Money Management

Everyone needs emergency savings in case of unexpected financial issues. Check out recent data on how Americans are doing with their emergency funds. [[{“value”:”

Emergency funds are one topic where financial experts are largely in agreement. The traditional advice is to have enough emergency savings to cover three to six months of living expenses. It’s also recommended to keep that money in a high-yield savings account, so you can earn as much interest as possible on it.

Saving that much money is no small feat. So, how many Americans have done it? Thanks to research by the Federal Reserve, we have the answer.

Here’s how many Americans have enough in their emergency funds

Over half (54%) of Americans have at least three months of emergency savings, according to data collected by the Federal Reserve in 2023. That’s unchanged from 2022, but a decrease from 2021, when 59% of Americans had three or more months of emergency savings.

Still, it’s great news that so many people have built their emergency funds. When you have money saved for emergencies, you don’t need to go into debt if you have a health issue, need to pay for home repairs, or run into any other unexpected bills. An emergency fund is good for your finances and your peace of mind.

How to build your emergency savings

If your emergency fund isn’t where you’d like to be, don’t feel bad. After all, 46% of Americans haven’t saved three months of expenses, so it’s a common issue. Here’s what you can do to increase your emergency savings.

Set up a high-yield savings account as your emergency fund

If you haven’t already, open a high-yield savings account. Only 34% of Americans have one, according to research by The Motley Fool Ascent. Most are leaving a lot of money on the table, since high-yield accounts currently offer rates of 4% to 5% or more.

Make sure to set up a sub-account for your emergency fund. Some banks call these sub-accounts “savings buckets.” This keeps your emergency fund separate from the rest of your savings, which is important. It’s easier to track how much you have in your emergency savings, and it prevents you from mistakenly using this money for non-emergencies.

Figure out how much you can afford to contribute every month

Pretty much nobody builds an emergency fund overnight, unless they win the lottery or get drafted by the NFL. For the rest of us, it’s a process that requires saving what we can each month.

Go over your finances, including your bills and income, to figure out a realistic amount you can save. It could be $50 per month, $100, or $1,000 — whatever works for you. The more you can save, the faster you’ll build your emergency fund. It should be an amount you can comfortably afford, so you don’t struggle to make it work every month.

Make it automatic

At this point, you have an account for your emergency fund, and you know how much you’ll contribute to it. The last step is saving that money.

To guarantee this happens, schedule an automatic transfer from your checking account to your savings account. The best time to schedule this is right after you get paid. If your paycheck hits your checking account on the 1st of every month, you could set up a transfer to your savings on the 3rd or 4th (to give yourself a little breathing room in case of delays).

This is called paying yourself first. Instead of waiting until the end of the month to see how much money you have left, you prioritize saving by doing it before you spend any of your paycheck.

You can follow those steps to build an emergency fund and reach any other savings goals you have. It takes time, but consistency pays off. And if you want to save more, you could find places to reduce your spending or look for ways to raise your income.

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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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Interested in a CD this month? Read on to see how you can avoid some costly blunders. [[{“value”:”

CD rates in August are still red hot. The Federal Reserve opted not to lower its benchmark interest rate in late July, thereby allowing the strong CD rates that have been around since the start of the year to remain available to savers.

You may be eager to open a CD this month while rates are still strong. But if you’re interested in a CD, do your best to avoid these big mistakes.

1. Not making sure you’re set with emergency savings first

The benefit of keeping your money in a CD over a savings account is twofold. First, with a CD, you’re likely to score a higher interest rate because you’re committing to keeping your money in the bank for a while. Secondly a CD lets you lock in that interest rate for its duration.

If you open a 12-month CD at 5%, you’re guaranteed that 5% for an entire year. With a savings account, the interest rate on your account could fall with market conditions (it could technically also rise, but based on today’s environment, a drop is the most likely scenario).

But savings accounts offer one big benefit over CDs: flexibility. You can withdraw from a savings account at any time without having to worry about negative consequences. With a CD, there can be steep penalties for taking an early withdrawal.

So before you open a CD, make absolutely sure that you’re all set as far as your emergency fund goes. If you take money you should’ve earmarked for emergencies and put it into a CD, you might end up paying a penalty fee if you have to withdraw that cash before your CD matures.

At a minimum, you should aim for your emergency fund to have enough money to cover three full months of essential living costs. Some people even like to aim for six months’ worth. Assess your needs and savings either way before moving forward with a CD.

2. Not shopping around for rates

Because CD rates are strong in general, it’s easy to look at the attractive rate your bank is offering and assume it’s the best deal available. But you never know when another bank might have a slightly better deal. And if you’re going to commit to a CD, you might as well eke out as much interest as possible.

So before you open a CD, shop around a little bit. Compare offers and terms so you can feel more confident in your choice.

3. Not setting up a CD ladder

As mentioned, one pitfall you might face with a CD is an early withdrawal penalty for having to take your money out before your CD matures. But a good way to reduce that risk is to set up a CD ladder instead of opening one CD.

With a CD ladder, you divide your deposit into a number of smaller ones and then use that money to open a few CDs with staggered maturity dates. The goal is to have a portion of your money free up at different times so you can access that cash if you need it.

Here’s how a CD ladder might work: Say you have $3,000 you want to put into a CD. Rather than stick all of it into a 12-month CD, you could instead:

Put $750 into a 3-month CDPut $750 into a 6-month CDPut $750 into a 9-month CDPut $750 into a 12-month CD

This gives you access to a portion of your money every three months. If you end up with a large unplanned expense that wipes out your emergency fund, you may be able to take the remaining money you need from a maturing CD without having to cash one out early.

It’s definitely a great time to put money into a CD. But try to avoid these mistakes so you don’t wind up regretting your decision.

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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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You could turn a $300 monthly investment into over $400,000 on the S&P 500. Find out why lower-risk investments make more sense over time. [[{“value”:”

Cryptocurrency has had another incredible run recently. Particularly Bitcoin, the granddaddy of crypto, which has doubled in price in the past year. On Aug. 1, 2023, Bitcoin was still languishing below $30,000. A year later, it was trading at $64,680, according to CoinGecko data.

That’s an extraordinary recovery. But before you add crypto to your brokerage account, know that it’s still a highly volatile and risky investment. It can — and often does — drop by 10% or more in a matter of days. To build long-term wealth, slow and steady is a better mantra than high risk and hope.

Here are three strong long-term investments to consider. The right combination for you depends on your goals, risk tolerance, and investment strategies.

1. Exchange-traded funds (ETFs)

ETFs are essentially baskets of securities that come in different forms. What they have in common is that you can buy them from your stock broker just as you would a normal stock. Rather than getting shares in just one company, you’re accessing a mix that fits a particular theme.

You can buy ETFs for various assets, including stocks, bonds, and commodities. That might take the shape of:

An index, such as the S&P 500A type of investment, such as dividend stocksAn industry, such as the energy sectorA bond ETF

If you’re new to investing, the powerful thing about ETFs is that it makes it easy to build a diversified portfolio. Let’s say you invest in an ETF that tracks the S&P 500. Historically, the S&P 500 has generated average annual returns of more than 8%. If you’re able to invest $300 a month and earn a return of 8%, in 30 years, you’d have over $400,000.

2. Real estate investment trusts (REITs)

REITs are companies that own and manage various real estate projects. For example, you might find a REIT that specializes in office buildings or warehouses. Others may focus on healthcare. These are a way to add real estate to your investments without having to actually buy property.

One interesting thing about REITs is that they have to pay at least 90% of their taxable income to shareholders in the form of dividends. Dividends are regular shareholder payments that you’ll get in addition to any gains from the appreciation of your holdings. If you reinvest your dividend payments, you’ll have more REIT cash earning returns.

That adage about not putting all your eggs in one basket is very true in regards to investing. As such, if you already own stocks, adding REITs to your portfolio is a way to spread your risk. Finally, performance-wise, analysis from The Motley Fool shows REITs outperformed the S&P 500 over the past 25 years.

3. Gold

Gold may be one of the oldest investments around, but it’s not a straightforward investment choice. It’s worth discussing here because some people see Bitcoin as a form of digital gold — particularly because it can act as a hedge against inflation.

Gold often holds its value — or even gains value — when the economy is struggling. It is viewed as a safe haven when things are topsy-turvy. The heightened geopolitical uncertainty we’ve seen this year is one reason prices have hit new highs. There’s a school of thought that says if the dollar or the stock market crash completely, gold holdings will still be safe.

Unlike stocks and REITs, gold won’t pay you dividends or generate income unless it increases in value. If you buy physical gold, you also need to think about how you might store it and insure it. If that doesn’t appeal, you might look to an ETF that holds gold or one that focuses on gold businesses, such as mining companies.

Forget crypto — it’s too risky

You might be looking at the assets above and thinking, “But if I’d bought Bitcoin a year ago, I’d have doubled my money.” That is true. The challenge with crypto is that you might make outsized returns, but you might also lose everything. It’s still a really new asset class ,and there’s a lot we don’t know.

For example, stronger crypto regulation could transform the whole landscape — not least because it might impact who is able to buy or sell digital assets. Plus, crypto faces challenges in terms of adoption and technical development. That’s one thing if you want to own a small amount of crypto alongside other assets. But that level of risk is not ideal if you’re planning for your old age.

All investments carry some risk. The stock market can rise and fall. But the beauty of investing with a long-term horizon is that you don’t need to take outsized risks in order to build wealth. If you have 30 years ahead of you, you can opt for lower-risk assets and let the power of compound interest work in your favor.

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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.Emma Newbery has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

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The Northeastern United States is an expensive place to live. Find out which of its cities rank the highest for overall affordability. [[{“value”:”

Where you live plays an important role in your finances. It affects your job opportunities, unless you’re a remote worker. It also impacts your cost of living. Some parts of the country are on the expensive side. Others are more affordable, making it easier to invest and build up your savings account.

The Northeastern United States is one of those expensive areas. Many of its major cities are pricey, with high rent and mortgage payments. If you live in this region, or you’re considering a move there, it may help to know the most affordable options.

The 10 most affordable cities in the Northeast

The affordability rankings below are based on each city’s cost of living compared to its median household income. It’s not a ranking of the cheapest Northeastern cities with the lowest typical expenses. It’s the cities where residents have the most money left over after paying their bills, on average.

As you can see, the Northeastern’s reputation for being expensive is well-earned. Only one city on the list has a cost-of-living estimate lower than its median household income. For residents in most cities, it’s a struggle to pay the bills and still be able to save money.

What can you do if you live in an expensive area?

I used to live in Los Angeles when I wasn’t earning much money, so I know how hard it is to make that work. Opposite side of the country, same sky-high cost of living. Practically all your income gets eaten up by bills.

Moving somewhere cheaper is one possible solution, but it’s often not a realistic option. If you have a job and a life in your current city, you probably don’t want to leave it. Here are a few options that don’t involve such a drastic life change.

See if you can find cheaper housing

Even if you don’t want to move to a new city, you could consider searching for a new home. Housing is the biggest monthly expense for most Americans. That also makes it one of the best places to cut back. See if there are more affordable neighborhoods, or consider downsizing to a smaller home.

Look for ways to raise your income

This is challenging, but it’s arguably the best way to improve your financial situation. If you can get a promotion at work, find a higher-paying job, or start a small business to bring in more money, it will be much easier to pay your bills and save money regularly.

Cut back on large expenses

Review your bank statements and credit card bills for the last few months to see where you’re spending the most. For many households, food and car payments are the major monthly expenses (along with housing). Subscriptions and auto insurance are two other areas where it’s easy to overspend.

Use a cash back credit card

If money’s tight, it makes sense to use a cash back card everywhere you can. Some of the best cash back cards earn either 2% on all types purchases or up to 6% in bonus categories. While you won’t get rich from cash back, every little bit helps. Just make sure you pay your credit card bill in full every month to avoid interest charges.

Moving to a more affordable city could be the way to go if you’re able to work remotely, or if you have a job opportunity there. But there are also plenty of ways to improve your finances where you currently live, including trimming your expenses, increasing your income, and earning cash back on your bills.

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Click here to read our full review for free and apply in just 2 minutes.

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. Lyle Daly 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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Travel credit cards can be valuable if they fit your lifestyle. Ask yourself these questions before you get one to make sure it’s the right choice. [[{“value”:”

If you want to explore the world or save on your family’s next vacation, a travel card could help you do it. These cards earn points you can use for travel expenses. Many of the best travel rewards cards have other perks, too, such as elite status with hotels or access to airport lounges.

But travel cards aren’t right for everyone. Before you apply for one, ask yourself these important questions.

1. How often do I travel?

First, decide if you travel enough to make a travel card worth it. As a rule of thumb, if you take at least two or three trips per year, then you could benefit from a travel card. If you only travel once a year, you’re probably better off with cash back credit cards.

Opening a travel card when you don’t travel much is one of the most common credit card mistakes. The people who do this often end up with a huge balance of travel rewards points they don’t end up using.

2. Which travel perks are most important to me?

There are all kinds of benefits you can get from travel credit cards. Here are some examples:

Free checked baggage with an airlineA yearly free night certificate with a hotel chainAirport lounge accessA fee credit for a Global Entry, TSA PreCheck, or CLEAR® membershipElite hotel status

Think about which features you want in a travel card. If you’d like to check bags for free with your favorite airline, then getting one of its airline cards could be the best choice. If you want hotel perks, look for a hotel card from your favorite chain. And if you want more flexible benefits, you could go with a general travel card that’s not tied to an airline or hotel.

3. Do I know how to use travel rewards?

When you’ve found a travel card you like, learn about how its rewards program works. Make sure you’ll be able to use those rewards to book the travel you want.

Some people make the mistake of getting a travel card just because it’s popular. Then, they realize that it’s harder to redeem their points than they expected.

Travel rewards programs have a learning curve. It’s best to see if a card’s redemption options will work for you before you apply.

4. Will I get my money’s worth from the annual fee?

Most travel cards charge an annual fee. There are a couple of no annual fee travel cards, but they’re light on benefits. The most popular cards charge anywhere from $95 to $695.

It only makes sense to open a travel card if you’ll get more value from the benefits than you pay for its annual fee. If a card costs $250 per year, it should ideally save you much more than that.

Go over the benefits the card offers. Some of these may not have a fixed dollar value, but you can put an estimate on them. For example, I personally value airport lounge access at about $100 per year based on my own travel habits. Don’t forget to account for the rewards you’ll earn with a card, as they also have value.

5. Can I spend enough to earn the welcome offer?

Travel cards tend to have the largest welcome offers — introductory bonuses for new cardholders. But their welcome offers also normally have higher spending requirements. A card may offer 60,000 to 80,000 points if you spend $4,000 on purchases in the first three months.

A welcome offer is an all-or-nothing deal. You either meet the spend requirement and earn it, or you don’t. Only apply for a card if you’re 100% confident you can spend enough to earn its welcome offer and still pay off your monthly balance.

A travel card could save you a lot of money and make every trip more enjoyable. After asking yourself those questions, you’ll know if this type of card is right for you and what to look for in a card.

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Click here to read our full review for free and apply in just 2 minutes.

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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Want to fly in style with Spirit Airlines without paying additional fees at checkout? The airline will offer bundled packages with extra perks. Find out more. [[{“value”:”

Spirit Airlines is going through a transformation. You may know of the airline as a low-cost carrier. Many people who fly with the airline appreciate the company’s low ticket prices. The good news is that won’t be changing anytime soon.

But Spirit is changing how passengers can book their tickets. With the current setup, travelers can book airfare and pay for extras like seat selection fees and baggage fees. These extra fees could quickly impact your checking account balance.

The carrier recently announced it would offer bundled packages to make pricing more transparent. Some packages will include premium perks that appeal to travelers who prefer an upgraded flight experience. Here’s what you need to know before you fly with Spirit Airlines.

Introducing brand-new bundles (plus, an unbundled option)

Spirit will continue to offer affordable airfare. However, for flyers who want an upgraded experience at an affordable price, the airline will also offer bundled packages with upgrades included. These offerings ensure travelers get what they need at a transparent price point.

Spirit will continue to offer airfare-only bookings with its new “Go” product for those who prefer a no-frills experience. Go bookings are best for travelers who want an unbundled experience with no extra amenities.

Travelers can book the following bundled experiences starting on Aug. 16, 2024:

Go: You’ll get a ticket with no extra amenities. For additional fees, you can add checked bags, standard seat selection, wifi, or snacks and beverages.Go Savvy: You’ll get either one carry-on bag or a checked bag and standard seat selection during booking.Go Comfy: You’ll get a guaranteed blocked middle seat, one carry-on bag, one checked bag, priority boarding, and a snack and non-alcoholic beverage.Go Big: You’ll get a Big Front Seat, snacks and drinks (including alcoholic beverages), one carry-on bag, one checked bag, priority check-in and boarding, and wifi access. A Big Front Seat features wider seats, more legroom, additional cushioning, and no middle seat.

Some offerings, like unlimited snacks and drinks and priority boarding will be available starting on Aug. 27, 2024. However, bookings begin on Aug. 16, 2024.

If you fly with the airline, whether occasionally or regularly, you should keep these changes in mind to know what to expect when you’re ready to book.

Change and cancel fees are no longer a thing

This isn’t the only change that Spirit has made in 2024. Earlier this year, the airline updated its policies and eliminated change and cancellation fees.

If you book a Spirit flight and need to cancel or change it, you won’t pay fees. You’ll only be responsible for paying the difference in airfare when rebooking. This policy change is welcome news for busy travelers who want to avoid additional fees that drive up vacation costs.

Earn rewards when you travel

Whether flying with Spirit, another airline, or taking a road trip, take advantage of opportunities to earn rewards. You can use credit cards that earn rewards when paying for your travel bookings and earn points, miles, or cash back.

You can later redeem your rewards for cash back or travel bookings to save more money on travel. Are you thinking of adding a travel rewards credit card to your wallet? Check out our list of the best travel credit cards to learn more.

Alert: highest cash back card we’ve seen now has 0% intro APR until nearly 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

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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