Money Management

Keeping money in most checking accounts means losing funds every month. Find out why and what you can do about it. [[{“value”:”

Checking account fees can nickel and dime you. Charging Americans to keep their funds in checking seems a bit silly, considering how few checking accounts pay interest. Even if you’re only paying a fee of $10 to $15 per month, that’s $120 to $180 per year that is rightfully yours. That amount doesn’t even take into consideration other checking-related fees like paper statement fees, overdraft fees, ATM fees, and account closure fees.

Fortunately, checking accounts aren’t the only game in town.

Before you make a move

Before you move any money from your checking account, review your household budget and determine how much money you need to pay all outstanding bills. While it’s rarely a good idea to leave much more than you need in an account that doesn’t earn you money, it’s essential to ensure that you always have enough available for bills to be paid.

Once you know how much you need in checking at any given time, here are four places for you to park the rest of your cash.

1. High-yield savings accounts

A high-yield savings account offers higher rates than a traditional savings account. For example, some high-yield savings accounts currently pay more than 5% on deposits. A high-yield account is an excellent place to keep your emergency fund. It’s easily accessible when needed and allows your money to grow more quickly over time.

2. Money market accounts

Another type of savings account is a money market account (MMA). Like high-yield savings accounts, some MMAs currently offer great rates. There are a few caveats to know about MMAs:

MMAs often have a minimum balance requirementMMAs may restrict the number of withdrawals and transfers you can make in a monthMMAs have a variable rate, meaning they can change without notice

Even with these restrictions, earning over 5% with an MMA is preferable to earning no interest with a checking account.

3. Certificates of deposit

A certificate of deposit (CD) is another type of savings vehicle that usually offers a higher interest rate. Here’s how it works:

When you open a CD, you promise to deposit a specific amount of money for a specified period of time, which is referred to as the “term.”The bank guarantees it will pay a set amount of interest as the CD matures.Unlike high-yield savings accounts, traditional savings accounts, and MMAs, CDs have a fixed interest rate that is locked in for the duration of the term you’ve chosen.Withdrawing money before the term ends typically results in a penalty. Fortunately, CDs are available with terms ranging from three months to five years, so you can choose one that works for your saving timeline.

4. Treasury bonds

If you have funds you won’t need to access for a while, a treasury bond is another way to grow money effortlessly. With terms ranging from 10 to 30 years, treasury bonds are considered long-term investments. When you purchase a treasury bond, you’re lending the U.S. government money. In return, the government promises to pay interest. And since treasury bonds are backed by the full faith and credit of the United States government, they’re considered low-risk investments.

A note on interest-paying checking accounts

If you’re fortunate enough to find a checking account that pays interest, don’t automatically assume it’s a good idea to tuck all your money into checking. That’s because interest-paying checking accounts don’t guarantee that your funds will keep pace with inflation. For example, the national inflation rate is currently about 3.4%. While that’s far lower than it was last year, it’s still not down to the 2% goal the Federal Reserve has set. Unless an interest-bearing checking account pays an annual percentage yield (APY) of more than 3.4%, you’re losing money.

While it’s nice to look at a checking account balance and see there’s more than enough to cover your bills, losing money by allowing funds to linger in checking helps no one’s bottom line.

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It’s nice to hope that your project gets done on time, but if you have multiple employees, project management is key. Read on to learn why. [[{“value”:”

Throughout my career, I’ve worn a lot of hats, but one that I am particularly proud of is being a project manager for a copywriting firm. I ran the teams, I assigned the workload, and, sometimes, I ate the pavement when a project slipped sideways. It was a challenge in every sense of the word, but it also was a job that brought considerable value to the small business I worked for, and I believe my work made us more efficient and productive. Here are some of the things I learned in that role.

What does a project manager do at a small business?

Project manager is a title that can have a bit of play in it, especially at a small business, but for the most part, a project manager for a small business assign tasks to the team, answers questions about those tasks, monitors the tasks and the overall project’s progress, finds solutions when a team member doesn’t meet their deadline, and generally ensures that the project gets delivered on time.

In my case, I also was often involved in hiring team members and, unfortunately, firing them, since we weren’t large enough for a proper human resources department. I also often sat in on kick-off calls so I could get a very good understanding of what the project was. During those meetings, I would build the team in my head that I thought I needed for the project as the picture became clearer.

A project manager is your efficiency secret weapon

Not every business that runs projects has a project manager or project management tools, and you can often tell. Sometimes it’s evident in a lack of cohesion of the end product, which your project manager is there to provide, and sometimes it’s evident in a lack of on-time deliverables. Small business owners often choose to go it alone, and armed with the right software bundle and well-designed project management tools, they may themselves become the project’s manager.

A project manager’s job is efficiency and problem solving, through every step of the process of creating some kind of deliverable. It doesn’t matter if it’s a house, a website, or a software package — your project manager’s goals will be improving efficiency in these areas.

Task design

Your PM knows your team better than anyone, I can promise you that. If they are tasked with choosing how to break projects down into tasks, they’re going to do this with the team’s strengths and weaknesses in mind so later they don’t have to find a way to fix a problem that could have been avoided.

Task assignment

Your team has different strengths, and your PM knows it. That’s why they will give the tasks best suited to the person with the right skills. This is an efficiency of its own, since you won’t waste time trying to assign work that’s obviously best for a particular person on the team.

Deadline compliance

There are always bumps along the road, and that means deadlines are easy to miss and hard to adhere to. A PM’s job is to deliver their projects on time. That’s why they work behind the scenes to check on progress and ensure that each part of the puzzle is moved to the right next party in a timely manner or reassigned to someone who can deliver the item before the next round of deadlines.

Quality control and product cohesion

Not all PMs are involved in quality control, but they should be at some level at a small business. This is a vital part of the job that gives your project the professional polish that will help you earn more market share over time. By implementing gatekeepers who are tasked with making the project shine according to written standards, your project manager ensures that clients aren’t coming back asking about inconsistencies.

Project managers and project management tools

Of course, no project manager can be a success without project management tools. These software packages make it possible for the project manager to see all the moving parts of a project at a glance. This is where they get a lot of their intel about how a project is doing, especially one with several teams or levels of handling involved.

When you have multiple levels in a project, such as a copywriting firm that also has editorial staff and SEO experts on hand, you have to know where all those pieces are. Plus, you need to know where they should be and who has them at any given moment. In a busy environment, that’s impossible without excellent project management software.

Project management is the key to turning a project that kind of works into one that has consistent professional shine, as well as one that meets its deadlines. That’s just as important as the rest. A perfect project is useless if it’s three weeks too late. With good project management, both in the form of human assets and software assets, your small business can be unstoppable.

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Opening a high-yield CD in an HSA could put your medical savings to work. Learn when you should (and shouldn’t) use CDs to grow your HSA funds. [[{“value”:”

Health savings accounts (HSAs) are tax-advantaged savings vehicles that help you save and invest for medical expenses. HSAs are funded with pre-tax dollars, which can lower your tax bill now, and you never pay taxes on investment returns when the funds are used for medical expenses. This makes HSAs one of the most powerful investment vehicles at your disposal, as you can keep all your investment gains for yourself.

Many HSA holders choose to invest in stocks, funds, or other investments to grow their contributions. However, with certificate of deposit (CD) rates trending higher than they’ve been in decades, some may wonder if it’s worth putting some money in a deposit account instead. If your HSA allows you to invest in CDs — and most do — let’s take a look at when it might be worth opening one in your account.

Invest in CDs for guaranteed returns

Aside from their high rates, CDs have one thing going for them — they can offer you stable, guaranteed returns. The upfront CD rate tells you how much interest you’re guaranteed to earn over the length of your term (provided you leave your money in place for the duration). It doesn’t change, even if ongoing market rates decline.

For example, the best CD rates right now pay at or above 5.00% APY. Meanwhile, the federal funds rate, which largely influences CD rates, is likely going to decline in the near future. If you lock in a 5.00 APY now, you could set yourself up to earn a solid rate at a time when going rates are much lower than that.

This might be more appealing than investing in the stock market. Stocks, though they offer unlimited growth potential, can also result in losses that could weaken or deplete your HSA money. Likewise, investing in a CD might be better than leaving your money as cash in your account, as your CD earnings can help you keep pace with inflation — while cash could lose purchasing power.

Depending on who manages your HSA, your CD options may be limited to brokered CDs. Brokered CDs don’t have early withdrawal penalties; rather, you would need to sell your CD on a secondary market if you wanted to cash out early. Brokered CDs also don’t earn compound interest, but simple interest. Often, your CD earnings will be transferred into a separate account, either on a monthly, semiannual, or annual basis.

Avoid investing in CDs for long-term growth

Although CDs can be good instruments for increasing wealth in the short term, they’re not great vehicles for long-term growth. Even the best CD rates cannot compete with the gains offered by the stock market for long-term investors. So if you have a long time horizon, your HSA funds might be better invested in stocks and index funds.

Consider, for instance, that the S&P 500 has generated an annual average return of 10% over the last 50 years. True, this doesn’t mean it will generate 10% every year — some years it will be 22%, others -5% — but over long periods, it tends toward that annual growth rate. Investing steadily in an S&P 500 fund, then, could offer you greater growth potential than the fixed rate on a CD.

Truth be told, nothing should stop you from combining CDs and equity investments. Diversifying your assets in this way can give you equal parts security and growth. Just be sure you’re investing that money in something, even if it’s in a savings account. Holding large swaths of cash in an account that doesn’t earn interest in today’s high-rate environment could mean missing out on easy earnings.

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Two-thirds of Americans have a retirement account. Find out how your own retirement savings compares to the average for your age group. [[{“value”:”

If you’re not completely confident in your retirement savings, you’re not alone. While 67% of Americans have a retirement account, only 34% believe their retirement savings is on track, according to recent Federal Reserve data gathered by The Motley Fool.

It may help to see what the typical American has put away for retirement to know where you stand. You’ll find that data below — along with the best ways to grow your retirement savings.

The average U.S. retirement savings

The median retirement savings is $87,000 as of 2022. As you’d expect, it varies quite a bit by age. Older Americans have had more time to contribute to their retirement accounts, so they naturally have more saved on average.

Here’s the median retirement savings by age:

Under 35: $18,88035 to 44: $45,00045 to 54: $115,00055 to 64: $185,00065 to 74: $200,00075 or older: $130,000

So if you’re 40 and have $100,000 in your retirement accounts, you’re $55,000 above the average for your age range. By knowing these numbers, you can quickly and easily check how your retirement fund compares to the typical American’s.

Remember that these are just national averages. They’re not a measure of whether you personally are on track for retirement. That depends on both your current retirement savings and your retirement goals.

How to improve your retirement savings

If you’re worried you won’t have enough for retirement, or you’d like to save more so you could possibly retire early, here are the best ways to build your retirement fund.

Maximize your tax savings

There are several types of tax-advantaged accounts you can use to save for retirement. The most common are 401(k) plans and individual retirement accounts (IRAs). Health savings accounts (HSAs) are another option available to Americans with qualifying high-deductible health insurance plans.

These all have yearly contribution limits. For most people, the best approach is to contribute as much as possible to retirement accounts first. If you have a 401(k) and an IRA, contribute up to the annual limits on those before saving through a taxable brokerage account. You’ll save the most on taxes this way.

Contribute to your retirement accounts after every paycheck

The most effective way to save for retirement is to make it a habit. Set aside a portion of each paycheck for your retirement savings. A good percentage to start with is 10% to 15%, depending on what you can afford.

If you have a 401(k), this is easy, as contributions are taken directly from your paycheck. While you can’t do the same thing with IRAs, you can usually set up automatic contributions to your IRA on a specific day, such as a day or two after your paycheck gets deposited.

Bump up your retirement contributions every year

If you consistently save for retirement, you’re already doing pretty well. To take it a step further, make it a goal to increase your contributions every year.

It doesn’t need to be a huge increase. If you’re currently putting 10% of your income into retirement, you could aim to add another 1% per year. You could also look for ways to increase your income. Since you’re going to be saving for decades, small increases make a huge difference over time.

Put your money in high-return investments

Along with how much you contribute, the other key ingredient in building your retirement is the return you get. Let’s say you invest $500 a month for 35 years. If you stick to conservative investments and average a 5% annual return, you’ll end up with $541,922. But if you get a 10% annual return, which is the stock market’s average, you’ll have $1.63 million — over $1 million more.

The best way to maximize your return is to invest in stocks or real estate. Stocks are easier for most Americans. As you get closer to retirement, it makes sense to shift some of your portfolio to more conservative investments, such as bonds. But in your 20s, 30s, and 40s, it’s a good idea to prioritize growth.

Saving for retirement is one of the most important parts of managing money. If you make it a habit, you can make sure you have a large enough nest egg when you want to retire.

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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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