Money Management

Using payment apps is a good idea — but don’t store your cash there. 

Payment apps make it easier to pay others and get paid yourself. Whether splitting a meal and drinks with a friend, reimbursing your roommate, or sending your sister money for her birthday, these apps make it simple to give someone money without the need to carry around cash. If you use these payment services, it’s best not to keep money sitting in your accounts. Here’s why you shouldn’t keep your cash in payment apps like Venmo and instead should keep it in the bank.

Payment apps offer convenience

Payments apps like Venmo, Zelle, and Cash App can add convenience to your life. You can quickly send money to family and friends in minutes. There’s no need to stop at an ATM for cash or write a check. It’s also easier for others to pay you. Plus, users can exchange money easily while on the go — whether they live locally or all the way across the country.

If you’re a fan of technology and use apps regularly, you likely use services like this. But make sure you don’t get into the habit of keeping money in your wallet or account balance. Here are a few reasons why storing cash in payment apps like Venmo is a bad money move.

1. Payment app funds aren’t FDIC insured

When you put your money in the bank, you can feel confident knowing that the Federal Deposit Insurance Corporation (FDIC) has your back. When you use an FDIC-insured bank account, up to $250,000 of your money is protected.

That means if something happens to the bank, the FDIC will reimburse you for any losses up to $250,000. The good news is most reputable banks offer FDIC-insured bank accounts — so you can better protect your money by opening an account with this insurance.

Since payment apps don’t offer FDIC insurance, you won’t have that same level of protection. If your payment app went under while you had funds sitting in the account, you might lose that money. Depending on your account balance at the time, that could be a pricey mistake.

2. It takes time to transfer money to your bank

You’ll have to be patient if you need the money sitting in your Venmo account to cover a bill because transferring money from a payment app to your bank can take time. You’ll be at a disadvantage if you have an urgent expense and need to access your funds quickly.

Many payment apps allow you to transfer your funds quickly if necessary, but they charge fees for this privilege. For example, Venmo charges a 1.75% fee for faster bank account or debit card transfers. Let’s imagine you have $600 sitting in your Venmo account and do an instant bank transfer. You’ll pay $10.50 in fees. Luckily, you can avoid getting into this kind of situation.

3. Your money won’t earn interest

When you put your money in a savings account that earns interest, you can earn free money. Every extra cent earned in interest can make a difference in today’s expensive world. However, you won’t earn interest when you store your cash in payment apps.

Because of this, it’s best to transfer extra funds from these accounts into an interest-earning savings account. Check out our best high-yield savings accounts list if you’re looking for a way to boost your earnings. Current interest rates are competitive, so don’t miss out.

Keep your extra money in the bank, not payment apps

If payment apps like Venmo and PayPal make your life easier, you should continue to use them. But it’s essential to ensure you’re not storing extra cash in these accounts. Instead, move your extra money to your bank account. By doing this, you can better protect your funds, have easy and quick access to your money, and earn interest.

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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.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal. The Motley Fool has a disclosure policy.

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Get ready to breathe a little easier next year. 

Insulin is a life-saving medication for people with diabetes, but unfortunately, many drug manufacturers don’t offer it cheaply. This is true even for seniors with Medicare Part D plans that help with prescription drug costs. The average senior spent about $54 per month on insulin in 2020, according to the Kaiser Family Foundation, and some paid as much as $116 per month. That amounts to $1,392 per year on insulin alone.

Fortunately for seniors, insulin costs are going to look a lot different in 2023 thanks to a new Medicare change. Here’s what you need to know.

New caps on insulin costs kick in Jan. 1

In an effort to make healthcare more affordable for seniors, Medicare will cap insulin prices at $35 for a 30-day supply beginning on Jan. 1, 2023. Those who get a 60- or 90-day supply could pay up to $70 or $105 per prescription, but their costs should still average out to no more than $35 per month.

One important caveat is that this cap only applies to insulin covered under Medicare Part D plans. It does not apply to insulin used in a traditional insulin pump, which is covered under Medicare Part B. If you don’t have a Part D plan, you’ll pay 20% of the Medicare-approved amount for the pump until you meet the deductible and 100% of the cost for all insulin-related supplies.

But there’s good news on that front too. The government will impose caps on insulin used in traditional insulin pumps beginning on July 1, 2023.

Other ways to keep your out-of-pocket healthcare costs down

This new rule will be a big help to seniors used to paying even more for their insulin. But with inflation making other medical care more expensive, there’s still no guarantee of saving money on healthcare in 2023.

The Medicare open enrollment period has closed for 2023, but ideally, you took the time to compare some plans to see whether there was a more affordable option for you than your current plan. If not, make a plan to do so next year (or sooner if you qualify for a special enrollment period). You may be eligible for one of these if you had other insurance coverage that you lost. For example, if you retire and lose your employer-sponsored health insurance, you would qualify for a special enrollment period for Medicare.

You could also look into a Medicare supplement plan, also known as a Medigap plan. It’s possible that some insurers may be willing to offer you a policy outside of the open enrollment period if you meet their medical underwriting requirements, but this isn’t a guarantee. If you are able to get a Medigap policy, it may provide you with extra help paying for things that original Medicare doesn’t. But it will also have costs of its own.

If you wind up with large medical bills, see if you can work with the provider to set up a payment plan so you don’t have to pay them all at once. Often, it’s possible to pay your balance off over time without incurring interest.

It’s not always possible to predict or even control your healthcare expenses. It’d be nice to see even more price caps on prescription drugs and services for seniors, but for the time being, you have to rely primarily on what you can do yourself to keep your costs as low as possible.

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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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Here’s a holiday conversation starter guaranteed to heat up the room. 

Diners wend their way to reserved tables. The server approaches yours and delivers your food. As you settle in for a hot meal, you notice something offensive on your plate. A closer look reveals the object to be a long human hair.

Gross. It’s certainly not yours. The food is probably fine, but eating the dish just feels wrong.

You flag the server down, and they offer to replace the meal. You accept, but you’re forced to wait for round two. Your family chows down without you. Question is, do you tip the server? If so, how much?

Tips for best service

We took a look at the average American’s monthly expenses. Of the nearly $700 spent monthly on food, we spend $253 on eating out at restaurants and takeout. I probably spend at least double that — yummy food is a weakness of mine.

Americans tip big. The average American tips 20% for flawless service, according to data from Discover Credit. That number can dip to as low as 6% if the tipper discovers a hair in their food or — heaven forbid — the server is rude.

The average American spends around $50 per month, or $600 per year, on restaurant tips for excellent service. The number shrinks to $30 for those who mostly order food for delivery.

But there’s a fair amount of situations where service isn’t perfect. Everything from slow drink refills to failing to replace a meal can trigger irritation amongst diners, which leads to lower tips.

Tips for the worst service

Messed-up drinks. A clueless server. Slow service at an empty restaurant. A bad experience makes for lower tips. It’s a game of money limbo — how low can you go without feeling bad?

Here are some of the worst things a server can do to diners, according to Discover:

Be rude (average 7% tip)Don’t replace food after a hair is found in the meal (average 11% tip)Don’t speed up service after being asked (average 11% tip)

A server who commits any of these sins should expect to find themselves grimacing at the business end of a lower tip. Women and current/former servers tend to be more forgiving of mistakes than men and non-service workers.

Hard-working servers deserve to earn income for their service — that’s why folks tip. Thankfully, it’s possible to be a generous tipper and save on monthly tipping expenses.

Stay generous, save money

Tips cost money. No amount of money magic will turn your generosity into pure income. That sacrifice is part of what makes tipping such a gratifying experience. But you can lighten the load in small ways.

Here are a few ways to stay generous and save:

Try visiting a restaurant during happy hour. Food is cheaper, and your usual tip will look huge.Be courteous. A happy server will replace your messed-up food, no charge.Pay with a card that gives 5% cash back on dining out. The best dining and restaurant credit cards can refund you a quarter of your tip, or more.

From the hair salon to the mechanic, folks tip. How much should you tip remains a contentious question, especially among restaurant-goers. Nobody likes to find hair in their salami sandwich. It’s still a good idea to stay generous and save where you can.

Oh, and pat yourself on the back — you now have a nifty conversational firework up your sleeve. Deploy with caution.

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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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Some of the most important lessons in life are those shared by our parents. 

If you want your children to grow up knowing about money, much of what they learn will be up to you. Whether you have an easy, compliant kid or a strong-willed child, the best approach to teaching them tends to be in bite-size pieces. One small lesson, reinforced in fun and positive ways, may just stay with your child throughout life.

If you’re not sure where to get started, we’ve developed this easy-to-follow 12-month guide.

January: Money truly does not grow on trees

If you ever rolled your eyes after a parent or grandparent reminded you that money does not grow on trees, you’re not alone. Most of us heard that little nugget of wisdom a time or two.

One way to begin teaching your children that money does not grow on trees is to talk about how your family gets money to pay bills and do the fun things you do.

You can reinforce this idea by offering your child a small allowance in return for completing specific chores. If they don’t complete the chores, they don’t earn an allowance. What those chores are and how much the allowance is should be based on the age and capabilities of the child.

February: A budget as GPS

If you’re comfortable, show your child the monthly budget you use to keep your household running smoothly. You don’t have to go into the details, but explain that a budget is like GPS, reminding you of where you want to go.

Help your child create a budget of their own. Let’s say the most your child can earn in a given month for doing their chores is $10. Ask them to break that $10 down into how they’d like to spend it. Assure them that their budget may change over time as they earn more money or their priorities change.

March: The difference between wants and needs

This is a tough one, even for adults. One way to introduce the idea of wants versus needs is to create a list. If you have a 7-year-old, the list may look something like this:

School clothesNew fidget toyVideo gameLunch moneyShoesSoccer ball

Include as many things as you can think of, and be sure to include the types of toys and activities your child enjoys. Make a game of it by asking your child to go through the list and tell you which are needs and which are wants.

April: How money grows

Once your child has earned an allowance, tell them you’ll hold their money for as long as they would like. However, for every month they leave it with you, you’ll pay them 2% interest. If they give you $10 to hold, they’ll earn $0.20 the first month. And because they now have $10.20, they’ll earn $0.21 the following month (we’re round up here).

The point is to help them understand that, like you, some bank accounts pay interest. The longer the child leaves the money on deposit, the more interest they’ll earn. Further, the interest they earn will earn interest of its own.

May: How credit works

The flip side of teaching a child how money grows is to help them understand how credit works. Let them know that if they want to spend money they haven’t earned, they can ask you for a loan. However, it’s going to come at a price.

Explain that they’re going to have to repay the money plus interest. You’ll want to set a strict limit on how much they can borrow so they don’t get in over their heads.

June: The world is an expensive place

Any time you’re in a store with your child this month or thumbing through a catalog, challenge them to guess how much an item cost. If they’re within $1 of the correct price, they get one point. If they’re within $2, they get two points, and so on.

The goal is to see who has the lowest score at the end of the game.

July: Waiting pays off

Ask your child if there’s anything they’d like to buy but don’t have the money for. If they come up with anything within reason, allow them to save their money in the Bank of Mom or Dad. Since you introduced the concept of compound interest in April, set an interest rate you’ll pay each month that the money stays on deposit.

The challenge for the child is waiting until they’ve earned enough to buy the item they want. Whether they make it or not, it’s a great way to teach delayed gratification.

August: Money can be lost

Introduce your child to the stock market by playing an online game like The Stock Market Game. It gives your child a set amount of pretend money to invest. With your help, your child can choose stocks they believe are a “sure thing,” and find out what happens when a stock loses value.

September: Money gives you options

It’s easy to believe that money makes us happy. What money actually does is give us options. Each time your child wants to do something with their allowance, whether it’s spending, saving, or giving it away, remind them that the money they’ve earned gives them the option to make those important decisions.

October: Start a business

If your child is interested in earning money, allow them to use their allowance to open a lemonade stand, buy and resale chocolate at a mark-up, or any other endeavor that will be safe and instructional.

November: It’s okay to ask for help

If you have a financial planner, tell your child about that person and what they offer. Then, encourage them to come to you with any questions they may have about money. It’s okay to look up answers if you don’t know that answer right off the bat.

December: Giving is good for the soul

Studies show that some of the happiest people on the planet are those who are generous. Encourage your child to spend this month thinking of others and the role they might play in making someone else’s holiday season a little brighter.

The important thing to remember is that it’s the little lessons you teach throughout the year that are most likely to stick with your child.

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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.Dana George 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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If you’re tired of worrying about economic doom, you’re not alone. 

I don’t know about you, but I’ll remember 2022 for its skyrocketing cost of living and near constant warnings of economic doom. As we enter 2023, there are signs that inflation may be slowing and the jury’s out on whether the U.S. economy will enter a recession. While I am interested in what the experts think, I’ve stopped paying attention to their predictions. Here are two reasons why.

1. The experts don’t agree

Even among the experts, there’s very little consensus about what might happen next year and how bad it might be. The economic impact of the pandemic and associated lockdowns and stimulus packages is unprecedented. A lot of the indicators economists normally use are topsy-turvy and as a result, there’s a lot of uncertainty about what the year will bring.

Some senior figures in banking and business think a recession is inevitable. Others worry we’ll hit a period of stagflation — a double whammy of economic stagnation and high inflation. On the other extreme, still others claim America can tame inflation and avoid a recession completely. Given the predictions vary from OK to bad to very bad, it’s hard to know who to trust.

2. I’m as ready as I can be

The second reason I’m ignoring economic predictions is that I’ve done what I can to prepare and I don’t see the point in worrying about things I can’t control. Admittedly, I’m a person who’s inclined to lie awake at 3 a.m. thinking about the ways in which everything could go wrong. I’m also a freelancer, which means I have less job security than many workers with full-time jobs.

The following things help me sleep better at night.

My emergency fund is in good shape

One of my financial goals for 2022 was to beef up my emergency fund. I’d had to dip into it to cover several unexpected expenses at the tail end of 2021, so building back those savings was a priority. Right now, I have about six months’ worth of living expenses in a savings account, and could cut my living expenses to make that money go further if needed.

I don’t owe any money

I am fortunate not to owe any money. That means I don’t have to factor debt payments into my monthly outgoings, and I won’t have to pay higher rates of interest on any loans or credit card debt. Not carrying debt made it easier to rebuild my emergency fund this year and frees up cash for other things, such as investing for the future.

I have a career plan

In the worst case scenario that I lose my main source of income, I’ve already mapped out where I might look for other jobs. Another step I took this year was to update my LinkedIn profile and my resume. If you’re ready to go and know where you might apply, it’s much easier to snap into action.

Preparing for a recession

You may be reading this and thinking, “Good for you — I’m not ready for a recession and can’t see how to get there.” Ten years ago, I would have thought the same. I had spent almost all my money and energy propping up a failing business and was barely able to cover the rent. I drastically cut my spending, took on every freelance job that was offered to me, and in time was able to rebuild my finances. It won’t happen overnight, but you can do it.

If you need extra cash to pay down debt or build up your savings, start by making a budget. You can use a budgeting app or sit down with your bank statements and a piece of paper. Look at where your money goes each month and see if there are any ways you can shave off a few dollars. Every dollar you save is money you can use to strengthen your financial foundations.

You may feel like you’ve squeezed every cent you can out of your budget and still don’t have enough cash. If this is the case, perhaps there are ways you can earn some extra money. You might take on a side hustle or ask for extra hours at work. Or see if you have unwanted items you can sell online. The job market is still relatively strong, so it may be easier to pick up extra work now than later on this year.

Bottom line

One of the challenges in preparing for a possible recession is that many of the moves you can make require extra cash. That’s something a lot of households have struggled to find this year as high inflation has put a big strain on people’s bank accounts.

It isn’t easy, but many Americans can strengthen their financial positions, even if it means making short-term sacrifices. Ignoring economic predictions doesn’t mean burying your head in the sand and ignoring the potential for economic difficulties in 2023. Instead, try to position yourself so you can handle whatever the year throws at you.

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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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If you’re a Target loyalist, don’t miss out on shopping strategies that help you save money. 

If you enjoy shopping at Target, you likely spend a significant amount of money there throughout the year. There are some steps you can take to reduce your spending while shopping at this popular retailer. With the right moves, you can shop at Target even if you’re on a strict budget. Here are some of the best tricks that can help you save money at Target.

1. Earn cash back with the Target Circle Rewards program

The Target Circle Rewards program is free to join. This loyalty program rewards shoppers for spending money at Target. You’ll earn 1% back in rewards on eligible purchases every time you shop at Target. You can redeem your cash back earnings to get a discount on future orders. You may also want to use rewards credit cards to earn additional cash back.

2. Clip money-saving offers in the Target mobile app

If you’re not using the Target mobile app, you’re missing out on savings. The app features clippable Target Circle offers that allow you to save money on purchases. You’ll save money when you clip an offer and make an eligible purchase. It’s a simple way to get a great deal.

3. Don’t forget to bring your reusable bags

Reusable shopping bags help reduce plastic waste. When you use these bags, you can do your part for our Earth while also benefiting financially. Target will give you a $0.05 discount for each reusable bag you bring. You won’t get rich off this discount, but it could help you keep more money in your bank account.

4. Take advantage of the price match guarantee

Target has a price match guarantee, which could help you score a discount on your next order. The retailer will match its own online and in-store prices. Additionally, if you find an identical item for less at select online retailers, Target will honor the lower price and give you back the difference. Price matches must be done within 14 days of purchase.

It’s worth noting that the retailer has a more generous price match guarantee during the holiday season. If you buy an item and Target reduces the price (online or in-store), you can request a price match as long as you do so within the holiday price match timeline.

5. Scan item barcodes while shopping to get the best price

You can use the Target website or mobile app to research deals as you outline your shopping list. But there is another easy way to get a great deal on your next Target run. The retailer has a barcode scanner located within its mobile app.

You can scan product barcodes as you peruse the aisles. When you do this, you’ll be shown the price of each product. Sometimes in-app and online product prices are lower than those listed in-store. You may find out that the item is on sale and can request a price match at checkout.

This tool will also tell you if there are any offers you can clip to save even more. Once you get into the habit of using this feature, you’ll put a stop to overpaying for your purchases.

Every bit of money saved makes a difference

It’s no secret that prices are on the rise, no matter where you shop. You can reduce your spending by using money-saving strategies like the ones mentioned above. As you continue to save money in your daily life, you’ll be closer to reaching your personal finance goals.

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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.Natasha Gabrielle 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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