Money Management

A safe is an important part of your home security system. 

Adulthood comes with a lot of important and difficult-to-replace paperwork, like your Social Security card, birth certificate, and various financial documents. While you can certainly keep these important bits and bobs in a safe deposit box at your local bank branch, doing so will mean paying a monthly rental fee as well as losing instant access to your stuff when you need it. You’ll have to take yourself to the bank (during their open hours, which likely coincide with your working hours or anything else you want to do besides visit a financial institution and often wait to be helped) to access items. So what’s the solution?

If you have paperwork (and even cash money, jewelry, and other valuable items) you want to keep secure while still maintaining your access to it, consider purchasing a safe. There are several different kinds available, from small models that will be easy to grab and take with you in the event of a natural disaster evacuation, all the way up to large safes built right into a wall of your home that will deter burglars. You likely don’t need the latter, unless you own a lot of larger items that should be locked up (such as firearms). Keep reading to see how not having one of these handy storage containers can impact your bank account balance as well as your free time.

Losing money

If you’re keeping cash at home, this is the easiest way for you to directly lose money if you don’t have a safe to keep it in. Home invasions can happen anytime, and if you live in an area where burglary is a risk, you’ve likely taken the important step of setting up a monitored home security system, perhaps with cameras and motion sensors. You can finish the job and prevent money loss by adding a home safe to keep that cash out of the hands of thieves. And in the event of an impending natural disaster, if you’re asked to evacuate, you have your cash and documents in one place where they’ll be easy to grab and bring along.

Without a home safe, you’re also at risk of losing money if your identity documents (like that Social Security card) are unprotected and vulnerable to theft. If someone nefarious has access to your personal data, they can steal your identity and ruin your finances. Having to clean up the fallout from identity theft can cost you money. Save yourself money and a headache by investing in a safe.

Losing time

If you’re lacking a secure and protected spot for your important documents (not just identity paperwork, but copies of tax returns, car titles, credit card statements, and more), you’re going to lose time if they are destroyed or stolen. How so? You’ll have to replace them. This can include contacting the government to get help replacing that Social Security card, asking your CPA to send you a copy of last year’s tax return, and so on. And if you have reason to suspect you’re a victim of identity theft, you’ll have to spend time monitoring your credit report and reaching out to your financial institutions if your back-up credit cards have been taken by thieves who broke into your home.

Getting a home safe for your important documents and any cash savings or other valuable items is a smart idea that can save you both money and time. If you have to evacuate to escape a wildfire or a hurricane, or are frequently away from home, knowing your stuff is both secure and easily accessible to you when you need it can give you some much-needed peace of mind in this sometimes-scary world.

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Are you making it, too? 

There are certain expenses we all know to set money aside for. If you own a home, paying your mortgage every month is required. And you’ll also need to make sure there’s room in your budget for expenses like food, car payments, and utility bills.

But there’s one important expense many people inevitably forget to save for: healthcare. And doing so could have seriously negative consequences.

Are you setting money aside for medical costs?

Even if you’re a relatively healthy person, you never know when you might get injured or fall ill, leaving you with hundreds or thousands of dollars in medical bills to grapple with. That’s why it’s so important to have money accessible for healthcare expenses. Yet in a recent Transamerica survey, only 77% of respondents said they have money available for medical costs, which means 23% of workers are leaving themselves extremely vulnerable.

How to save for healthcare costs

When it comes to socking money away for healthcare spending, you have options. One is to simply pad your savings account, which is never a bad thing. But doing so won’t give you any sort of tax break. And if you’d like to snag a tax break in the course of saving for healthcare, there are two different accounts you can look at.

1. Flexible spending accounts

FSAs let you set aside pre-tax dollars for medical costs. With an FSA, you must use up your balance by the end of your plan year or otherwise risk forfeiting it. Some plans will let you carry a limited amount of money from one plan year to another, but you’ll need to check the rules of your FSA to see if that’s possible. And even so, you’ll then still only have a limited window to spend down your balance.

2. Health savings accounts

If you’re enrolled in a high-deductible health insurance plan, you may have the option to participate in an HSA. These accounts are actually more flexible than FSAs because they don’t require you to spend down your plan balance year after year. Rather, you can carry HSA funds forward as long as you want, and you can invest money you don’t need right away so it grows into a larger sum over time.

Like FSAs, HSAs give you a tax break on your contributions. And if your HSA investments make money, those gains are yours to enjoy tax free as well.

You should know that you generally can’t have an FSA and HSA at the same time. If you’re eligible for an HSA, it pays to choose that account over an FSA. That said, you may be able to open a limited-purpose FSA and use it alongside an HSA, but that will depend on whether your employer offers one.

Healthcare is an expense that’s often unavoidable. And the last thing you need is the stress of racking up debt when medical bills mount. If you’re not already allocating money in your budget for healthcare purposes, it’s time to rethink your spending and expenses. And it definitely pays to build up some dedicated healthcare savings so you have cash reserves to tap for that purpose.

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If you want to use travel rewards this year, it’s time to start planning. 

Credit card travel rewards are a popular way to book trips, and for good reason. For people who love to travel, there’s nothing better than getting to do it for free. Instead of spending your hard-earned cash, you can use points or miles you’ve earned from paying with your credit cards.

However, 2023 could be a challenging year for using travel rewards. It’s not a sure thing this will be the case, but there are some signs that booking travel this way could become more difficult. If you’re planning to travel this year, it’s important to know what to expect and how to ensure you can use your rewards.

Travel demand is up, and consumers have points to spare

It’s shaping up to be a big year for travel. In fact, global air travel demand has exceeded equivalent 2019 levels for the first time since the pandemic, according to S&P Global Commodity Insights.

There has already been growth in flights across the United States and Europe, and China recently eased its air travel restrictions. It’s issuing passports and has removed its strictest measures for international travelers, like internal lockdowns and mandatory testing.

Based on that, travel demand could continue to rise throughout the year. And there’s a good chance that many of the people booking airfare and hotels will want to do so with travel rewards. Consumers with travel credit cards accumulated lots of points during the pandemic.

Airlines and hotels typically offer a limited amount of award availability. That means there’s only a certain number of plane seats or hotel rooms that can be booked with rewards instead of cash. In addition, the best deals are often especially limited. For example, most airlines have “saver” award airfare, with seats that cost far fewer miles than standard award airfare.

Airlines are making it harder to get elite status

Less award availability isn’t the only potential issue for travelers in 2023. Three of the largest U.S. airlines have also revamped their loyalty programs and made it harder to reach elite status.

American Airlines, Delta Air Lines, and United Airlines have all raised spending requirements for some of their elite status tiers. These tiers offer valuable perks for frequent flyers, which can include:

Access to expanded award availabilityPriority boardingHigher mileage earning rates on airfareComplimentary upgradesDiscounted or complimentary memberships to airport lounge programs

Airlines are aiming to make elite status more exclusive again. While that’s understandable, it does make things more difficult if you’re trying to maintain elite status and now need to spend more to do it.

How to use your travel rewards in 2023

It’s still possible to redeem your rewards for free travel. It just probably won’t be as easy this year, considering the demand. To maximize your chances of success, here are the most important things to remember:

Start shopping as early as possible. Award availability tends to go quickly, so it helps to book far in advance of your travel dates. Even if you don’t find anything right away, you’ll have more time to shop around than if you waited until the last minute.Try to be flexible about your travel dates. Sometimes changing your travel dates by a few days can help you find award space. The more flexible you are, the more likely it is you find a redemption that works for you.Learn about all the ways you can use your rewards. Frequent flyer miles and hotel points are fairly straightforward, but some credit cards offer rewards with various redemption options, like transfers to airline and hotel partners. Make sure you know all about your options so you don’t miss any good booking opportunities.

These tips always help when booking award travel, but they’re especially important when availability is scarce. One last thing to keep in mind is that once you find the travel you want to book, do it ASAP. Lots of deals don’t last long, so if something catches your eye, lock it in while it’s still available.

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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.Lyle Daly has positions in Delta Air Lines. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.

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Is an installment plan offered by your credit card company a good move for your wallet? 

Many of us use credit cards to pay for everyday expenses. But you’ll be charged interest if you don’t pay off your entire credit card balance. Some credit card issuers now offer installment plans to help consumers pay off their debt in a more manageable way. Is it a good idea to use these payment plans? Find out what you need to know so you can decide.

What to expect with credit card installment plans

If you have to make an expensive purchase and know that it’ll be challenging to pay off your debt as soon as your credit card bill arrives, you may be tempted to utilize a credit card installment plan to break up the debt into more manageable monthly payments.

When you set up a payment plan, you’ll agree to paying off a transaction within a set timeline, and your card issuer will break the total debt into equal monthly payments. Usually, several payment timelines are made available for you to choose from — such as three, six, or 12 months. Your card issuer may require transactions to meet a set dollar amount to qualify.

Payment plans can make it more manageable to pay off expensive purchases. But it’s essential to be aware of fees. Most issuers build fees into the monthly payment amounts instead of charging interest. You’ll be paying extra money for this convenience. Your card issuer will outline these fees in advance.

Do this before agreeing to a credit card payment plan

Before agreeing to a payment plan that your card issuer offers, calculate the total fees you will pay. Does it make sense to pay extra to buy yourself more time to pay off the purchase? If you can afford to pay off the debt in full without a payment plan, that’s the best move.

If this isn’t something you can comfortably do, it’s worthwhile to consider whether committing to a payment plan or paying regular credit card interest is best for your wallet. Do the math to see which is the least expensive option. Don’t forget to review your budget. You want to ensure you’re being realistic about what you can afford to pay each month.

If you decide to use payment plans offered through your card issuer, it’s crucial to stay on top of your payments. Otherwise, you may have to pay extra fees, or you may have to forgo the payment plan and pay interest. Paying your bills on time each month is good for your credit.

Here’s another financing option to explore

Instead of using these payment plans and paying extra fees, you may want to consider another way to finance an upcoming expense. Getting a 0% APR credit card is one option to explore. Throughout the card’s promotional period, no interest will be charged.

You can avoid credit card interest charges if you pay the debt off before the promotional period ends. Many of the best 0% APR credit cards offer no interest on purchases for 15 months or more. This solution makes for an affordable way to pay off your debt.

Use caution when paying with credit cards

Don’t forget to keep your personal finance goals in mind when using credit cards. Credit cards are convenient, but payment plan fees and interest charges can add up quickly. Don’t risk falling into credit card debt because that could negatively impact your credit and life.

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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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These options will not make you rich, but they will protect your money.  

If you’re a little nervous about parting with cash, it’s natural. After all, the last few years have been tough, and we’re all a little more aware of what can go wrong. However comforting it may feel to leave a chunk of cash in your bank account, chances are it’s not earning interest. And if it’s not earning interest, it’s not keeping up with inflation — or even helping to dampen inflation.

The trick is finding someplace safe where you can stash your money while still earning interest. Here are five ideas.

Treasury bills

Treasury bills (T-bills) won’t make you rich. In fact, the interest paid may not even keep up with inflation. However, they will allow you access to your money while also paying some interest. A T-bill is a short-term loan you make to the U.S. government that is backed by the Treasury Department.

You can buy a T-bill with a minimum purchase of $100. And you can choose from the following maturity dates: 4, 8, 13, 17, 26, or 52 weeks. While T-bills don’t precisely pay interest, they are designed to help you earn money on your investment.

Each T-bill has a face value. When you make the purchase, you pay less than face value. However, you get back the total face value when it reaches maturity. Your profit is the difference between what you paid for the T-bill and the face value.

While the FDIC and NCUA do not insure T-bills, they are backed by the full faith and credit of the U.S. government.

Certifications of deposit (CDs)

A certificate of deposit (CD) is like a savings account. The difference is, you promise to leave your deposit with a financial institution for a set period of time. For example, you may open a CD with a 6-month, 1-year, or 5-year maturity date. You are paid interest in exchange for allowing the financial institution to hold your money. The longer the term you choose, the higher the rate of interest you are paid.

CDs are fully insured against loss.

Money market fund

A money market fund is a type of mutual fund. Like a traditional mutual fund, the cash you invest is pooled with money from other people to invest in high-quality, low-risk investments. The fund is managed by professionals who invest in a range of holdings.

Not to be confused with a money market account, a money market fund is not federally insured.

Money market accounts (MMAs)

Banks and credit unions also offer traditional money market accounts (MMAs). If a savings and check account married and had a child, it would be an MMA. Like a savings account, your money earns interest. Like a checking account, you can use an MMA to make payments or withdraw cash up to six times a month.

People are drawn to MMAs because they typically pay a higher interest rate than a standard savings account. Funds deposited into an MMA are federally insured.

High-yield savings account

The primary difference between a traditional savings account and a high-yield savings account is that the high-yield savings account offers a higher interest rate. The rate you’ll earn is variable, meaning it will rise and fall depending on the Federal Reserve’s benchmark interest rate. Your money is fully insured.

Part of managing money means determining how much risk you’re willing to take. It also involves determining how much cash you want to keep on hand for emergencies. Each of these five suggestions offers a place to store that cash until it is needed.

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This is something every borrower needs to understand. 

Most people borrow money at some point in the course of their lives. This could be a mortgage loan to buy a house, a car loan to purchase a vehicle, or a personal loan to fund a big purchase.

Sometimes, it’s easy to get approved for a personal loan. But, in other situations, few lenders may be willing to offer the desired funds and borrowers may be offered a loan only with a very high interest rate — if they are offered one at all.

A lot of factors determine how easy it is to borrow, but ironically, it’s generally a lot easier to get a loan when you don’t really need one. Here’s why.

Borrowing is easier for people who already have a lot of money

There’s a simple reason why it’s easier to get a loan when you don’t really need one.

If you’re already in a very good financial position, lenders won’t be worried about whether you have the ability to make payments. But if you are in dire need of cash and desperate to borrow, this can raise major red flags and prompt lenders not to give you the money you require.

When you apply for a loan, lenders take a look at many factors. Depending on the loan type, this could include reviewing your income, your bank account statements and other assets, and your credit score.

If you have plenty of money in the bank to easily pay off most of the loan balance or if you make a good income and the monthly payments are just going to be a small fraction of your earnings, then lenders feel good about giving you the loan. The risk of default is really low.

Of course, you may be wondering why someone would borrow in this situation. But people do it all the time. Those who are well off often take out mortgage loans and even car loans and business or personal loans because they don’t want to tie up their cash. They could afford to get by without borrowing, but they choose to borrow strategically, and lenders let them do this because they know they’ll earn interest and get their principal balance repaid.

Someone who really needs money, on the other hand, may not have a stable, generous income or a big bank account balance. Since their financial situation is precarious, lenders will not want to give them a loan because there’s a high risk of missed payments.

What should you do if you really need to borrow?

While there’s a good reason lenders are more likely to loan money to people who don’t need it, it’s an unfortunate situation for those who find themselves in dire need of funds with no easy way to get an affordable loan.

If you find yourself in this situation, the best option you have is to shop around very carefully for a lender. Don’t fall victim to payday loan providers or other financial service providers who target desperate people with high interest rates.

Look for credit unions or small banks that may be more willing to work with you. And, if possible, consider a co-signer who can vouch for you. Just be sure you can definitely repay the loan; otherwise, your co-signer could be on the hook for it.

Ideally, you can try to save up an emergency fund over time so you don’t find yourself forced to borrow. But it takes time to do that. If you need money in the meantime, you’ll need to be careful which lender you trust to avoid making your financial situation worse in the long run.

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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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