Money Management

Some financial decisions can have a massive long-term impact. Find out which money moves have paid off the most for me. [[{“value”:”

Some people like to closely track every aspect of their finances. They check account balances often, and they’re always looking for improvements they can make, no matter how small.

I’m not one of those people. I don’t want to spend too much time managing money, and I definitely don’t want to agonize over every small financial decision just to add a bit more to my savings account.

What has worked for me is focusing on the decisions that have the biggest impact. Looking back, there are three money moves that have each been worth over $100,000 for me.

1. Getting into the habit of investing

I started investing nearly 10 years ago, but I made a common mistake: I was inconsistent about it. When I happened to have extra money, I’d deposit it to my brokerage account. Then, I’d spend way too long trying to find the perfect place to put it.

People who are inconsistent about investing tend to invest far less money overall. And if you leave money sitting around your account while you wait for the right investment, you miss out on any gains the stock market makes. Overall, the stock market (as measured by the S&P 500 index) has a long-term return of about 10% per year.

When I was 28, I made an important change. I told myself I’d invest at least $1,000 per month. To make it easy, I decided I’d put that in an index fund that tracks the entire stock market. This got me into the habit of investing, and every year, my portfolio has gotten significantly larger.

Looking for a brokerage so you can start investing? I use Interactive Brokers because it’s feature-packed and low on fees. Click here to learn more about it and open an account today.

2. Being proactive about raising my income

Lots of financial advice revolves around budgeting and carefully managing your spending. There’s nothing wrong with this, but in my opinion, your income is a much more important piece of the puzzle.

You can only cut spending so much before it starts affecting your quality of life. If you’re able to raise your income, you’ll have more money to save, invest, and spend on things you enjoy.

I’ve done my best to maximize my earning potential. Since I’m a freelancer, I have more control over my income than someone with a W-2 job. But whether you have a business or a full-time job, there are plenty of methods you can use to increase your earnings. You could:

Search for higher-paying clients or jobs as part of your weekly work routine.Invest in yourself by going through training programs to improve your skill set.Be easy to work with. Soft skills can make a big difference in who gets new job opportunities and promotions.Ask your manager what steps you need to take to get a raise.

3. Avoiding large expenses that would affect my financial goals

As I mentioned earlier, I don’t like to micromanage my spending. The last thing I want to do is track where every dollar is going. Instead, I just avoid overspending on big expenses or anything I’ll be paying on a monthly basis. Here are the most common examples that many people overspend on:

Mortgage or rentCar paymentDining and entertainment

For example, I make sure my total housing costs are no more than 25% of my income. That’s just my personal rule — some financial advice recommends up to 28% or 30%. I like to stay a little lower to play it safe, and so I can invest more.

When you have a big housing payment, an expensive car, and you go out to eat all the time, that can add up to thousands of dollars every month. But if you’re careful about how much you spend in those areas, your overall spending will likely be fine, even if you aren’t closely tracking everything else.

These are fairly simple money moves, at least in theory. In practice, they can be challenging, especially in the beginning. But they’ve all been well worth it. They took me from having almost nothing saved to being financially stable and seeing my net worth go up every year.

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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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Is there such a thing as putting too much cash into a CD? Read on to find out. [[{“value”:”

If you’ve been paying attention to savings account and CD rates, you may have noticed that they’re lower now than they were during the summer. That’s because the Federal Reserve has started cutting its benchmark interest rate in response to cooling inflation, and when this happens, banks also lower the rates they offer consumers. So if you’re interested in opening a CD, it’s a good idea to do it now.

That said, you need to be careful about putting money into a CD, because most of them will hit you with a steep penalty if you take your cash out early. So you don’t want to go overboard on funding a CD.

But let’s say you have $25,000 on hand to put into a CD before rates fall even more. Should you go all in? Or is $25,000 too much cash to have in a CD?

When going big on a CD makes sense

Some CDs come with a minimum deposit, but it’s pretty uncommon for that minimum to be $25,000. That’s not an attainable sum for a lot of people. While you might find a CD with a $5,000 minimum, $25,000 is a different story.

It could make sense to put $25,000 into a CD if that money is earmarked for a relatively short-term goal. Say you want to buy a house in 2026 and that $25,000 is for your down payment. Putting it into a 12-month CD right now isn’t a bad choice. Click here for a list of the best CD rates today.

The reason it pays to put that much money into a CD in this situation is because your goal isn’t very far off, which makes investing a risky prospect. But if your money is for a goal that’s about seven years out or longer, then investing makes more sense than limiting yourself to a CD.

A more efficient way to grow your wealth

Even though some CDs are still paying close to 5% today, the S&P 500’s average annual return over the past 50 years is 10%. And that accounts for good years as well as bad ones.

If you put $25,000 into a stock portfolio that gives you a 10% annual return, in 20 years, you’ll have about $168,000. On the other hand, let’s say you put your $25,000 into a 12-month CD that you keep renewing at 4%. In 20 years, you’ll end up with about $55,000.

But that also assumes you can even get 4% from CDs over such a long period, which is unlikely. And even if you do, you’re talking about a $113,000 difference compared to what a stock portfolio might give you.

Don’t leave yourself short on emergency savings

You may decide you’re not ready to invest, and that opening a $25,000 CD makes sense for you. But before you commit, assess your emergency fund and make sure you’re leaving yourself with enough money in a regular savings account to cover at least three months of essential bills.

You don’t want to take the attitude that you can always cash out your CD early if you need money in a pinch, because then you’ll generally face a penalty like we talked about earlier. And that penalty could negate the benefit of opening a CD in the first place.

All told, $25,000 is a lot of money to put into a CD. But that doesn’t mean it’s an unreasonable sum for you. Think about your savings timeline and your emergency fund needs before diving in.

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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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It doesn’t necessarily take a lot of money from you to retire with $1 million. Here’s how it might be more possible than you think. [[{“value”:”

As of 2022, the median retirement savings balance among Americans aged 65 to 74 was $200,000, according to Federal Reserve data. And if you earn a typical salary, you might assume that $200,000 is a reasonable savings goal to aim for yourself.

But you may be surprised at how easy it is to retire with $1 million — even if you’re paid an average wage. To pull that off, though, you’ll need to employ a specific strategy of saving and investing.

What it takes to reach $1 million

Let’s get one thing out of the way. You don’t necessarily need $1 million to retire comfortably. Many people are able to live well on less. And if you earn an average salary, you may be used to living pretty modestly. But there’s also nothing wrong with aiming high — even if you don’t have a six-figure income.

In 2023, the median U.S. household income was $80,610, according to research by The Motley Fool Ascent. If your income is similar and you save 5% of it for retirement, you’re parting with about $4,000 each year, or about $335 per month. Meanwhile, the S&P 500’s average annual return over the past 50 years is 10%.

If you put $335 a month into a retirement plan over 35 years, and your stock investments generate a 10% yearly return, you’re looking at retiring with almost $1.1 million. Yes, really.

And if you’re wondering how that’s possible, it’s because as soon as your money starts making money in the stock market, your gains are reinvested. It’s a concept known as compounded returns.

A simplified way to look at it is this. You might invest $1,000 one year so it grows to be worth $1,100 after 12 months. But then, the next year, you have an extra $100 to invest.

Now, imagine you’re doing this over 35 years. Even though you’re only parting with 5% of your salary, you’re earning enough in stock market gains — and you’re reinvesting those gains — to end up with close to $1.1 million despite only contributing about $140,000 to your retirement plan yourself. Talk about a sweet deal.

Get started as soon as possible

Not only is it possible to retire with $1 million on an average salary, but you can pull that feat off even if you don’t begin saving for your senior years the moment you start working. The above example uses a 35-year savings window.

You could conceivably start saving at age 32 and still meet your goal by age 67, which is a reasonable age to retire. It’s actually full retirement age for Social Security purposes for anyone born in 1960 or later (meaning, the age you get your full benefit without a reduction).

But if you want to meet that goal, don’t delay. Click here for a list of the best individual retirement accounts (IRAs) and set up automatic contributions from your checking account so that money lands there every month without much effort.

From there, it’s a matter of investing in stocks and being patient. And you should know that most IRAs let you invest in S&P 500 ETFs (exchange-traded funds), which allow you to build a diversified portfolio even if you know nothing about picking stocks.

Of course, you may not end up with exactly $1 million by retirement even if you stick to this basic plan. The point, however, is that $1 million in savings is doable even if you earn an average income. So don’t assume that retiring with a ton of wealth isn’t in the cards for 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.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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Many credit cards charge interest rates of 20% or higher. Check out the best strategies to follow and never pay interest on your credit card. [[{“value”:”

Credit cards offer lots of useful features. With the top credit cards, you can find sign-up bonuses worth hundreds of dollars, earn cash back or travel rewards, and get complimentary purchase protections, to name a few common benefits.

The tradeoff is that credit cards also have extremely high interest rates. The average rate on credit cards that are assessed interest is 23.37%, according to Federal Reserve data.

While credit card benefits can save you money, you’ll give all that savings back (and then some) if you’re paying interest. Here are the best strategies to pay zero interest on your credit cards.

1. Use a 0% intro APR card if you need to carry a balance

If you have some big expenses coming up, and you know you’ll need time to pay them off, your best bet is a 0% intro APR card. This type of credit card charges a 0% APR for an introductory period.

You still need to make minimum payments, but you can carry a balance without being charged interest. Keep in mind that the APR will increase to the card’s go-to rate after the introductory period ends. To avoid interest entirely, you’ll need to pay off your balance before that happens.

Looking for one of these cards? Click here to review our curated list of 0% intro APR credit cards, with introductory periods lasting as long as 21 months!

2. Pay in full every month

Credit card companies only charge interest on your purchases when you carry a balance. If you don’t carry a balance, you can use your card without any interest.

To be specific, you’ll need to pay your card’s full statement balance by the due date. It’s a simple strategy, but it’s worth following whenever possible. By paying in full, you get the benefits that your credit card offers without the costly interest charges.

3. Refinance credit card debt with a balance transfer card

Lots of people assume that if they’re already in credit card debt, they’re stuck paying interest on it. That often isn’t the case.

Some credit cards offer a 0% intro APR on balance transfers. After you open one of these cards, you can transfer over your credit card debt. There’s normally a small balance transfer fee, with the standard amount being 3% to 5% of the balance you’re moving to the new card. In exchange for paying that fee, you can use a balance transfer card to pay down your debt interest-free during the introductory period.

If you have a large amount of credit card debt, a balance transfer could save you hundreds or even thousands of dollars. Click here to learn more and check out our favorite balance transfer cards.

4. Figure out how much you can afford to spend with your card

Paying your credit card in full is a smart strategy. But to do that, you need to be careful about how much you spend. It’s easy to overspend with credit cards, especially if your card has a high credit limit.

Don’t use your credit limit as a guide to how much you can spend. Come up with an amount you can afford to pay off every month, based on your income and financial goals.

5. Build an emergency fund to cover surprise expenses

Another reason people overspend on their credit cards is to cover emergency expenses. If you don’t have the money for a car repair or a hospital bill, putting it on a credit card may be your only option.

This is why financial experts always recommend having an emergency fund. The typical recommendation is to save three to six months of living expenses for emergencies. It takes time to build your savings to this level, but if you set aside money every month toward your emergency fund, you’ll be better prepared for those unpleasant surprises.

Credit card interest is expensive, but you can avoid it. If you pay off your card every month, and take advantage of 0% intro APR offers when necessary, you won’t have any pesky interest charges on your bill.

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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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Are the deals at low-cost retailers like Five Below worth your money? Many purchases are a good buy. Find out more about the popular discount retailer. [[{“value”:”

Many people prioritize shopping at discount retailers to honor their budget. Some join warehouse clubs like Costco to score members-only deals, while others get what they need from low-cost retailers like Dollar Tree and Five Below.

If you’re sick of overspending, it may be time to explore new retailers with great deals. Could you keep more money in your checking account by shopping at Five Below? It’s possible. Let’s discuss what you need to know about Five Below before visiting your local store.

Many items are priced at $5 or less

If you’re looking for a retailer with great prices, Five Below is one store to consider. Most items sold here are priced at $5 or less, just like the store’s name suggests. If you’re working with a limited budget, shopping deals like this can help you stretch your dollars further.

But some items sold at Five Below are more expensive, and sold under the label Five Beyond. Keep this in mind as you walk around the store. Always check the price tag before you add something to your cart so you’re not caught off guard at checkout.

However, don’t disregard items priced above $5, as some of these finds can be value-packed. For example, you can get a 10-pound dumbbell from Five Below for $5.95. But you’ll pay $15 or more at retailers like Target for a similar product of the same weight.

One way to maximize your savings is to use a rewards credit card to pay for your purchases. This makes it easy to earn cash back rewards.

Want to maximize your savings by earning credit card rewards? Explore our curated list of the top cash back cards with big rewards.

Five Below has something for every shopper

Another reason many shoppers like Five Below is that it sells so many goods. You can find many products at your local store and at FiveBelow.com. The retailer sells items in various categories, and there are essentials for kids and adults alike.

Some examples of goods sold here include games, toys, candy, stationery, electronics, sports equipment, home decor, clothes, books, beauty and personal care items, and more. There’s truly something for everyone at Five Below. Just browsing the aisles is an experience in itself.

Make sure your Five Below purchase is a true bargain

One thing I’ve noticed about Five Below is that the retailer doesn’t always offer the lowest prices. If you’re looking for the best deal, compare pricing elsewhere. Pay close attention to product package size to ensure you’re not paying more for less at Five Below.

I’ve noticed, for example, that some personal care and toiletry items are more expensive at Five Below than at Dollar Tree. Keep this in mind as you scan the aisles for deals.

I noticed that Dollar Tree sells a five-ounce package of Colgate Cavity Protection Toothpaste for $1.25. But at Five Below, you’ll pay $3.00. You get a six-ounce tube, but it’ll cost you more.

This isn’t to say that all the deals at Five Below are a wash. I’ve seen board games and fitness equipment and gear available for half the price you’d pay at other retailers. One example is the card game, Tacocat Spelled Backwards. Amazon lists the retail price of this game as $14.99, but you buy it for $5 at Five Below.

Just ensure you’re getting good value before you purchase something from Five Below.

Don’t ignore rewards opportunities

Bargain shopping is a great money move, but don’t miss out on the chance to earn rewards. Using a credit card that earns rewards is a great strategy. A flat-rate rewards credit card can be an excellent option for Five Below shoppers, since the store doesn’t fit a bonus category for credit cards, like a gas station or restaurant would. Flat-rate credit cards pay the same across all purchases, such as a flat 2% cash back on everything.

Flat-rate rewards cards make it easy to earn cash back or rewards points in a simplified way. Ready to get rewarded when you shop? Explore our curated list of the top rewards credit cards to find your ideal card.

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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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