Money Management

A high-yield savings account can do great things for your finances. Learn why one writer is declaring them perfect for your vacation savings. [[{“value”:”

I love to travel, and thanks to some big changes with my finances and career situation these last few years, it’s gotten easier to do it more often. Most weeks, I’m able to funnel a little money into my vacation fund, and it’s exciting to set a savings goal for a particular trip and dream about the cool museums I’m going to visit, the beaches I’ll stroll, or the restaurants where I’ll have dinner.

I keep my vacation fund in a high-yield savings account (HYSA) for a few key reasons — in fact, I think these accounts are the best place to save for travel. Here’s why.

Why HYSAs are perfect for vacation savings

So why should you use a high-yield savings account to save for travel? You definitely don’t want to keep your vacation fund mixed with your checking account money — why make managing money any harder? Here’s why a HYSA is worth it.

The APY

You want to target a high-yield savings account specifically, not just open a savings account with a big bank, which likely pays pathetically low interest. The best HYSAs are generally offered by online-only banks. They don’t have the overhead costs that come with managing bank branches, and they pass their savings on to you in the form of a higher interest rate on your saved cash.

Right now, the average rate on savings accounts is 0.45%, but you can find rates on HYSAs of 10 times that or higher. Earn 0.45% on $5,000 in vacation savings, and you’ll have an extra $22.55 after a year. But if you earn 4.50%, you’ll have an extra $230.12. That could cover a night at a hotel or a few decent lunches on your trip.

Savings buckets

Not every HYSA offers them, but I’d argue that if you’re hoping to save for travel specifically, savings buckets are worth considering. These will let you split up the cash in your savings account into separate sub-accounts.

If you want to save for a few different trips at the same time, this is perfect. You can set a goal for each, and your bank may even email you with encouragement when you reach certain milestones (like 50% of the way to that romantic honeymoon).

More hoops to jump through to access your money

And another reason why HYSAs are great for vacation funds is because they don’t always give you such easy access to your cash (for example, most don’t come with an ATM or debit card). Since they’re offered by online banks, you won’t be able to stroll into a branch and withdraw your cash.

It’s usually easiest to move money electronically out of one of these accounts, and that might give you more motivation to keep saving and not take out cash for an unnecessary non-vacation expense.

How can you find a good HYSA?

Have I convinced you that a HYSA is a great place for your vacation fund? There are a few more key features (beyond a high APY and savings buckets) you want to target if you’re looking for a new bank account to save for that dream vacation.

A well-rated mobile app: I’m a big fan of online and mobile banking — I love being able to check on my money anywhere and at any time. Read reviews of the bank you’re considering to see what’s up with its app and learn about what features it comes with (such as budgeting tools or free credit score access).FDIC insurance: Your money should be safe in the bank, and with this coverage, it’ll be insured for $250,000 per depositor, per FDIC-insured bank, per ownership category. If your bank goes under, all your money will be returned to you under the limits.Security features: These include multi-factor authentication, debit cards that have EMV chips, and 24/7 customer service help. These can all be found with the safest banks.

Ready to start a new vacation fund? Dig into high-yield savings accounts and pick out a winner — your dream destination awaits.

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The idea of making money in your sleep is more than possible. Learn how to get your perfect passive income stream up and running. [[{“value”:”

From passive income sources to side hustles, skyrocketing living costs have left many of us looking for ways to boost our checking account balances. In that sense, passive income — making money without actively working for every cent — sounds like a dream come true.

The reality is a little different. Without going all Shakespeare on you, nothing will come of nothing. To create passive income streams, you’ll need a combination of time, knowledge, and money. The right passive income stream depends on your budget, skills, and available hours.

Here’s one way to break down some common passive income ideas:

Best if you have cash to invest: Buy ETFs or REITs

If you’re able to put your money to work for you, investing can be one of the least time-intensive sources of passive income. There is some time involvement: You’ll need to open a brokerage account and research different assets and investment strategies. But after that, a lot of buy-and-hold investing strategies don’t take a ton of ongoing management.

For example:

Exchange-traded funds (ETFs): An ETF is a basket of securities that follow a specific theme. You might buy an ETF that tracks the S&P 500 and gives you exposure to the largest 500 companies in the U.S. or one that’s made up of companies that often pay dividends to investors.Real estate investment trusts (REITs): REITs are companies that own and manage a mix of properties. They usually specialize in a specific sector such as office space or warehouses. REITs have to pay out 90% of their taxable income as dividends.

Dividends are an important concept when it comes to passive income. Some companies pay a percentage of their earnings as dividends to shareholders. That means you get regular payouts in addition to any portfolio gains if the asset appreciates in value.

Best if you have teachable skills: Make an online course

There’s a lot of appetite for online learning, so if you have skills to teach, creating an online course could be a great earner. I have a friend who is both a coffee aficionado and a former teacher. She made a successful video course on how to taste coffee.

Think about where your expertise lies and research potential customers who might pay to learn from you. Ideally, it’s something you get excited about because that will come through on the video. And it should be something you have experience in. If you don’t know how to play the guitar, no amount of passion is going to make you a great online guitar instructor.

OnlineCourseHost.com estimates it will take between three days and two months to make a video course. Once the course is made, you’ll need to spend time marketing it and managing your customers. Online platforms like Udemy, LearnDash, and Skillshare can make the process easier. Still, be prepared to put in a lot of work upfront to build this passive income stream.

Best if you own property: Rent out space

I rent out an apartment, and I can tell you it takes a lot of work. That said, there are less time-intensive ways to be a landlord or make your space work for you. For example, a good property manager can help keep your rental income truly passive. They will help you find tenants, keep your property occupied, and stay on top of any maintenance and day-to-day management.

Fees vary, but many property sites estimate an 8% to 12% fee. That’s going to eat into your profits, so weigh that against the value you put on your time. Plus, a professional could help you maintain a higher occupancy rate and avoid legal issues.

Best if you’ve always wanted to get published: Write an ebook

Like creating an online course, writing an ebook can take time and knowledge. And there’s no guarantee it will pay off — it’s a very competitive market. (I know; I self-published a book, and it generates less than $20 a year in passive income.)

However, if you enjoy writing and are willing to keep at it, some authors do make money this way. Before you start, research which topics are likely to be profitable and what the competition is like. Look for some crossover with themes or genres you want to write. And be prepared to invest in marketing, cover design, and editing help.

Best if you have limited upfront cash: Use what you have

If you don’t have a lot of time, expertise, or money, don’t despair. Take a step back and think about what you do best or what you own that you could put to work.

For instance, if you’ve got an eye for design, you might be able to sell your work on Etsy. Print-on-demand centers will fulfill your orders with minimal work from your side. If you have garage space or a parking spot, perhaps you could rent it out. Or sell ad space in your car’s back window. Be creative. Worst comes to worst, you can write an ebook about your experiences.

Bottom line

It is possible to build up decent passive income sources, even if you don’t have lots of money to invest. Just be realistic about the time involved. Your so-called passive income source should not mean you’re showing up for work with bags under your eyes and drifting off during meetings.

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

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The USDA announced SNAP benefits will increase by just a few dollars next year. Find out how much your household will receive from October onwards. [[{“value”:”

SNAP food benefits are a lifeline for millions of low-income American families. All the more so in recent years, as high living costs have squeezed people’s checking accounts even more. If you are worried about keeping food on the table, you are not alone.

According to the USDA, almost 13% of Americans — around 17 million households — went hungry in 2022.

Every year, the USDA increases food benefits to keep up with inflation. Unfortunately, SNAP households will only see a tiny change for the 2025 fiscal year. Even though inflation continues to impact prices, the new maximum monthly allotment for a family of four will increase by just $2 to $975.

Minuscule increase in SNAP food benefits for 2025

The new SNAP payments will come into effect this October — the start of the new fiscal year. Sadly, the planned increase of around 0.2% (or 0.3% depending on your family size) will not come close to covering higher food costs. Bureau of Labor Statistics data shows the cost of food has increased by 2% in the last year.

Here are the maximum food benefit payments for SNAP households for 2024 and 2025 in the majority of U.S. states. Payments are higher in certain states, such as Alaska and Hawaii.

To claim SNAP benefits, a household needs to meet certain income criteria. There’s also a limit on how much a family can have in their bank account. Benefits are calculated by taking the maximum amount for that household size and making deductions based on things like income, child support, and medical expenses.

How to maximize your SNAP benefits

The tiny monthly increase in SNAP benefits will come as a blow to many families. A couple of dollars extra might buy an extra couple of cans of beans, but it won’t go very far in feeding a family of four. While it is worth looking to see if you qualify for any other benefits or assistance, it is also important to think about how you’ll get by on the payment you receive.

Here are some ways to make your SNAP benefits go further.

Use cash back apps

Several top cash back apps work with EBT payments and can be a good way to get some money back on your shopping. Combine apps with coupons and in-store discounts. The more you can stack those discounts, the better.

Look for double-up food programs

More than 25 states have Double Up Food Bucks programs right now, so see if there’s anything locally. It essentially means SNAP recipients can get two-for-one deals on fruit and vegetable purchases at participating farmers markets and stores.

Always shop with a list

It can be difficult to plan meals for a busy household when time is tight. But if you want to stretch $975 a month to feed a family of four, planning is essential. The USDA has some free budget recipe ideas that are worth checking out.

Buy in bulk

Bulk buying can translate into serious savings, but it can be difficult if you don’t have much cash to spare. See if you can club together with friends and split the costs of a Costco run. Or perhaps try to set aside a few dollars a month from your grocery budget until you’ve got enough to bulk buy a few items.

Seek emergency help if you need it

If you don’t have enough food right now, help is available. Find out how your local soup kitchens and food pantries work in terms of timing and what documents staff might need to see (if any). You may need to show some form of ID, and it’s often worth arriving early to beat lines.

Don’t expect big changes to SNAP for 2025

The USDA’s announcement will be beyond disappointing for families who are already struggling to make ends meet. You may feel like you’ve already used every trick in the book, but try not to despair. Look for even small steps you can take to stretch your food budget a little more. Not only that, but the U.S has a network of food banks whose mission is to stop people from going hungry.

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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 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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You may be inclined to pump extra money you have into your mortgage. But read on to see why that’s really not your best move. [[{“value”:”

It’s a common thing to sign a 30-year mortgage when buying a home. But the idea of having a mortgage hanging over your head for three decades may not be ideal. So you may be motivated to make extra mortgage payments in the hopes of paying it off early.

That’s not an unusual thing to do. But depending on your circumstances, it might also be a huge financial mistake.

Why paying off a mortgage early doesn’t always make sense

The logic behind paying off a mortgage early is simple. The sooner you do, the less interest you pay. But if you have a low interest rate on your mortgage, then it doesn’t make sense to pay it off early. In doing so, you could actually end up losing money.

In 2020 and 2021, mortgage rates fell to record lows. If you signed your mortgage then, you may have locked in a fixed interest rate of 3% or less.

But right now, savings accounts are paying 4% or more just to keep your money in the bank. So why would you pay extra into your mortgage to save 3% interest when you could earn 4% interest on that money without taking on any risk?

Plus, if you leave more money in your savings account rather than pay it into your mortgage, you’ll have more of a cushion in case your home needs repairs. Borrowing rates are up these days. So if you end up needing to do a $10,000 repair, you might get stuck paying 7%, 8%, or 9% to borrow that money in the form of a home equity loan.

But if you don’t pay extra into your mortgage and keep your cash, you’ll have the money to cover repairs outright.

Investing is a better idea

Furthermore, on a long-term basis, investing your extra money rather than paying off your mortgage early could do better things for your finances.

Say you took out a $200,000, 30-year mortgage three years ago at 3%. A one-time extra payment of $5,000 into your mortgage now will save you about $6,000 in interest and shave about a year off of your repayment window.

But let’s say you instead invest your $5,000 in a portfolio of stocks. At a 10% return, which is in line with the market’s average, you’re looking at growing your balance to about $65,000 over 27 years — the remaining time on your mortgage. That’s a $60,000 gain, which beats saving $6,000 on interest costs.

Hold off on extra mortgage payments even if your loan’s rate is higher

If you signed your mortgage in the past couple of years, then you may be sitting on an interest rate around 7% instead of 3%. If so, you might assume it makes sense to chip away at that loan because of that much higher rate. But even then, you may want to hold onto your cash.

If you signed your mortgage recently at a higher rate, there’s a good chance you’ll have an opportunity to refinance in the coming years as rates start to drop. So if you make a point to maintain a great credit score or boost your score into a more favorable range (ideally, the mid-700s or higher), you can put yourself in a position to lock in a lower interest rate on your new loan.

From there, you may be looking at paying a lot less interest overall, which is often the goal of paying off a mortgage early.

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A recent study has shown that white Americans have significantly more savings than other racial groups. Find out what’s happening and how you can help. [[{“value”:”

Have you ever wondered what it’s like to be someone else? How your life might be different if you’d been born to different circumstances, or with a different culture entirely? If you’re a white American, being born as a minority would have given you a very different life, indeed, including entirely different financial circumstances.

For example, a recent study shows that white Americans had a median of $12,000 in their transaction accounts — accounts like checking accounts — vs. the roughly $2,100 median balance of both Black and Hispanic account holders in 2022.

Money in the bank, financial stability in life

It may not be all that surprising, but the lack of money in the bank for Black and Hispanic families also translates into fewer feelings of financial security. The Federal Reserve has been surveying American adults since 2013 to gauge how they’re feeling about their own financial picture. The question posed was about whether they felt they were “at least doing okay financially.”

In 2022, the last year we have data on transaction accounts, 84% of white adults felt that they were doing okay financially, compared to only 64% of Black adults. Despite having the same median bank balances, 77% of Hispanic adults felt they were doing okay financially.

In 2023, Black adults did begin to feel a bit better about their financial situations, with 68% doing okay financially, but Hispanic adults felt worse, with 76% feeling okay financially.

A few factors influencing these feelings

The lower feeling of economic stability may, in part, be due to an increase in variable income for both Black and Hispanic populations. The Federal Reserve found that although 26% of white adults experience variable income, only 8% say it causes them hardship.

For Black populations, 30% have variable incomes and 11% to the point of hardship. Hispanic adults experience the highest rate of variable income — 35% — with 16% reporting that it’s a hardship.

And even this has knock-on effects, as the Federal Reserve found that only 11% of white adults did not pay all their bills in full in the prior month, compared to 31% of Black adults, and 27% of Hispanic adults. Those same populations also told the Federal Reserve that they sometimes or often didn’t have enough to eat in the prior month, with 10% of Black adults and 13% of Hispanic adults making such an admission.

Overcoming financial disparity among racial groups

Unfortunately, financial disparity among racial groups is a difficult bar to overcome. There’s no way to budget your way out of systemic issues like these. Even when times are good, the benefits are unequally distributed.

A Pew report in 2023 showed that while all ethnic groups saw a substantial gain in household wealth between 2019 and 2021, Black families moved from $15,300 to $27,100 and Hispanic families from $34,400 to $48,700. White families experienced a smaller percentage gain, but a larger gain overall, going from $203,200 to $250,400.

According to Pew’s commentary, the reasons that Black and Hispanic families started with so little wealth are very different, but both are hugely impactful to their lives and ability to fully participate in the economy. For Hispanic families, it’s largely to do with the relatively new expansion of this group in the United States. It takes time to build wealth, especially when coming from a different country. The move itself is a huge investment.

For Black families, the story is a little different. They have been in America since there has been an America, but it has only been in the last several decades that they’ve been permitted to fully participate in the financial system. Slavery was a huge influence, but so was segregation and the lingering effects that have held Black families back from opportunities to own homes, invest, get college educations, and achieve high-paying careers.

How can you contribute to financial equitability?

If you’re not on the receiving end of financial inequity, you can take action to help level the playing field for everyone. Supporting Black- and Hispanic-owned businesses and donating time and money to charities that help people of all races take steps toward financial freedom, like Habitat for Humanity, are great places to start.

But you can send an even stronger message that you believe in fairness for everyone and that everyone deserves a chance to feel financially secure when it comes time to vote, even in local elections.

Choosing candidates that support more equitable policies, who have track records of voting for funding public education and making the world in general more accessible to more people can do much more to change outcomes for families across America than you might possibly imagine.

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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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Before you head to the dealership lot or look at cars online, you’ll need to figure out how much you can actually afford to spend on a car. Learn how here. [[{“value”:”

Buying a new (or new to you) car can be exciting and fun, but it’s also a big financial decision. And those car payments can follow you for years, making it harder to buy a home, invest money for the future, or even change jobs. (You’ll have to afford that car payment, after all!)

So, how do you figure out how much car you can actually afford? Generally, your total car costs shouldn’t exceed 10% to 15% of your take home pay. That means if you make $60,000 but pay for insurance and invest in your 401(k), your take home is likely around $3,000 per month. So, you might think you can afford $300 to $450 per month in car payments.

Take that number to the car dealership, though, and they might tell you can afford just about any car! How lucky for you. But that’s because the length of the loan can be extended to meet your monthly payment requirements — and it also means you’ll pay a ton more in interest.

Here’s a better way to tell what cars you can actually afford.

Use the 20/4/10 rule

The 20/4/10 rule is a good rule of thumb for figuring out how much car you can actually afford. This means you should be able to put 20% down, finance the car for no more than four years, and keep your total monthly car costs, including car insurance and car payments, below 10% of your monthly income.

Using this rule, you can figure out how much car you can afford. Let’s say your monthly gross income is $5,000, which means you should spend no more than $500 per month on car expenses. Then, let’s drop our estimated monthly payment to $400 to account for the cost of insurance, registration, and so on.

Now, let’s assume a four year loan payment, which is 48 months. So, we’ll use the formula:

Maximum monthly payment x 48 = Estimated loan amount

Based on our 10% rule, that means:

$400 (maximum monthly payment) x 48 (car loan term) = $19,200 (maximum loan amount)

Then, let’s find out how much we’ll put down by finding the down payment.

Estimated Loan Amount / 0.80 = Car Price

Note: We don’t just add 20% to $19,200 because we’re assuming the loan amount will cover 80% of the price of the car — hence the 0.80.

Based on our numbers, this comes to:

$19,200 / 0.80 = $24,000

All this back-of-the-napkin math means you can afford a car that costs around $24,000. But there are a few other factors to consider.

Find out your interest rate

The average interest rate for a car loan is between 6% and 10%, depending on your credit score. If you have a lower credit score, you can expect your interest rate to be as high as 12% to 18%.

For example, let’s say you purchase a car with a loan amount of $19,200 at an interest rate of 12% and finance it for 48 months. A handy car loan calculator tells us your monthly payment will be $506 per month, and $192 will go to interest in that first month. The amount that goes to interest will fall over time as you pay down the principal, but your car payment will remain the same.

This was not factored into our calculations above, because rates can vary so much by person. For ease of calculation, expect to pay between $100 to $200 a month in interest, so consider dropping your ideal loan payment by at least a hundred dollars to account for this difference.

Shop around for car insurance

Car insurance rates can vary drastically by insurance company and by car. You’ll pay a lot more to insure a 2024 Ford Mustang than you will to insure a 2000 Toyota Camry. Make sure to shop around for insurance plans and find one that fits your needs and your budget. Drivers who can’t afford to replace a vehicle should buy full-coverage insurance.

Final thoughts

Don’t let the excitement of getting a new ride blind you to what you can actually afford. Use the 20/4/10 as a rule of thumb, but stay on the conservative side by dropping your ideal monthly payment a bit. This will leave you with money to save or invest, setting you up for long-term financial success.

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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.
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