Money Management

Where you put your money should depend on your goals. Read on to find out how to decide which account type is right for you. [[{“value”:”

If you’ve got some extra cash you’re trying to decide what to do with, you’ve probably considered either a high-yield savings account or a certificate of deposit (CD).

Both can be great places for your money, but which one you should choose ultimately depends on several factors. Here are two questions you should ask yourself before moving your money into either one.

1. Will I need access to this money in an emergency?

This is the most important question you should ask yourself. Any time you’re deciding what to do with your money, like spend it, save it, invest it, or pay off debt, taking an honest look at your current finances is the first step.

If you don’t have any money in your emergency fund, putting some of it into a savings account is probably your best option. Savings accounts allow you to take your money out whenever you need to, usually without any penalties. In contrast, most CDs will charge you a penalty for withdrawing money before your term is up.

Let’s say you have $2,000 and decide to put it into a 2-year CD with a 4% yield. Then, after six months, your car breaks down, and you have to repair it for $800. Your CD may charge you 180 days of simple interest when you take that $800 out, costing you about $40.

However, if your money is in a savings account, you’ll likely be able to withdraw the $800 without penalty. Many online savings accounts don’t charge a monthly maintenance fee and may only charge an excessive withdrawal fee for too many monthly withdrawals, which can range from $1 to $15 per transaction.

Don’t want to research the best savings accounts yourself? No problem. Click here to see our list of top-rated high-yield savings accounts.

2. Is this account the best way to reach my financial goals?

The second question to ask yourself is whether or not the account you’re about to open will help you reach your financial goals. Asking this helps give you a zoomed-out perspective of your personal finances. If you’ve got some money in your emergency fund, your next steps could be:

Paying off debtPadding your emergency fundEarning a higher yield to avoid the negative effects of inflationBuilding your retirement nest egg

For example, if the goal for your current funds is to earn as much money as possible for retirement, you may want to skip both the savings account and the CD and invest your money in a brokerage account instead.

However, if you’re in retirement or nearing retirement and want some of your money to earn a nearly guaranteed return to combat inflation, then a CD could be a good option. Some CD rates are above 4%, which is easily above the current 12-month inflation rate of 2.4%.

What to pick if you’re unsure

If you’ve asked yourself these questions and are still unsure what to do with some of your extra cash, a simple solution would be to put it into a high-yield savings account.

Many online savings accounts pay yields of 4% to 5% and don’t charge maintenance fees. This makes them an ideal place to let your money sit while you figure out the next best move for your cash.

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You should be cautious about how you use your credit card, but there are times when it makes sense. Read on to find out the best purchases to put on your card. [[{“value”:”

I use my credit card sparingly these days, but some purchases are better put on the card than paid in cash. Whether it’s to receive cash back rewards, earn travel points, or simply get the best seats available for a concert, credit cards can be a better option for big purchases.

Of course, using a credit card is only a good option if you can pay your credit card bills on time without accruing interest. If your finances are in good shape, here’s when it may make sense to put your next expense on a credit card.

1. Business expenses

Experiencing cash flow fluctuations is a normal part of running any business, which makes easy access to credit essential for many small business owners. However, it’s not just convenience that credit cards give small business owners; you’ll also get:

Cash back rewards that can add up quickly for large purchases (like equipment)The ability to build credit as a small business, making it easier to get future loansEasy expense tracking for taxes

What’s more, a credit card protects your business against losses from unauthorized purchases. This can be critical for small business owners who are using their cards for purchases and want the peace of mind of not being on the hook for fraudulent charges.

Related: Looking for the best cash back cards? Click here to see top-rated cash back credit cards.

2. Electronics and appliances

Using your credit card to buy an expensive computer or a large appliance not only gives you lots of cash back rewards — if you’ve got the right card — but it can also help protect your purchase.

Some credit cards will even extend the standard warranty length for appliances and electronics, which could keep more money in your pocket if your new computer decides to give up after the manufacturer’s warranty.

Some cards even offer price protection that can pay you the difference if there’s a price drop. That could come in handy if, let’s say, your new refrigerator goes on sale a few days after you bought it.

3. Booking travel

If you travel even occasionally, using a credit card to book your trip is probably the best option. One of the biggest benefits of using a card is that many of them provide travel insurance, which can help you recoup the cost of a trip if it’s canceled due to illness or weather.

Not having to buy separate travel insurance may be enough of a perk on its own, but if you use a travel credit card, typically offered by airlines or hotels, you can get plenty of other perks, including:

Cash back or general reward pointsAirline and hotel pointsComplimentary airport lounge accessFree checked baggage and priority boardingHotel upgrades like late checkouts, discount rates, or free breakfast

Choosing the best travel credit card doesn’t have to be difficult. Click here to see the best travel credit cards.

4. Event tickets

Some credit cards offer specific entertainment rewards when you buy event tickets, like for concerts or sporting events. In addition to the typical purchase protections, your credit card may give you:

Exclusive access ticketsPresale ticketsPreferred seatingInvitation-only eventsMeet-and-greet events

An added benefit of using your card to buy tickets the next time Hamilton is in town, is that some credit cards will reimburse you if you’re unable to make it to the event because of sickness, accidental injury, or public transportation problems (like the bus breaking down on the way to the show).

While you need to be careful about not overusing your credit card, or using it when you can’t cover the payments, many credit cards give you protections and perks that make using them well worth it for some consumers. Now, if you’ll excuse me, it’s time to see what football ticket perks I might be eligible for.

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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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Costco memberships offer a lot of value. But read on to see if you should stop paying for one this month. [[{“value”:”

If your Costco membership is up for renewal this October, you may be in for an unpleasant surprise. In September, Costco raised the cost of its fees. Now, a Gold Star membership costs $65 a year, while an Executive membership offering 2% cash back on purchases costs $130.

Of course, if you’ve been getting great value from your Costco membership, then it’s worth keeping it, even if it’ll now cost you a bit more. But if these signs apply to you, then it may be a good time to cancel your membership.

1. The crowds are keeping you out of the store

Crowded stores are a big reason not to shop at Costco. But if you’ve stopped going to the store and are doing the bulk of your Costco shopping online, then it may be time to stop paying for a membership.

Although Costco.com offers its share of competitive prices, the real bargains come by purchasing items in stores. When you buy online, there’s always a markup because Costco builds the cost of shipping and handling into its listed prices.

On the positive, if you use the right credit card to check out at Costco.com, you can enjoy a nice amount of savings to make up for those higher costs. Check out this list of credit cards offering great rewards at Costco.

But for the most part, you’ll get more value from your membership by doing your Costco shopping in person. If you can’t stand that idea, you may want to come up with a different solution for stocking your pantry and fridge. You may, for example, find that another warehouse club store is less crowded and therefore more tolerable.

2. You’re shopping way too much

Not going to Costco very often is a good reason to cancel your membership. But so is going there too often.

If you’re the type to pop into Costco on a day when you’re bored or have a light schedule, then you may be putting yourself at risk of impulse spending — and wrecking the budget you’ve set.

Costco has observed an uptick in non-food spending among members. On its most recent earnings call, CFO Gary Millerchip said, “We have seen that as inflation has dissipated, our members have started to spend more on non-food items, which is really encouraging in our mind. And what we’re really pleased about is the widespread nature of that across the different categories that we’ve seen in non-foods.”

There’s nothing wrong with buying items other than groceries at Costco. But you need to be honest with yourself. If you’re going too often and buying things you don’t need, it may be time to take the option off the table.

3. There’s a more convenient way to get your hands on bulk groceries

A Costco membership has numerous benefits. But if there’s an easier way to get access to groceries in bulk, why not cancel and make your life easier?

Perhaps your closest Costco is 30 minutes away from your home, while there’s a Sam’s Club 15 minutes away. And as a bonus, a Sam’s Club membership costs less than a Costco membership, whether you buy the basic one or an upgraded one. You’ll spend just $50 for a regular Sam’s Club membership, or $110 a year for a Plus membership offering 2% back, like Costco’s Executive membership.

Or, you may not need a warehouse club membership at all. If your local supermarket down the road carries the grocery items in bulk that you tend to use the most, you may be able to get the large quantities you need without having to drive out of your way, period.

Plus, don’t forget that Amazon carries a wide range of non-perishable foods. And thanks to the site’s Subscribe & Save program, you can set up automatic deliveries so you don’t have to worry about running out of household staples.

As a bonus, you may be eligible for up to 15% off your scheduled deliveries with Subscribe & Save. Costco doesn’t offer such a service, so you have to actively keep track of the items you use regularly and make sure you have the supply you need.

You shouldn’t cancel your Costco membership this October because renewing it will cost more. If you were getting great value out of your membership before the recent fee hike, then chances are, you’ll continue getting great value in the coming year. But if the above signs apply to you, then it may be time to say goodbye to Costco for good.

Top credit card to use at Costco (and everywhere else!)

We love versatile credit cards that offer huge rewards everywhere, including Costco! This card is a standout among America’s favorite credit cards because it offers perhaps the easiest $200 cash bonus you could ever earn and an unlimited 2% cash rewards on purchases, even when you shop at Costco.

Add on the competitive 0% interest period and it’s no wonder we awarded this card Best No Annual Fee Credit Card.

Click here to read our full review for free and apply before the $200 welcome bonus offer ends!

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 positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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The typical U.S. household has a pretty large net worth. But that doesn’t tell the whole story. Read on to learn more. [[{“value”:”

Blame it on social media, human nature, or whatever you want, but when it comes to sticking our noses in other people’s business, there’s perhaps nothing more intriguing than comparing finances.

Admit it — you’re just itching to know how much money your neighbor with the brand-new sports car makes. And you’re probably wondering how your savings account balance compares to the amount of money your friends have in the bank.

But while it may be somewhat difficult to figure out how wealthy your neighbors or friends are, it’s actually not so difficult to find out the average net worth among U.S. households. That’s because the Federal Reserve collects that data every few years and makes it available to the public. And as of 2022, the average U.S. household’s net worth was a pretty impressive $1,063,700.

But that number definitely doesn’t tell the whole story. So don’t panic if your personal net worth isn’t anywhere close.

What’s net worth, anyway?

If you’re not sure what the term “net worth” actually means, don’t sweat it. It’s just a fancy way of saying what your total assets amount to once your debts are subtracted.

As a very basic example, if you have $40,000 in a savings account and own a home worth $500,000, your total assets equal $540,000. If you owe $300,000 on your mortgage, we subtract that amount to arrive at a net worth of $240,000.

You may be doing some quick calculations and thinking, “Welp, my net worth is nowhere close to $1,063,700.” But actually, most households have a much lower net worth than that.

Now you’re probably wondering how that can be if we just learned that the average household’s net worth is over $1 million. But what you also need to know is that as of 2022, the median net worth among U.S. households was just $192,900.

And in case you slept through Statistics 101, when you have a median that’s way lower than an average, it indicates that the median is the more representative number to go by. In the case of these numbers, what’s happening is that a small percentage of very wealthy households are driving up the average net worth. But it doesn’t mean the typical American has more than $1 million in assets after taking their debts into account.

How to grow your net worth

While you don’t have to stress about growing your net worth to $1,063,700, you should have the goal of seeing your own net worth grow over time. And there are some basic strategies you can use to achieve that goal.

First, aim to keep debts to a minimum — especially high-interest debt, like that held on credit cards. The more you borrow, the more it takes away from your net worth. And also, the more money you spend on interest, the less you get to save and invest.

Next, save and invest. Keep enough money in a savings account so you’re covered for emergency expenses. Then, invest money you’re earmarked for long-term goals, like retirement.

Over the past 50 years, the S&P 500 has rewarded investors with an average annual 10% return, accounting for good years and bad. A $10,000 investment in a fund that tracks the S&P 500 today could be worth around $450,000 in 40 years, assuming that 10% yearly return. Click here for a list of the best brokerage accounts to start your investing journey ASAP.

You should also know that because home values have a tendency to increase over time, buying a home instead of renting could be another efficient way to grow your net worth. But only do this if you actually have the desire to own a home. If not, keep renting, but invest the money you aren’t spending on expenses like maintenance and repairs.

If you’re surprised to see that the average American household’s net worth is $1,063,700, you’re surely not alone. But recognize that this net worth isn’t actually typical. And know that with the right strategy, you might one day join the ranks of people whose net worth tops the $1 million mark.

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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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Owning a vehicle has gotten really expensive in the last few years. Here’s how your car payment stacks up to the typical American’s. [[{“value”:”

Transportation is Americans’ second-largest expense behind only housing. It’s something pretty much everyone deals with, whether you live in a city and take public transportation or you live somewhere suburban or rural and own a vehicle.

There are several expenses everyone must plan for under this category, but the one that’s the hardest on your bank account is likely the monthly car payment. Here’s how yours compares to the national average and what you can do to bring your costs down.

The average American spends 6% of their annual income on their car payment

Car payments vary significantly depending on the make and model of the vehicle and how large of a down payment you can make when you buy the car. The average American spends about $462 per month on vehicle purchases, according to U.S. Bureau of Labor Statistics data. This amounts to an annual expenditure of $5,539.

It accounts for 7% of the average American’s overall spending and 6% of their annual income. That’s up nearly a quarter from last year. And it’s just one of the many expenses vehicle owners face.

Car insurance is the second-largest transportation expense, costing the average American around $1,775 per year. Premium costs depend on the make and model of your vehicle, as well as your location and driving record. The company you work with matters too, which is why shopping around is so critical. Comparing rates from several of the best auto insurers is the easiest way to figure out which company offers you the greatest value.

There are also a host of other, smaller costs associated with owning a car, including:

In addition to being costly, these expenses can also be unpredictable. That makes them difficult to plan for, but there are a few strategies that can help.

How to reduce your transportation expenses

There are several steps that can help you reduce your transportation costs, including:

Weigh the pros and cons of owning a vehicle: Owning a vehicle may be more expensive than it’s worth if you live in a city that has a well-established public transportation system.Limit how often you drive: Combining errands to a single trip and carpooling with others can reduce how much you spend on gas as well as your likelihood of getting into an accident.Don’t ignore routine maintenance: Perform routine maintenance as scheduled to avoid bigger mechanical issues down the road.Raise your auto insurance deductible: Raising the deductible increases out-of-pocket costs in the event of an accident, but it lowers monthly premiums significantly.

Those in the market for a new vehicle may want to take some additional steps, including:

Choose your vehicle carefully: Do some digging into the cost of insuring the car, common mechanical issues it has, and how many miles it gets to the gallon to decide if it’s right for you.Consider buying used: Used vehicles are significantly cheaper than new cars. They’re also more affordable to insure.Make a larger down payment if you can afford it: The more you’re able to pay for your vehicle upfront, the less you’ll have to borrow.Shop around for an auto loan: Check out some of the best auto loan providers and see if you can get pre-approved so you know how much you can spend and what kind of interest rate you might pay.

Those hoping to take out an auto loan soon could also benefit by waiting until 2025. The Federal Reserve is just beginning to lower its benchmark interest rate, and loans will likely be much more affordable next year than they are now.

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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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Home prices are falling in some markets. Read on to find out how it makes homeownership more affordable. [[{“value”:”

Housing prices spiked during the pandemic as remote work became the norm for many companies, low mortgage rates encouraged borrowers to buy homes, and a housing shortage constrained supply amid high demand.

The result is that the median home price now costs 36% more than it did five years ago. But in a few areas of the country, house prices are actually going down. Here’s where home prices are falling and what it means for you.

Where home prices are falling

Housing affordability fell to a 40-year low in 2023, but the situation is turning around in some parts of the country.

Here’s where home prices have been dropping over the past year, according to Realtor.com:

Miami, Florida: Down 11.2%Denver, Colorado: Down 6.3%Seattle, Washington: Down 5.5%Kansas City, Missouri: Down 4.9%Oklahoma City, Oklahoma: Down 4.3%San Jose, California: Down 4%Tampa, Florida: Down 3.2%Austin, Texas: Down3.1%Detroit, Michigan: Down 3%San Antonio, Texas: Down 2.6%Raleigh, North Carolina: Down 2.6%

The recent pullback in the above cities indicates that the housing market is finally moving in a more favorable direction for some buyers.

Looking for the best place to store your down payment cash? Click here to see our top high-yield savings account picks.

How could falling home prices impact you?

Falling prices could make owning a home more affordable, but not just because the home itself costs less. Here’s how lower home prices combine with other factors to make home buying cheaper.

1. You’ll need a smaller down payment and could have more housing options

The first thing you might notice if home prices come down in your area is that you have more options. For example, if the top of your budget is $350,000 and a house you like is $365,000, a 4.1% drop in its price would mean the home is now in your price range.

Not only could this open up more buying options for you, but your down payment might also get cheaper. If you put 20% down for a house that costs $365,000, you’ll pay $73,000. But if that same home is now priced at $350,000, a 20% down payment is $70,000, saving you $3,000 at closing.

2. Lower rates and lower prices could save you hundreds each month

The Federal Reserve recently cut the federal funds rate by a half percentage point, which means mortgage interest rates should begin to slowly come down as well. While the Fed doesn’t set mortgage rates, changes with federal funds rate influences mortgage rates, as does inflation and the strength or weakness of the economy.

Many economists estimate that mortgage rates could continue coming down as the Fed makes additional rate cuts, perhaps dropping to 5.5% by the end of 2025.

Average mortgage rates have fallen from about 7.1% six months ago to the current rate of 6.1%. Falling home prices combined with lower rates means that your mortgage payment could be substantially lower than before. Take a look:

Don’t settle for the first mortgage rate quote you get. Click here to compare mortgage lenders to ensure you get the best rate.

As you can see, a home price that’s 4.1% lower than before, combined with rates down 1% over the past six months, means the same home could be $267 cheaper per month than before.

I’ve been on the sidelines of the housing market over the past few years, biding my time and waiting for a good deal. With some home sales slowly dropping, I’m optimistic that my wait might soon be over. If you’ve been on the sidelines, too, these falling prices and lower interest rates may be just enough to bring you back into the game.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Chris Neiger 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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