Money Management

February will be the last month households can get extra SNAP payments. 

It’s been almost three years since the government introduced additional SNAP food benefits designed to help families through the COVID pandemic. The extra money cushioned families a little against the economic impact of the pandemic and the sky-high inflation that followed. However, that’s about to come to an end. Last week, the government passed legislation that will do away with these emergency payments throughout the country.

The new law means February will be the last month households can get extra SNAP cash, whichever state they are in. While some local authorities already ended the extra SNAP payments, more than half the U.S. states continue to make them. As a result, many families will see a deduction in their food payments in March.

SNAP benefit boost will end in March

SNAP, or the Supplemental Nutrition Assistance Program to give it its full name, is a federal program designed to help low-income families afford healthy food. In much of the country, the maximum monthly benefit for a family of four is $939. Payments are higher in high-cost states like Hawaii and Alaska.

In normal times, a household’s benefit is calculated by making deductions from the maximum based on things like income. But the pandemic provisions let states pay families the full amount, without any deductions. They could also give up to $95 extra to households that already receive the maximum. The Center on Budget and Policy Priorities said the emergency allotments, along with other measures, “played a key part in averting increased hunger.”

The emergency allotments have been managed on a state-by-state basis, and a number of places have already stopped paying the extra money. However, 32 states, including states with high levels of hunger like Louisiana, West Virginia, Oklahoma, and Texas, have continued. February will be the last month they’re able to do so. The Consolidated Appropriations Act, 2023 ends the SNAP benefit boost in all U.S. states by March.

This will have a significant impact on many families who’d come to rely on the extra cash — especially as it’s gone some way to helping cover the soaring costs of rent, utilities, and other essentials. Low-income families have been hardest hit by inflation as they already spend a lot of their cash on necessities and don’t have a lot of space to cut their spending.

Late last year, the Food Research & Action Center warned the end to emergency allotments could cause a “hunger cliff for millions of people.” It added that the “steepest cliff will be for older adults at the minimum benefit level who will have their monthly SNAP benefits fall from $281 to $23.”

How to cope if your emergency payments will end

Unfortunately, the end in emergency SNAP payments will translate to less money in many family’s bank accounts. If you’re worried about how to cope when the extra money stops, take these steps now:

Adjust your food budget: If you’re about to lose a chunk of your SNAP benefits, start by working out how much you’re likely to lose. Let’s say you need to find an extra $50 a month to spend on groceries. How can you cut costs in other areas to make up that cash? Or can you take on extra hours at work to bring in some extra money?Look for ways to make your SNAP money go further: If you live in a state with a Double Up Food Bucks program, use it. You can get twice as much fruit and vegetables when you spend your SNAP dollars at participating farmers markets and stores.Use cash back apps: Look for cash back apps that let you scan your receipts after purchase. Some ask you to activate offers before you go to the store, while others simply pay points based on what you’ve bought.Maximize discounts: Offers come in many shapes and sizes, including in store discounts, coupons, and coupon apps. The trick is to seek out offers on the products you buy regularly, especially more costly items like meat or detergent.Check out other assistance programs: Make sure you’re getting all the financial support you’re entitled to. If you’re pregnant or have young children, perhaps you can get additional help from the Women, Infants, and Children program. If you’re over 60, the Commodity Supplemental Food Program might help. In addition to food support programs, you may also qualify for help paying your utility bills or covering your rent.

Emergency help is available

If you don’t know how to put food on the table right now, you’re not alone. It isn’t always easy to ask for help, but perhaps a food pantry or soup kitchen could mean you or your family don’t go hungry. There are several NGOs such as Feeding America and food pantries out there with networks of hunger-relief projects throughout the country. Call United Way on 2-1-1 to find out about local assistance and any national programs you might qualify for.

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Here’s how to know if you’re an over-saver. 

Given that a lot of personal finance advice stresses the importance of saving money, you’d be forgiven for thinking there’s no such thing as saving too much. Ramit Sethi, the man behind the ​​I Will Teach You To Be Rich book and website, thinks otherwise. He says people can (and do) get so tied up in saving for the future that they miss out on enjoying what they have.

Sethi recently tweeted that it’s possible to over save. He highlighted a conversation with someone who’d got so into the habit of saving that they couldn’t bring themselves to spend anything. “I recently spoke to a guy about his finances,” posted Sethi. “He’s saved and invested consistently, increased his salary, and managed his expenses. His problem: He can’t bring himself to spend his money.”

Is it possible to over save?

Many people struggle to save money, especially in the current inflationary environment where a dollar doesn’t go as far as it used to. But for some people, the habit of saving has become so ingrained that they can’t let go. Put simply, you can have too much of a good thing.

For example, let’s say you have more than nine months’ worth of living expenses in your emergency fund, and are more than on track with your retirement savings. If you’re still nervous about spending money on, say, a vacation with your family or dinner out with a loved one, you may be overdoing it on the savings front.

Perhaps you’re self-employed and often find yourself working late nights and weekends to put extra cash aside. That’s understandable, especially if you like your work or aren’t where you want to be financially. But if a fear of not having enough money in your bank account means you’re always working, you might be heading for burnout rather than financial security. Especially if you’re actually on top of your financial goals.

Knowing where to draw the line

If some of the scenarios above ring a bell with you, congratulations. Being frugal isn’t easy and it takes dedication to prioritize the needs of your future self over the things you might desire today. All the same, if you’ve already overshot your financial goals and are still making sacrifices, it might be time to re-evaluate your habits.

There’s no hard and fast rule about how much you need to save. Everybody has a different idea of what constitutes financial security and how much they will need in retirement. Here are some questions to consider:

How big is your emergency fund?

Many financial experts recommend having three to six months’ worth of living expenses in a savings account as a cushion against the unexpected. With a potential recession looming, some have upped that amount to nine months or even a year. If you’ve got more than that, you may want to cut yourself some slack.

What are your retirement plans?

It isn’t easy to plan for old age, because we don’t know how long we’ll live, what our health situation might be, whether we’ll be able to work for as long as we hope. Some people use the 4% rule, which says you can withdraw 4% of your portfolio’s value in your first year of retirement and adjust it for inflation every year afterwards. The idea is that you’ll be able to live that way for 30 years without running out of money.

It isn’t a hard and fast rule, but it does give you an indication of how much you’ll need to set aside before you retire. Let’s say you have $1 million when you reach retirement age. That means you’d be able to take $40,000 in your first year of retirement and adjust that for inflation in the subsequent years. Sky-high inflation has undermined this idea a little recently. However, if you’re on track to massively overshoot your target amount, you might be able to ease up on your contributions.

Bottom line

Like many things in life, extremes are rarely helpful. There’s no point saving so much today that you don’t have time to build any happy memories. Equally, spending more than you earn will mean you can’t build wealth for the future. The trick is to strike a balance.

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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.Emma Newbery 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.

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Is an Amazon Prime membership worth it for you? 

Amazon Prime is one of the most valuable membership services out there because you get tons of perks in exchange for paying your $14.99 per month or $139 per year. But, it doesn’t necessarily make sense for everyone to be a member.

If you’re not certain whether signing up for Prime makes sense for you or not, watch for these three signs that it might make sense to put a Prime membership on your credit card before your next Amazon purchase.

1. You regularly pay shipping fees (or add items to your cart to get over Amazon’s threshold for free shipping)

Amazon Prime members get free two day shipping. If you are not a Prime member, you may have to pay shipping fees for most items purchased from the site unless you meet a minimum purchase threshold (usually by adding at least $25 worth of items to your cart).

If you regularly find yourself either paying shipping charges or buying extra items just to qualify for free shipping, then you might be better off just paying for Prime service.

2. You want free grocery delivery and you live in a qualifying area

Amazon offers two different options to get groceries delivered directly to your door. You can use Amazon Fresh or you can get groceries delivered from Whole Foods. Prime members can get free delivery through Fresh if they order at least $35 worth of groceries, although Whole Foods delivery costs $9.95 in many cities.

If you can qualify for free grocery delivery through Fresh, this can save you a lot of time and money. You won’t be tempted to make impulse purchases in the store and you won’t spend on the gas to get there. Fresh also has a great selection of items, including many organic brands at good prices.

You can pay for grocery delivery through other services like InstaCart, but if you join Prime you won’t have to shell out extra cash — you can get your food brought to you while also taking advantage of all of the myriad other services that Prime membership has to offer.

3. You want to save money on streaming music and video

With Amazon Prime, you’ll have access to both Prime Video and Prime Music as part of your membership. Paying the monthly fee for Prime can be cheaper than the cost of getting a separate video and music streaming service. For example, if you signed up for Spotify Premium, you’d be paying $9.99 per month just for music alone and would need to tack on a video streaming service costs on top of that.

Amazon’s music service has more than two million songs and is ad-free so it’s good enough for most casual listeners. Prime Video has tons of hits, including blockbuster movies and Amazon original series. When you figure that you get these services along with all of the other things that Amazon has to offer, they can feel like essentially free add-ons that provide lots of entertainment bang for your buck.

If any of these three signs applies to you, you should consider getting a Prime membership ASAP to try out. If you haven’t used the service ever or in a while, you may be eligible for a free trial if you check your account. If you sign up for a paid membership but don’t like it or don’t end up using your benefits, you can always cancel.

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

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Are you getting some of the $14.8 billion the IRS is sending out? 

The American Rescue Plan Act provided $1,400 stimulus checks to most eligible adults and dependents. But it did much more than that. In fact, some provisions of the American Rescue Plan Act are continuing to pay off for taxpayers even today.

On Friday Jan. 6, 2023, the IRS announced that it would be sending around 12 million tax refunds to Americans. These payments will go to individuals who are eligible to get extra money back due to the American Rescue Plan Act. These refunds total around $14.8 billion, and the average amount eligible individuals will receive is $1,232.

Here’s why the IRS is distributing this money — along with some details about who may be eligible for a payment in their bank account.

Why is the IRS sending out more money?

When the American Rescue Plan Act was signed into law by President Joe Biden in March of 2021, one of the key provisions of the COVID-19 relief bill involved excluding some unemployment benefits from taxation.

Specifically, up to $10,200 of unemployment benefits paid out in 2020 would be excluded from taxable income for each spouse if a couple filed their taxes as married filing jointly. This exclusion was applied for those with individuals under $150,000 (with this income limit applied regardless of tax filing status).

Many people had already submitted tax returns before the American Rescue Plan Act was passed. As a result, they had already declared this income and paid taxes on it. The IRS opted to review tax forms submitted prior to the passage of the American Rescue Plan Act to determine who had been affected by this law change.

On Jan. 6, 2023, the IRS indicated it had conducted its review and corrected 14 million returns — which is now resulting in refunds totaling $14.8 billion being sent to 12 million people.

Who is eligible for this money?

Anyone who paid taxes on all of their unemployment compensation earned in 2020 could potentially be entitled to money back from the IRS after this review. The IRS also indicated it made corrections to tax returns for other issues relating to the Earned Income Tax Credit, other COVID-19 stimulus checks, or the American Opportunity Tax Credit.

The IRS found most of these issues and is processing refunds automatically, but it also said in its news release that taxpayers entitled to the funds who didn’t have their returns corrected will need to file an amended 2020 return to get their money. This can be done with online filing software and should be done ASAP to avoid leaving funds on the table.

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It could set you on a solid savings path. 

Is a recession going to batter the U.S. economy in 2023? Wouldn’t we all like to know?

For much of the latter half of 2022, economists seemed convinced that a recession was inevitable. But consumer spending held steady and strong during the last quarter of the year, despite many people pledging to cut back during the holidays because of inflation.

In fact, we’re starting off 2023 in a pretty strong economic place. But that doesn’t mean things won’t take a turn for the worse at some point during the year. And if you’re worried about that happening, there’s one important thing you need to do — boost your savings.

Of course, adding money to savings is easier said than done. And so it’s a good idea to make the process automatic at the start of the year.

Put your savings on autopilot

Most banks allow you to set up an automatic transfer so money leaves your checking account each month and lands in your savings account. If you want to boost your emergency cash reserves, it pays to set up that automatic transfer in January so you can steadily work towards your savings goal, no matter what it happens to be.

A big reason many people struggle to save money is that they collect a paycheck, spend it, and figure they’ll sock away however much is left over at the end of the month. But what happens if, month after month, there’s just nothing left over?

A better bet is to send money into your savings account automatically at the start of the month, before your paycheck gets whittled down. If you normally bring home $3,000 a month and $250 of that lands in your savings account before you get a chance to touch it, you’ll most likely learn to make do with $2,750 in spending money. But you may need to “force” yourself to save, so to speak, via that automatic transfer to be successful.

How much emergency savings do you need?

The big fear around recessions is job loss. And if a recession strikes this year, we could see unemployment levels rise. The more money you have in savings, the more protected you’ll be in case your job winds up on the chopping block.

Now at a minimum, you should aim for enough savings to pay for three months of essential bills. But the more replacement income you’re able to sock away, the better protected you’ll be.

The scary thing about a recession is that our next one could be short-lived, or it could drag on. And so three months’ worth of living expenses in savings could disappear rather quickly if you’re forced out of a job and can’t find a new one for an extended period of time.

Of course, there’s no guarantee a recession will hit this year. But at some point, economic conditions are likely to decline. And so the more prepared you are, the less sleep you’re apt to lose over the idea of a recession. Putting your savings on autopilot at the start of the year could leave you with a lot more financial protection by the end of it.

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Even people who write about personal finance aren’t immune to costly errors. 

2022 was full of wins for my bank account. I got out of debt, increased my income, and started saving money to buy a house in the next few years. I settled into my new career as a writer and editor, and finally felt as if I’d made the right choice to change careers in 2021. Unfortunately, not every move I made was a winner.

I lost $50 to account maintenance fees in 2022. While this is a pretty small amount of money, I’m kicking myself a little, because as a personal finance writer, I really should have fixed this problem sooner than I did. Plus, it was such an easy fix. Thankfully, I have resolved it and will no longer be charged that fee. Here’s what happened.

How I fell prey

I had a lot to juggle in 2022, between taking on new professional duties and working a lot of extra hours to achieve debt payoff. As so much of my attention was on work, I only vaguely registered that the savings account I opened several years ago was suddenly charging me a $5 monthly maintenance fee.

I originally opened the account (which is linked to the checking account I have with the big national bank I’ve been with since college) so I could have some money in it for overdraft protection. This was back when I still lived paycheck to paycheck and didn’t really make enough to save much money, so at the time, I set up the account to just automatically take $25 per month from the linked checking account. Unless I was saving for a specific goal (like moving; I do that often), I just kept a few hundred dollars in that account and dipped into it occasionally to cover shortfalls.

In early 2022, its balance was about $100 after I made a withdrawal, and I stopped paying much attention to it. I opened a high-yield savings account with an online-only bank, so I would have a place to keep money for freelance taxes and for my eventual home purchase. As a result, I hadn’t bothered adding anything to the old savings account beyond that $25 automatic transfer. However, the bank noticed I was neglecting it, and started charging me $5 per month — for the 10 months it took me to fix the problem.

This is the part of the story where I hang my head in shame, because when I finally flipped back through my bank statements and saw that I’d lost $50 to those fees, I discovered that the minimum balance required to avoid that fee was only $300. Now, $300 is a decent chunk of money, but I could easily have funded my account back in the spring, kept it at $300, and not been charged even once. Live and learn!

I transferred money to the account and will keep it at $300 moving forward. Since it still collects $25 per month from my checking, I will be moving any money above $300 to my other savings account, where it will earn much more interest. I like having this account linked to my main checking account, however, as it’s nice to have overdraft protection.

How can you avoid bank fees?

Thankfully, there are a few ways you can avoid my mistake and skip paying account maintenance fees:

Read the fine print: If I had bothered to read the details on my account sooner, I would have known that leaving the account under $300 would result in fees. Don’t be like me! Read the fine print on your account so you know the requirements.Open an account without fees: Some savings accounts come without any fees at all. These are often geared toward seniors or students, so if you’re a standard adult like I am, you may not qualify for one. It pays to ask, though.Switch banks: Some banks, especially online-only banks, have done away with account maintenance fees altogether. Do your research to find one before you switch banks.

Getting better with money is a journey, not a destination, and while I feel great about a lot of the moves I made in 2022, this mistake is not one I’m proud of. That said, I’m glad it only cost me $50 overall, and the problem was easy to fix. If you’re paying an account maintenance fee every month, I recommend taking the above steps to keep your money from leaking away.

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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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