Money Management

Budgeting isn’t for everyone. If it’s not working for you, here’s how to ditch it without compromising your finances. [[{“value”:”

A late 2023 survey by PayrollOrg found that 78% of Americans are living paycheck to paycheck with no money in a savings account to fall back on. If this sounds like you, then it may be time to start following a strict budget, whether by tracking expenses on a spreadsheet or using a budgeting app to keep tabs on your spending.

But what if your financial situation isn’t so dire? Maybe you have a decent savings cushion and are working toward other financial goals, like retirement. Is budgeting really necessary in that case?

The answer is that while budgeting can certainly be helpful, it’s not your only solution. So if you’ve tried it and it doesn’t work for you, you should know that there may be a better way to work toward your goals without making yourself miserable in the process.

The problem with budgeting

Budgeting isn’t necessarily so time-consuming if you find a great app or system that makes it efficient. But one big problem with budgeting is that it can feel very restrictive.

At its core, budgeting has you allocating a certain amount of money each month to different expenses. And you’re not supposed to spend more in any given category. If you do, you’re supposed to make up for it by finding money from a different category. That can be frustrating and put you in a position where you’re stressing yourself out for no reason.

Why automating savings is a better solution

For many people, the goal of budgeting is to limit spending enough to be able to move money into savings at the end of the month. But what if instead of that, you were to move money into savings at the start of the month — before you begin paying your bills?

You can set yourself up to do that by automating the savings process. Figure out how much you want to contribute to your savings each month, and then arrange for that sum to leave your checking account before you get a chance to spend it — such as right after your paycheck hits.

That way, you know you’re meeting your monthly savings goal, which takes the pressure off. And from there, you’re free to spend the rest of your paycheck as you want.

So let’s say you get a monthly paycheck of $3,000, $300 of which you want to save. If that $300 leaves your account off the bat, you’ll be left with $2,700.

From there, it doesn’t matter if instead of spending $250 on leisure, you spend $260. As long as you’re able to cover all of your bills that month without racking up debt, you’re in good shape — you’ve funded your savings and tackled all of your financial obligations without having to worry about the finer details.

It’s worth giving budgeting a try if you’ve never done it before — especially if you’re living paycheck to paycheck and are having trouble managing your bills. But if budgeting just doesn’t work for you, don’t force it. You may find that automating your savings not only takes the pressure off, but makes it easier for you to meet your financial goals.

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A credit card is a credit card, right? Nope. Read on to see how to tell you haven’t found the right card for you. [[{“value”:”

Applying for a credit card can be exciting and a bit nerve-wracking. Will you be approved? How high will your new credit limit be? And can you reach the spending requirement for that sweet welcome bonus?

Unfortunately, it’s not a good idea to just apply for any shiny new credit card you learn about. Since your finances are at stake, it’s worth thinking carefully about the cards you want and making sure that the hard credit pull (which lowers your credit score by a few points) is worth it.

Here are four red flags that you’re applying for a card that’s not right for you.

1. Your credit score is less than the requirement

Some credit cards have more stringent credit score requirements than others. Depending on your credit score, you might not qualify for the best credit cards available — a lot of them target applicants with good credit, which is a credit score of at least 670.

This isn’t to say that you can’t be approved for a card with a lower score — credit card issuers consider your whole financial picture, including income and debt situation.

But if you have a credit score of 600 and are targeting a higher-end card, you might not want to get your hopes up. Instead, target a card for fair or average credit. And work on your credit score so you can eventually apply for that other card and have more confidence you’ll be approved.

2. The annual fee is too high for you

You know what high-end credit cards often come with? A big annual fee. An annual fee on a credit card shouldn’t automatically be a dealbreaker — two of my favorite cards have annual fees and I easily get my money’s worth out of the cards. But paying an annual fee for a card I don’t get as much use from would give me pause.

Before you apply for a card with an annual fee, make sure you can afford to cover that fee. Also, do the math to see how you’ll offset the fee with the card’s benefits.

3. The card doesn’t match your spending

Different cards have different bonus rates, and are therefore suitable for different types of spending. If you spend a lot of money on gas and groceries, it’s worth targeting a card that pays a high rate on both. But if the card you’re applying for doesn’t match your spending, it’s unlikely you’ll get enough value from it to make it worthwhile. This becomes even more crucial if the card has an annual fee.

Luckily, there are tons of options for all kinds of spending. If you like to dine out, there are cards for you. Same for travel, whether you want the flexibility of earning extra rewards on all kinds of expenses (like hotel stays, transit, and so on), or you want to be firmly in a certain airline or hotel chain’s ecosystem. You just have to explore what’s out there to find the perfect card for you.

4. The welcome bonus is the main draw

Finally, it’s a red flag if the main selling point for the card you’re applying for is the welcome bonus. Welcome bonuses are great — don’t get me wrong. A nice one (like earning $200 in cash back in exchange for spending $500 on the card in the first few months of opening your account) can sweeten the deal for sure.

But only focusing on the welcome bonus is a problem. You generally don’t have long to meet the minimum spending requirement, and ideally, you’re making a longer-term commitment to a new credit card than just three or six months. A new credit card has the potential to improve your credit score over the long term as you use the card and pay off the charges.

If you’re only interested in getting that welcome bonus and then stop using (or cancel) the card, you could burn your bridges with that credit card’s issuer, making it difficult to open new cards in the future. Other card issuers may check out your credit report and notice a history of new cards opened and closed in short order, and they tend to frown on that behavior.

So there you have it. Before submitting a new credit card application, make sure you’re interested in the card’s features as a whole, can afford the annual fee, and have an adequate credit score to qualify.

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

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Even $1,000 can grow into much more if you put it to work. Here are a few smart places to put $1,000 today. [[{“value”:”

The best place to put money will depend a lot on your own circumstances. If the money is something you need access to in the future, that will dictate a lot about what you do with it now.

On the other hand, if your only goal with this $1,000 is to get the best return, that’s a different decision. And so is what to do if you have debts or bills.

Here are a few options to consider for your $1,000.

1. Pay off any high-interest debt

The average credit card charges more than 22% interest. You’ll be hard-pressed to find any investment that gives you a 22% return.

Ergo, if you have high-interest debt, the best return on investment is to pay off that debt.

If you have debts with lower interest rates, then you may want to consider your options. Folks with those magical 3% (or lower) mortgages, for instance, could get a better return with a competitive high-yield savings account.

2. Stash it in a high-yield savings account

If you want to set and forget your savings (without tying it up), a high-yield savings account is the place to go. The best savings accounts pay around 5% APY right now, which is a pretty solid return for what is generally zero risk.

I consider savings accounts to be the baseline for the question of, “Is this a good return?” If I can get a higher return from a savings account than another option, that’s where I’d rather put my money.

Oh, and don’t just put it into any old savings account (especially at a brick-and-mortar bank). The national average savings rate is just 0.45%, so be sure you’re getting a competitive rate before tucking away your money.

3. Build emergency savings in a money market account

There is one universal truth we must all acknowledge: life’s gonna life. No matter what else, you can count on something unexpected occuring, probably at a terrible time, and it’s likely going to cost you money.

Emergency funds are that money. They make it easier to roll with the punches without totally losing your marbles.

The best high-yield money market accounts are comparable to savings accounts on rates, except money markets have ATM cards and paper checks. This makes your money accessible in a hurry whenever life, you know, happens. (C’est la vie, mes amies.)

4. Grow it with a long-term CD

If you don’t need access to your $1,000 anytime soon, you could put it into a long-term CD. Rates on CDs are locked in until it matures, so you could lock in today’s rates for years with the right CD.

Keep in mind that once you put the money in the CD, you really need to leave that money alone until the CD matures. Most CDs have steep fees (sometimes even including part of your principal) for withdrawing your principal early.

5. Start — or add to — a retirement account

If you’re sure you won’t need that money and you’d like to put it toward the future, consider a retirement account. Most people (66% according to study by The Motley Fool) feel behind on saving for retirement, so this could be a good time to add to — or start — your retirement fund.

Of everything on this list, this is the one that’s hardest to “take back.” In other words, only put your money here if you’re positive you won’t need it for anything else anytime soon. Never invest your emergency fund.

Keep your money working for you

The key to wealth is turning your money into more money. There are a ton of ways to do this, even with only $1,000.

As I noted above, the best option for your money will depend entirely on your own circumstances. Consider all of your options before making any big decisions about where to put your savings.

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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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Many hotel credit cards include complimentary elite status. Find out how this benefit works and how it can upgrade your travel experience. [[{“value”:”

I’ve been using travel rewards cards for years. But sometimes, I’m still pleasantly surprised by the perks they offer.

Case in point, many hotel credit cards include automatic elite status. Hilton cards can get you Silver all the way up to Diamond status, depending on the card you choose. Marriott Bonvoy cards offer Silver Elite to Platinum Elite status.

I wasn’t always a fan of hotel cards, and elite status never seemed like a big deal. It has since become one of my favorite features — and it has seriously upgraded my travel experience.

What is hotel elite status?

The major hotel chains all have their own loyalty programs. As a member, you earn points redeemable for free nights.

Each loyalty program also has elite status tiers. If you stay enough nights, or earn enough qualifying points, you can get elite status with the hotel. For example, you might get silver status for staying at least 10 nights per year, gold status for staying 30 nights, and so on.

Basically, elite status is a way for a hotel to build loyalty and reward its most loyal guests. It includes complimentary benefits, and these benefits get better the higher your status in the loyalty program.

How elite status can improve your hotel stays

Here’s a look at some of the typical benefits you can get with elite status:

Complimentary upgrades, when availableFree daily breakfast for twoEarly check-in and late checkout, when availableGuaranteed room availabilityAccess to the hotel’s club or lounge areaBonus points on stays

Let’s say you’re in one of the higher status tiers with your favorite hotel chain. Instead of waiting in line at reception, you use the special desk for guests with elite status. You’re told that since there’s availability, your room has been upgraded.

Even though breakfast for two would normally cost $70 or $80, you don’t need to worry about that, as it’s included. And since your flight home isn’t until the early evening, you take advantage of a late checkout to enjoy the last day of your vacation.

I’ve gotten to experience the elite status treatment quite a few times over the last two years, and it has made hotel stays much more enjoyable. Some of the perks save you money. Free breakfast for two could knock a sizable amount off your bill if you’re staying a few nights. And some of them, especially complimentary upgrades, make your stay more special.

Getting elite status with a hotel card

If you want elite status with a hotel, it’s probably easy enough to get it, no matter how often you stay there. The major chains all offer hotel credit cards, and elite status is a standard feature on many of them. Here are a few of the biggest chains that have their own credit cards:

HiltonHyattIHGMarriott

All these hotels have multiple cards at different price points. Generally, cards with higher annual fees also include a higher elite status tier. These cards have other benefits, too, so you’ll want to take all these factors into account when deciding which one to pick.

If you’re a fan of a specific hotel chain, check out the credit cards it offers, and apply for the one you like the most. If you’re flexible about where you stay, then you can compare card options from different hotels. I’ve never had a favorite hotel chain, so I did the latter. I got a Hilton card, since I liked its benefits. Now I stay at Hilton properties when I can to take advantage of my elite status.

For frequent travelers, elite status with a hotel is nice to have. If you think it’s something you’d enjoy, there are plenty of credit cards that can help you get it.

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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.Lyle Daly has no position in any of the stocks mentioned. The Motley Fool recommends Hyatt Hotels, InterContinental Hotels Group Plc, and Marriott International. The Motley Fool has a disclosure policy.

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You don’t need to keep the same stock broker for your whole life. Check out a few of the reasons you may want to make a change with your brokerage. [[{“value”:”

It’s a great time to be an investor. A large number of brokerages offer taxable accounts and retirement accounts. Just about all the best stock brokers now offer commission-free trading, too. You don’t need to pay costly fees to invest anymore.

You have options for where you invest. And in some situations, it makes sense to switch to a new brokerage. Here’s when you may want to consider doing this.

1. You’d like to have your banking and investment accounts in the same place

Some brokers focus primarily on investing, with taxable brokerage accounts and individual retirement accounts (IRAs). Others offer investment accounts and bank accounts, such as checking accounts and high-yield savings accounts.

There are benefits to having all your accounts in one place. It’s more convenient and easier to stay on top of your finances, since you can see everything by logging into a single account. You can also quickly transfer money between your accounts. If that’s something you’d like, and your current broker doesn’t offer bank accounts, there are plenty that do.

2. You want to expand your investment options

Pretty much every broker lets you invest in stocks. Other than that, investment options vary quite a bit from broker to broker.

There are many types of investments that not every broker offers. These include mutual funds, bonds, options, futures, and fractional shares (being able to buy a portion of a stock share). If you’ve found yourself wishing your broker had more ways to invest, it could be time to make a change.

3. You could earn a bonus

Stock brokers want your business. Many of them are willing to pay for it in the form of broker bonuses. Some brokers offer stock shares and even cash bonuses of up to $1,000 for new clients.

Many broker bonuses are based on the amount of money you deposit and transfer over to your new broker. For example, a broker may offer $300 for bringing over at least $50,000 in new money, $500 for at least $100,000, and $1,000 for at least $500,000. With a sizable portfolio, you could qualify for some impressive bonuses.

Keep in mind that a broker bonus alone typically isn’t a good reason to switch to a new broker. What’s important is having a broker you like, so you shouldn’t pick one just for a bonus opportunity. But if you find a broker you like that’s offering a bonus, then it’s worth taking advantage.

4. You’re looking for a platform you’re more comfortable using

Every broker has its own unique trading platform. Some are more basic and well-suited for beginners. Others are far more advanced, which is harder if you’re new to investing, but can be useful if you’re an experienced investor.

It’s easier to get into the habit of investing when you like using your brokerage account. If placing an order is a frustrating experience, or if you can’t stand your broker’s mobile investing app, look for one that you’re more comfortable using.

5. You’re not satisfied with your current brokerage

Finally, if you’re dissatisfied with your brokerage in any way, remember that you don’t need to stick with it. As mentioned earlier, there are quite a few brokers to choose from.

Unhappy with your current broker’s customer service? Is it lacking educational tools and research offerings? Whatever your reasons, you could at least explore your options to see if there’s a better fit for you.

Switching to a new brokerage can be a good financial move. I recently changed brokers myself, and I’m happy I did. Now that you know the best reasons to look for a new brokerage, you can decide if it’s a move you want to make.

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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 work for your money. Here’s how to make your money work for you with passive income from sources like REITs and index funds. [[{“value”:”

There’s a lot of weird information on the internet about a lot of stuff. But boy, does it love get-rich-quick schemes that promise you’ll make a bunch of money while doing almost nothing. The truth, of course, is a lot different. What you end up with is a system that doesn’t work, an extra job that wastes your precious time, or a con job that just sucks in your money like a reverse firehose.

Fortunately, there are some legitimate passive income streams. You’ll need a brokerage account and some money to put to work. And you’ll need to put in a bit of research at the start. But once you’ve made your selections, they will pay you indefinitely. Here are three to consider.

1. Real estate investment trusts

Real estate investment trusts (REITs) are companies that own portfolios of different kinds of real estate, often around a singular industry or goal. For example, you might have a REIT that only owns industrial buildings. Or one that focuses on apartments. Or one that rents different types of biotech company units.

REITs are either private or publicly traded. I don’t recommend getting into private REITs unless you already have a lot of experience with publicly traded ones. The public ones have stiff financial disclosure rules and a lot of regulations on how they must invest their money and disburse earnings to investors. For example, 90% of taxable income has to go back to shareholders as dividends.

The dividend of a REIT is its crowning glory. All stocks are an investment in a business, but with REITs, you get paid real money based on what you put in and how well the business performs. That’s the dividend, which you can then use however you wish, without selling your stocks.

No matter what kind of real estate you’re interested in, there’s a REIT for you. You’ll find dividend yields, the ratio of the dividend compared to the stock’s price, from about 4% to above 10%, though I have a hard time trusting anything with a yield above about 6% or 7%.

If, say, you choose a REIT with a 5% dividend yield, that means that you’re earning $0.05 per $100 invested in dividends yearly. Plus as an owner of a stock, you may benefit from the stocks’ appreciation over time. So, when you go to sell your investment, you can also reap a second reward.

This is why I love REITs.

2. Exchange traded funds

If you want to invest in the stock market, but don’t really have any particular stocks picked out, an exchange-traded fund (ETF) might be the answer. Unlike picking individual stocks, ETFs let you choose a basket of stocks that represent different things. That might be a whole industry such as aerospace. Or a country — looking for an all-Canadian ETF, eh? It might even be a business philosophy, for example, companies with a solid focus on innovation.

However you want to slice up the business world, you’ll find an ETF that’s pre-cut and ready to go.

ETFs trade just like stocks. But unlike stocks, they represent several different companies, and so the returns can vary pretty widely based on what you choose. ETFs also carry fees, which vary depending on how they’re managed and where you buy them. If you choose your own ETFs and buy them through a self-service brokerage account, you’ll generally get the best deal on fees. But if you lack experience with investing in general, it may be worthwhile to pay a broker to do this research for you.

ETFs work just like stocks, in that if you hold on to them they can potentially increase in value, and many will pay dividends if all goes well. Dividends are often paid monthly, but can be paid at other intervals. This is largely based on the stocks within the ETF. It’s very important to read the documentation with your ETF before committing.

3. Index funds

Index funds follow the rise and fall of particular stock indexes, like the Nasdaq, the S&P 500, or even the Russell 2000. Like ETFs, there is a wide range of index funds to choose from. In fact, index funds are sometimes considered a type of ETF.

People who invest in individual stocks, like myself, spend a lot of time reading financials and learning about the companies they’re invested in. If that’s not for you, choosing an index fund can help you diversify your portfolio without having to do as much research. You can optimize your long-term returns — and you don’t have to pick a particular stock or an industry.

So, let’s say you want to invest in a tech-heavy index. Well, there’s nothing better for that than the Nasdaq, so grab the Nasdaq index fund that makes your heart swell with joy. You won’t necessarily get a slice of every stock in the Nasdaq, depending on which fund you choose, but the prospectus will outline what’s included.

Index funds also often pay dividends. The payments will vary a lot based on what stocks are being used to set the index, and how they perform. They may pay monthly or quarterly, so check your index fund prospectus before committing.

Income-producing investments are easy peasy

Your passive income streams should be that: passive. If you have to do a bunch of regular work to make them keep performing, you’ve got a job, not a passive income machine. But, REITs, ETFs, and index funds make passive income as simple as set and forget.

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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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