Money Management

Earning interest and writing checks: two great things that are even better together. 

Being an adult has its ups and downs. One of the definite ups is having some money saved and getting to decide where you want to put it. You have so many options… you can use it to pay down your debt, invest, or even spend it on something nice for yourself. But hear me out: What if you opened a new bank account instead?

Checking and savings accounts get a lot of press, but did you know there’s an account out there that has features of both? It’s true. Money market accounts (MMAs) offer higher annual percentage yields (APYs) on your money, like a good high-yield savings account, but they also give you easier access to your money, like a checking account. Here’s why it pays to consider putting your money into a money market account, and a few things to look for to ensure you’ve found a good one.

Why should you consider a money market account?

With so many bank accounts out there, you might be wondering what’s so special about MMAs and why they’re worth opening. Money market accounts come with some pretty cool perks.

Check-writing capability

The main feature that MMAs share with your trusty checking account is the ability to write checks on the money kept in one. This is very convenient should you want to pay directly with funds in the account. Some MMAs come with checks automatically, but not all do, so be sure to verify the account you’re considering does if this is a feature you’ll use. It’s also important to note that MMAs are subject to Regulation D, meaning that account holders are limited to six or fewer “convenient” transactions per month. If you exceed that number, you could be subject to fees or even have your MMA turned into a checking account, so tread lightly.

Higher APYs

Access to a higher interest rate is the biggest feature that MMAs share with high-yield savings accounts. A lot of the best savings accounts are now paying higher interest, which is a silver lining of consumer interest rates being up across the board (thanks to the rate hikes implemented by the Federal Reserve in 2022). MMAs have long been known for offering higher annual percentage yields (APYs) on money kept in them, which makes them a great place to keep your emergency fund in particular. You want easy access to that money (in case of emergencies), but ideally, you also want it to grow while it sits.

FDIC insured

While the word “market” may make you think about the stock market, it’s important to note that money market accounts have nothing to do with investment accounts, and as such, the money you keep in one (up to $250,000) is protected by the FDIC. The Federal Deposit Insurance Corporation insures consumer deposits in checking, savings, certificate of deposit (CD), and money market accounts in case of bank failure. How cool!

What to look for

Ready to put that extra money into a money market account? Here are some ways to tell you’ve found a winner.

Reasonable minimum balance requirements

Unlike for checking or most savings accounts, some banks have a minimum balance requirement to open or maintain a money market account. In some cases, you can open the account with a lower amount of money, but you might need to keep it funded to a certain level in order to earn the highest APY. Read the fine print and ensure you can meet this requirement on the account you’re considering.

No monthly fees

Bank fees have long been a part of life, but they don’t have to be. Many of the best banks have done away with monthly maintenance fees altogether (these are charged just for the privilege of keeping your money in the account). So if the bank you’re considering charges a fee on MMAs, see if there are requirements you can meet to avoid it. For example, some banks waive these fees if you have money regularly directly deposited into the account.

A debit card

Not only do MMAs allow you to write checks, some even come with a debit card! Debit cards are incredibly convenient, and can be used as a payment method in addition to being used to withdraw cash from an ATM. If this kind of easy access to your money is important to you, look for an MMA that comes with a debit card.

If you’ve got some money in need of a new home, consider a money market account. You can keep your money safe and earn interest, while also getting easy access to it when you need it. Win win!

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Here’s how to start putting your money to work. 

Will 2023 be the year you start investing? If you’ve yet to dabble in investing, the sooner you’re able to get started, the better.

When you invest money, you get a chance to grow it into a larger sum over time. And investing could be your ticket to meeting big goals, like being able to retire on time and in a comfortable manner. If you’re not sure how to start investing but want to kick off your efforts in the new year, here are some key steps to take.

1. Put yourself on a budget

Once you get on a budget, you’ll have a realistic idea of how much money you have available to invest with. So map out your monthly expenses, from your rent or mortgage payment to your transportation costs to your grocery bills, and see how much you can afford to invest. You don’t want to put so much money into investments that you struggle to pay your essential bills.

2. Decide how you’ll split your money between a brokerage account and retirement plan

Investing in a dedicated retirement plan like a 401(k) or IRA could help you grow your money in a tax-advantaged manner. But these plans are also restrictive in that you’re required to keep your money untouched until age 59 ½ or otherwise risk penalties. Meanwhile, with a regular brokerage account, you can access your funds at any point in time without penalty, but you won’t get any tax breaks in the course of investing.

Think about where you want to invest your money so you’ll know which type of account(s) to open. Dividing your money between a retirement account and a regular brokerage account isn’t a bad idea if you want some tax benefits, but also want some of your assets held in a less-restrictive account.

3. Commit to investing a preset amount of money each month

It’s a good idea to commit to investing a certain amount of money each month based on what your budget allows for — and to put the process on autopilot. Many brokerages and IRAs will allow you to set up automatic transfers so you can stay on track. And if you decide to invest in a 401(k) plan through your job, your contributions will be deducted from your paychecks automatically.

4. Assess your risk tolerance

Before you can start buying assets for your retirement plan or brokerage account, you’ll need to see how much risk you’re willing to take on. If you’re saving for retirement and you’re only in your 20s or 30s, it pays to push yourself to take some added risk because you have time to ride out market downturns. And often, taking on some risk means reaping greater rewards.

But also, you don’t want to take on risk to the point where it causes you to lose sleep. So you’ll need to balance your desire to score high returns with your near-term mental well-being.

If you don’t need to spend your entire paycheck on living expenses, then it pays to invest some of your money — even if it’s a small amount at first. And the sooner you start putting your money to work, the more wealth you’re likely to accumulate in the course of your investing career.

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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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Added Netflix fees could make the streaming service less worthwhile. 

Netflix has long allowed users to share passwords. But this perk is expected to come to an end in 2023.

Although the details aren’t perfectly clear yet, it’s likely Netflix will continue allowing people within the same household to still have one account that they can attach multiple profiles to.

When people access a Netflix account from a different household, though, an additional fee will be assessed to the account holder’s credit card or other saved payment method. This could be as much as $3.00 to $4.00 for additional users, which could make it a lot more expensive for friends and family to take advantage of one shared Netflix account.

When this change goes into effect, you’ll have a big question to answer: Is signing up for Netflix (or paying the extra password sharing fee) really worth it? Ask these questions to decide whether to fork out extra cash for the streaming service.

What will Netflix cost you?

To decide if it’s actually worth signing up for Netflix once you can’t share passwords for free, you’ll have to assess what new costs you’d actually incur.

It’s unclear exactly how Netflix will crack down on multiple households using the same account, but one possibility is that the primary account holder will be charged around $3.00 or $4.00 for outside users. If that’s the case and the primary account holder is willing to just let you cover that cost in exchange for keeping you on their account, then you may not face a huge added monthly expense. If Netflix is worth a couple dollars a month to you, you can just stick to this arrangement.

If you have to sign up for your own plan, though, you’re looking at a few options. You could spend anywhere from $6.99 per month (for a basic plan with ads that you can watch on one supported device at a time and that limits your access to some movies) all the way up to $19.99 a month for a premium subscription. The premium plan lets you watch on up to four devices at a time and that provides an ad-free experience with access to all movies in Ultra HD.

These are bigger expenses to add to your monthly budget and you’ll likely want to think a little more carefully about which plan — if any — you decide to spring for.

How often do you watch it?

Another big factor in whether signing up for your own Netflix account is worth it is how often you actually use the service. If you’re watching Netflix for hours every night and it’s a primary source of entertainment for you, you’ll likely want to keep it even if it adds to your monthly bills.

But if you watch one show a month, or none in some months, then you may be better off just skipping the service.

What other streaming services do you have?

With so many streaming services out there now, the total costs of subscribing to multiple platforms can really add up. Take a look at what else you’re subscribed to and see if you might want to cancel one of them in order to make room in your budget for paying for Netflix.

Answering these questions can help you to decide if signing up for your own Netflix account is worth the money or if the end of password sharing means the end of your viewership.

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

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The quick answer? Probably. 

Many people are familiar with 401(k) plans. After all, most large companies offer them. And even mid-size and small businesses offer the benefit of a 401(k) plan.

You may be less familiar with 403(b) plans. But actually, they’re closely related to 401(k)s. And they offer many of the same perks.

What is a 403(b)?

A 403(b) plan is a retirement account offered by certain types of employers — namely, nonprofits, schools, and other tax-exempt organizations. Like 401(k)s, 403(b) plans are funded through payroll deductions. You sign up to have a certain portion of your earnings allocated to retirement savings, and that money comes out of your paychecks during the year so you don’t have to think about it.

Another similarity between 401(k)s and 403(b)s is that both allow you to save for retirement in a tax-advantaged fashion. Contributions go in tax-free, though there’s a maximum limit you’ll need to stick to that changes from year to year.

Also, just as you’ll face penalties for taking a 401(k) plan withdrawal prior to age 59 1/2, so too will you face penalties for tapping a 403(b) before 59 1/2 (though there are some exceptions, such as becoming disabled).

Additionally, some companies that offer 403(b) plans also offer a Roth savings option, similar to how you might get that choice with a 401(k). If you save in a Roth 403(b), you won’t get a tax break on your contributions, but you will enjoy tax-free withdrawals once you’re retired.

Should you participate in a 403(b)?

Funding a 403(b) makes sense for a few reasons. First, as mentioned earlier, your contribution can serve as a tax break. Put $5,000 into a traditional 403(b), and that’s $5,000 of income the IRS won’t tax you on. Plus, investment gains in your 403(b) get to grow tax-deferred. That’s different from investment gains in a regular brokerage account, which are taxable year after year.

Another reason to contribute to a 403(b)? Many of the companies that offer these plans also match worker contributions to some degree. You might, for instance, have an employer who will match 100% of your first $3,000 in contributions. So in that case, putting in $3,000 from your paychecks means getting an extra $3,000 for free.

Finally, it pays to fund a 403(b) because you’ll need savings for retirement. And so you might as well enjoy tax breaks on the road to building them.

That said, one reason not to contribute to a 403(b) is if you don’t like your employer’s plan. Maybe it charges high fees. Or maybe it limits your investment choices. You may find that you have a lot more options for investing your money if you save for retirement in an IRA account. So that may be a better choice for you.

That said, if you’re going to choose an IRA over a 403(b), at least contribute enough money to your employer’s plan to snag your match in full. Otherwise, you’re just giving up free money for retirement that could be really helpful down the line.

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We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More