, so that’s a situation best avoided.

Meanwhile, CD rates happen to be competitive right now. Many banks are paying upwards of 4% for a one-year CD. But CD rates could also keep rising this year. And so the question is: Should you open a CD now, or hold off and wait for a better rate to become available?

The pros and cons of waiting

Let’s say you sit tight and keep your money in a regular savings account now, and then CD rates rise to, say, the 5% range for a one-year CD. In that case, waiting a few months could work to your benefit. The problem, though, is that we don’t know when and how CD rates will rise.

There’s reason to believe CD rates will increase modestly this year on the heels of rate hikes on the part of the Federal Reserve. The Fed raised its benchmark interest rate at the start of February by 0.25%. That’s a modest hike, but a hike nonetheless.

Since the Fed isn’t done battling inflation, we could see several more interest rate hikes this year alone. And those could drive CD rates up. The problem with waiting to open a CD, however, is missing out on a chance to start earning interest on your money now.

Let’s say you think interest rates for CDs will rise by mid-year. That’s all fine and good. But if you wait until then to open a CD, you’ll miss out on several months’ worth of interest.

A good compromise

If you want to start earning interest on your money but don’t want to lose out on higher CD rates, a good bet may be to open a shorter-term CD now, like a six-month CD. That way, you get to put your cash to work but aren’t committed to too long a time frame.

Another option? Put some of your money into a one-year CD, and then wait a few months to tie up the rest. If you see rates increase for CDs, you can put the rest of your cash into a second CD a few months later and enjoy that higher return.

In fact, laddering your money is a good bet when it comes to CDs. This means dividing up your cash and putting it into different CDs that mature at different times. It’s a good strategy for not only capitalizing on CD rate increases, but also, getting access to your money at different intervals so you have more flexibility.

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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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Nothing like leaving a slew of people frustrated to cement your reputation. 

It’s safe to assume that Dave Ramsey was employing a bit of hyperbole when he said, “If you hate the people in your family, leave unclear instructions and no will. Because they will all fight (for) the rest of their lives over your crap.”

Ramsey’s not wrong about the value of a will, though.

A quick 11-second clip

An 11-second clip of Ramsey’s comment on TikTok elicited a ton of responses. That’s likely because most of us have lost people we care about, and some of those people died without a will in place.

Before moving on to what happens when a person dies without a will, let’s consider the cost of a funeral. In 2022, the average cost of burying someone was just shy of $7,900. Dying without a will, prepaid funeral plan, or life insurance means leaving payment up to family and friends. You have to decide if you want those people to take money from their savings or retirement accounts to cover your funeral costs.

What happens when you die without a will

You’ll be gone and won’t have to worry about what happens if you die without a will. However, the people you care about may be in for a long, drawn-out process, possibly in probate court.

If you don’t have much money, don’t own property, and all your accounts are payable-on-death, your estate may not go to probate. If there’s more to consider — like a home, vehicle, retirement account, bank account, children, or pets — someone has to decide where it’s all going to go. That’s why most estates end up in probate court.

Probate is the legal process of deciding what happens to your assets after your death. If you die without a will, the first thing a probate court will do is appoint an executor. If you die without a will, you’ve presumably not named an executor, so the person who gets the job may or may not be thrilled.

If you have children, the surviving parent generally gets custody. If there is no surviving parent or that person is incapable of caring for the children, the court will ask family members to volunteer as guardians. If no one steps up or is fit for the job, the children may become wards of the state.

Because pets are considered personal property, they will be distributed by the probate court in much the same way as a television or a bicycle.

If you want more control over the situation, you need a will to spell out your wishes.

A basic will

A will doesn’t have to be elaborate to be effective. A basic will will cover the following:

Your personal information: This includes your full legal name, date of birth, and address.List of assets: This includes everything from your collection of vinyl records to the money in your savings account. You’ll also name who you want to receive the assets.List of your beneficiaries: These are the people you want to leave your worldly goods to. Beneficiaries can be anyone, from family members to charities.An executor: The executor will be in charge of taking care of unresolved matters, like paying bills and taxes. They’ll also oversee that your wishes are carried out, so make sure to name someone you trust.Guardian(s): If you have children under the age of 18 or disabled or elderly dependents, you get to appoint who will act as their legal guardian upon your death. The same is true of pets.Signatures: You’ll sign your will, along with witness signatures if required by your state.

How much does a will cost?

The average fee to have an attorney draw up a simple will is about $300. A more complicated will could be up to $1,000 or more.

You’ve worked hard for all you have, and undoubtedly have people you care about. While shelling out hundreds of dollars for a will may not sound like fun, the peace of mind a will brings may be priceless.

One more way to help those you leave behind

It’s tough to talk about the value of wills without including how much life insurance can benefit the people you love. According to Annuity.org, only 50% of us have a policy. And among adults aged 25 to 44, the percentage is only 46% — a 14% decrease in life insurance ownership over the past 10 years.

Not only would a life insurance policy help cover those funeral costs we discussed earlier, but it can also help replace your income, allow your loved ones to stay in the family home, and make it possible for your children to attend college. Even if you don’t have a family, a life insurance policy gives you the opportunity to leave money to the cause or causes you care most about.

May be less expensive than you think

It’s easy to suspect that the reason half of us don’t have life insurance is due to finances. You may be surprised to learn that a term life policy can be quite affordable. For example, take a look at the average monthly premium for a healthy adult by age, sex, and level of coverage:

You’ll notice that the younger you are when you buy a policy, the less expensive it is. The good news is that premiums do not increase. Let’s say you’re a female who purchases a 30-year, $500,000 policy at age 35. You’ll still only be paying $18.20 per month through your 40s, 50s, and into your mid-60s when the policy expires.

There are parts of adulting that are not a laugh a minute, and creating a will and buying life insurance certainly fall into this category. However, Dave Ramsey is right about one thing: Leaving this planet without legal documents in place could leave the people you love in a mess.

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.

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