Money Management

Travel is fun, but it can also lead to stress about money. See which vacation costs are the biggest stressors and how you can solve them. [[{“value”:”

A vacation should be a relaxing experience. Unfortunately, it often doesn’t work out that way. Lots of travelers experience financial stress while they’re on vacation. You expect to get away from it all and enjoy yourself, only to find that you’re constantly thinking about how much you’re spending and how it’s going to affect your finances back home.

Recently, Empower conducted a survey where it identified travel-related sources of financial stress. Here are the top five, the percentage of Americans who have experienced each one, and what you can do about them.

1. Dining out for every meal (51%)

If you’ve ever worried about your food spending on a vacation, you’re definitely not alone. Over half of Americans have felt the same way.

Restaurant spending can sneak up on you while traveling. Many travelers budget for airfare and a hotel, but don’t spend much time planning for meals. When you’re going out for two or three meals per day, that could easily add $1,000 or $2,000 to your travel expenses.

What to do: I’ve done my fair share of stressing about food costs, too. Here’s what has helped me:

Make dining a part of your travel budget. I normally plan for food to cost anywhere from $100 to $300 per day, and by preparing for this ahead of time, I’m not unpleasantly surprised in the middle of a trip.Book accommodations that include breakfast. Some hotel credit cards get you free breakfast, which is a good way to save.Look for alternatives to dining at restaurants. You could grab cheaper street food from time to time or get sandwiches and snacks at a grocery store.

2. Future credit card bills (29%)

About 3 in 10 Americans stress about future credit card bills in the middle of a vacation. It’s hard to completely relax on a trip when you know you’ll have debt waiting for you at home — especially with the average credit card interest rate being above 20%.

What to do: Set up a savings account to use as a travel fund. Figure out how much money you’ll need, and start transferring money to your travel fund every month. It may take a little longer to save up enough money for the trip you want, but you’ll be able to pay your credit cards in full after your trip.

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3. Experience costs (27%)

Along with dining, experiences and activities are the other big travel expenses people have while on vacation. Not everything costs an arm and a leg. But if you want to do any expensive activities, such as fine dining or chartering a boat, those can put a dent in your travel budget. And even more affordable activities can add up over the course of a vacation.

What to do: Find a balance between low-cost and higher-priced activities. I like to start by figuring out which expensive activities are a must-do and which ones aren’t as big a deal if they don’t fit the budget.

After I’ve decided on those activities, I add in some cheaper, but still fun options for the rest of the trip. Art galleries, walking tours, and a day at the beach are all good choices that don’t cost much.

4. Local transportation costs (24%)

Airfare may be the main transportation cost, but getting around once you’re on the ground can be costly, too. In many cities, Uber and Lyft rides normally cost at least $15 to $20. If you take a couple of those per day, that could be $75 to $100.

What to do: The best way to get around varies from city to city. So before your trip, search online to see what other travelers recommend for the destination you’ll be visiting.

Some places, including much of western Europe, are walkable and have excellent public transportation. If you’re going to an area like this, it may be a waste of money to rent a car or pay for ride-hailing services every day. By learning about your options before you go, you can avoid overpaying for transportation.

5. Gift/souvenir costs (22%)

The last financial stressor in the top five is gift and souvenir costs. It’s not always easy to find something for every friend and family member. It’s not cheap, either. As anyone who has visited a museum gift shop knows, cool trinkets can be surprisingly expensive.

What to do: Don’t breathe a word of your upcoming trip to friends or family. They can’t expect a gift if they don’t know you went anywhere. If they ask where you were, just tell them you were doing a digital fast.

If you’d rather not lie to some of the most important people in your life, just set a reasonable souvenir budget. You can find fun gifts at every price point. Most people aren’t expecting you to bring back anything that breaks the bank. They’ll be happy you thought about them on your trip and decided to bring them something, regardless of what it costs.

Don’t let financial worries ruin your vacation

Planning ahead goes a long way toward having a stress-free vacation. If you don’t have a travel fund already, set one up so you can make saving for vacations part of your routine. You may also want to check out travel rewards credit cards — these are my favorite way to travel for less.

Once you’re ready to go on vacation, decide how much you can spend on everything based on your travel savings. By doing a little more work before your trip, you can ensure that it’s truly a relaxing getaway.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool has a disclosure policy.

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Is your business at risk of making major payroll mistakes? Read on to see if that’s the case, and learn how to avoid common blunders. [[{“value”:”

Running a small business is no easy feat. Not only do you have to oversee all operations, but in the absence of the right help, you may also find yourself tasked with potentially tricky tasks, like payroll.

Unfortunately, payroll may be more complex than you imagined. Here are three common payroll mistakes small businesses tend to make.

1. Classifying employees incorrectly

Are all of your employees W-2 employees, or are some independent contractors? It’s really important to know.

W-2 employees may be entitled to certain benefits that contractors are not. At the same time, you may be able to impose certain rules on W-2 employees that you can’t rightfully impose on independent contractors.

If employee classification isn’t your area of expertise, it could pay to hire a human resources manager to help make those determinations. As an example, generally, with an employee, you have the right to dictate what their hours are and where they can work. You may not have the same rights with a contractor, so these are important details to know.

2. Miscalculating pay

Paying your employees may be a complicated endeavor. Not only do you have to account for the right deductions and tax withholding, but you also need to factor in bonuses and overtime.

The right payroll software can be instrumental in helping you navigate these complexities. But it could also be a good idea to hire an accounting professional to manage your payroll so you don’t have to stress over the many small but significant details involved in paying your staff.

3. Failing to send out tax forms in a timely manner

If you’ve ever been a salaried employee yourself, you may have memories of submitting tax returns along with a W-2 summarizing your annual wages. As a small business owner, it’s on you to make sure W-2 forms are given out in a timely manner.

Not only might you create a hardship for your employees by being late with W-2s, but you also risk potential fines. For the 2023 tax year, for example, the penalty for not supplying W-2 forms by the Jan. 31 deadline was $60 or more per late form.

But it’s not just W-2s to worry about. If you use independent contractors, you’ll need to create 1099 forms summarizing their pay as well.

A good software program can help remind you of deadlines and make it easier to generate the forms you need. But once again, this is a situation where outsourcing payroll to a professional could make a lot of sense. When you’re running a business, you’ve got a lot on your plate, so let that person be the one tasked with getting forms out in a timely fashion.

Delving into the world of payroll could mean getting in over your head. Now that these blunders are on your radar, you may be in a better position to avoid them. But it also pays to seek help as appropriate to avoid payroll-related headaches and focus on what you do best — overseeing a business.

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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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What can financial trends among baby boomers teach us about finances in America? Keep reading to find out. [[{“value”:”

With 76.4 million individuals in the U.S., baby boomers are a generation that’s shaped society at every turn, and their personal finance habits are no different. Let’s dive into seven eye-opening stats that reveal how this dynamic generation is shaping the financial world, from embracing modern technology to preparing for a historic wealth transfer.

1. Fintech adoption surges among boomers

Who said new technology is only for the young? A whopping 78% of baby boomers ramped up their fintech tool usage in 2022. It’s not just about checking accounts online; we’re talking about mobile stock trading apps, digital wallets, and more. This shift is revolutionizing how boomers manage their finances, making it easier to keep tabs on investments and spending in real time. They’re proving you can teach an old dog new tricks — and these tricks might just include blockchain and robo-advisors!

2. Boomers control a massive share of U.S. wealth

Think of economic power, and you might just think of boomers. They currently hold a stunning 52.8% of all U.S. wealth. That’s not just a big chunk of change — it’s half of the country’s $156 trillion in assets. That’s despite making up 21% of the country’s population. This level of wealth means boomers have a massive influence on the economy, driving everything from the stock market to real estate trends. Their financial decisions ripple across the economy, affecting us all.

3. A great wealth transfer is coming

Get ready for the biggest generational money move in history. Baby boomers are set to pass down about $84.4 trillion by 2045, with most of it going to their heirs and a tidy sum to charities. This isn’t just a lot of money; it’s a transformative wave that will reshape the financial landscape, impacting everything from investment strategies to charitable funding.

4. Retirement savings levels vary

Even with all this wealth, boomers’ retirement savings present a complex picture. The median savings balance is $202,000, which might sound okay at first glance. But dig deeper, and you’ll find that 13% of boomers don’t have any retirement savings at all. This gap between the haves and the have-nots highlights the challenges many face as they approach retirement, from rising healthcare costs to inadequate pension funds.

5. Boomers are a philanthropic force

Boomers aren’t just spending; they’re giving money away, and they’re giving a lot. They represent about 73% of all U.S. charitable donors and are a major philanthropic force. Whether it’s arts, education, or healthcare, Boomer donations support various causes and drive social change.

6. Boomers are not ready to retire

Here’s a twist: over half of boomers are choosing to work past the traditional retirement age of 65. This could be part financial necessity, and part a desire to stay active and engaged. Continuing to work allows boomers to maintain their lifestyle, support their families, and even pursue new career passions — proving that for many, “retirement” is becoming a whole new phase of opportunity and growth.

7. Boomers lean on Social Security

Despite their significant wealth, a good chunk of boomers — 41%, to be exact — rely on Social Security as their main source of retirement income. This stat underscores the importance of this program and highlights the vulnerability of many older adults who may not have enough saved to fully cover their retirement years.

Baby boomers are a generation of contrasts and complexities. With their big personal budgets and innovative financial practices, they’re not just watching the economy — they’re making waves. From the digital finance boom to the nuances of retirement planning, the financial legacy of the boomers will influence generations to come, shaping economic trends and personal finance strategies. As they set the stage for future generations, one thing is clear: baby boomers’ impact on the financial world remains as strong as ever.

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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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It’s important to have ample cash reserves as a new homeowner. But how much is enough? Read on to find out. [[{“value”:”

Recent data from SecureSave finds that 63% of Americans don’t have enough savings to cover an unplanned $500 expense. But when you’re buying a home, the bill for a single repair could well exceed the $500 mark.

That’s why it’s so important to have a solid emergency fund when you’re taking on the expense and commitment of homeownership. But just how much money should you keep in your savings account in that situation? Let’s find out.

Save enough to cover three months of bills at a minimum

The general consensus when building an emergency fund is that it’s important to have enough cash to cover three months of essential expenses at a minimum. The logic is that if you were to get laid off, you’d have money to tide yourself over while looking for work.

In the context of owning a home, a three-month emergency fund is likely to provide you with enough money to cover an unexpected repair — even a larger one. Let’s say your essential monthly bills come to $3,500, so you build a $10,500 emergency fund. If your water heater goes kaput and needs to be replaced, that sum leaves you with more than enough money to cover the cost, which Angi puts at $880 to $1,789 (with an average cost of $1,311).

For better protection, aim higher

A three-month emergency fund certainly gives you a decent amount of protection as a homeowner. But let’s face it — there’s no rule stating that you’ll only face one big home repair per year. What if you end up having to replace a water heater in June and then your heating system malfunctions in October, followed by a major roof repair in February?

It could be a good idea to aim for a six-month emergency fund, rather than three months. That also buys you more protection in the unfortunate but possible event that you wind up out of a job at the same time a major home repair pops up.

Save enough to address issues found during your home inspection

You may be buying a home that passes its inspection with flying colors, only to have issues arise shortly thereafter without warning. But if your home inspection revealed issues that are likely to come to a head in the coming years, then you may want to get estimates of those repairs and aim to add the sum of addressing them to your emergency savings goal.

For example, let’s say you want a three-month emergency fund for protection from a layoff. If, during your home inspection, it was discovered that your air conditioning system is functional but very old and wearing down, it’s a sign you may need to replace that unit somewhat soon. If you’re given an estimate that brings the cost of that work to $4,500, then you should aim to pad your emergency fund by that amount.

All told, you need cash reserves on hand when you own a home. At the very least, aim for a three-month emergency fund. But if you can do better, you’ll have that much more protection — and you’ll gain that much more peace of mind.

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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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A Costco membership is an extra expense, so it’s wise to ensure it’s still worth the cost before you renew. Find out why you may want to avoid renewing. [[{“value”:”

Many people rave about shopping at warehouse clubs like Costco. Getting a deal on bulk goods and other household essentials can be a win for your wallet. But a Costco membership isn’t right for everyone. In fact, for some, it could be a waste of money.

If you’re trying to decide whether it’s worthwhile to continue renewing your membership, you’re in the right place. Here are a few reasons to refrain from renewing your membership.

1. You no longer live or work near a club

Being a Costco member makes sense if you live or work near a club. You can shop there frequently without wasting time or gas. However, if your situation has changed since joining, and you no longer live or work near a club, you may want to reconsider renewing your membership. If you enjoyed the benefits of shopping at a warehouse club, see if there’s an alternative club in your community, like Sam’s Club or BJ’s Wholesale Club.

2. You’re not getting your money’s worth

If you’re paying for a membership but aren’t getting your money’s worth, it may be time to say goodbye to your Costco card when you’re up for renewal. It costs money to be a member, and you want to ensure you’re getting value from your investment.

How can you determine if you’re getting your money’s worth? Consider how much you spent on your annual membership and how much you’re saving every time you shop at your local club. For example, a Gold Star membership costs $60 a year.

Let’s imagine you go to Costco a few times a year and buy ten bags of 40-pound dog food throughout the year. Costco sells its 40-pound bag of Kirkland Signature Adult Formula Chicken, Rice, and Vegetable Dog Food for $49.99. A 40-pound bag of a similar product, Purina ONE Plus Dry Dog Food for Adult Dogs, Real Protein Rich Natural Chicken & Rice Formula is sold at Walmart for $60.48.

You’d pay $604.80 for 10 bags at Walmart or $499.99 to buy 10 bags at Costco. That’s a savings of $104.81 a year. Considering your Costco membership costs $60, you’d get your money’s worth. You’d likely use your membership perks to pick up at least a few other essentials every time you shop, resulting in even more savings.

But if you’re not seeing the savings add up and aren’t saving more than $60 a year, it may not be worthwhile to continue being a member.

3. You’re throwing away food

Many of the food items sold at Costco are sold in large packages. If you live alone or with only one other person, finishing all the food you buy from Costco before it expires can be challenging. The savings you get from shopping at Costco are no longer a win for your wallet if you throw away spoiled food. Buying food at other grocers may help you avoid food waste.

4. You can no longer afford the annual membership fee

You may want to skip renewal if you dread paying your annual membership dues because of the cost. Spending $60 or $120 yearly to shop at Costco is an investment. But if this expense no longer makes sense for your budget, that’s OK. Instead, consider shopping at other low-cost retailers like Aldi. You don’t need a membership card to get the best deals.

5. You’re spending beyond your means

Another reason you may decide not to renew your membership is because you’re overspending. Many shoppers keep more money in their checking accounts by shopping Costco deals. But it can also be tempting to overbuy at warehouse clubs. Limited-time sales or new products may entice you to spend beyond your means, especially because of the affordability and uniqueness of the products offered.

If you’re not careful, extra impulse buys can add up quickly and create financial stress. If you’re spending more than you can afford, it may be time to stop being a Costco member. Otherwise, your shopping habits could negatively impact your wallet.

If you struggle with managing money, using one of the best budgeting apps can be helpful. You can set limits and monitor your spending to avoid accumulating expensive credit card debt.

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

If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.

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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.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.

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It’s unlikely that CD rates will go up from where they are today. Read on to see why. [[{“value”:”

It’s a really, really good time to open a certificate of deposit (CD) if you happen to have the money. The Federal Reserve spent much of 2022 and 2023 raising interest rates in an effort to slow the pace of inflation. And the Fed’s tactics worked.

These days, living costs are still inflated, but they’ve been rising at a far more moderate pace than what we saw in 2022. And the Fed is hopeful that it will soon be in a position to cut interest rates, thereby providing relief for borrowers.

But while those interest rate hikes made it more expensive to sign a loan or carry a credit card balance, they worked wonders for savers. Thanks to those hikes, CD rates are sitting at the highest levels we’ve seen in years, with many CDs paying somewhere in the vicinity of 5%.

Of course, when you open a CD, you run the risk of potentially missing out on a higher rate a few months down the line. So you may be wondering if it pays to open a CD now versus wait a few months and see what happens.

But based on economic conditions, it’s unlikely that the Fed will raise interest rates anytime soon. So the likelihood of CD rates rising this year from where they are today is pretty slim, which means that the time to open your next CD is now.

It pays to act sooner rather than later

The Federal Reserve has long targeted 2% inflation as its annual benchmark. The central bank feels that this particular level of inflation is conducive to long-term economic growth and stability.

The Fed is hoping that inflation will inch closer to the 2% mark as 2024 moves along. As of March, annual inflation was being measured at 3.5%, per that month’s Consumer Price Index. Once that happens, the Fed may be in a position to start cutting interest rates.

But even if that doesn’t happen very soon, it’s unlikely that the Fed will want to raise interest rates again. In fact, the Fed opted to leave interest rates unchanged for its past six consecutive meetings. So barring a really jarring change in the inflation rate, interest rates are likely to only go down from where they are today.

That’s why waiting on opening a CD doesn’t really make sense. Of course, it’s one thing to wait because you don’t have the money or aren’t sure of your financial plans just yet. But don’t wait to open a CD because you think rates are going to get better. That’s not very likely. And if you wait for that reason, you could end up stuck with a lower rate.

Consider your CD term carefully

Because the Fed is expected to lower interest rates at some point in 2024, banks are being more cautious about longer-term CD rates than shorter-term rates. So while you might find a 12-month CD with a 5% APY, a 60-month CD might only pay 3.8% or 4%.

You may be inclined to go with a 12-month CD in this scenario, since that’s a higher rate. But remember, today’s CD rates are not the norm. In a year or so from now, you may not be able to find a CD rate that’s close to today’s rates, based on how inflation shakes out. So don’t automatically assume that a longer-term CD is a poor choice because its interest rate isn’t as high as a shorter-term CD.

Case in point: Let’s say you put $5,000 into a 12-month CD at 5%. That will earn $250 in interest. But what if by the time that CD comes due, 12-month CD rates are down to just 3.5%? Over the next year, you’re only earning $175 on a 12-month CD (assuming you only put $5,000 into that CD, as opposed to $5,000 plus the $250 you earned in interest). And then if 12-month CDs pay just 2.5% the following year, your interest earnings there are $125. So that’s $550 worth of interest over three years.

Meanwhile, let’s say you put $5,000 into a 60-month CD at 4%. There, you’ll earn $200 in interest per year over the next three years, bringing your total to $600. Again, this is a simplified example that does not account for earned interest on your interest, but the point is to illustrate that if you can commit to a longer-term CD, it may be a good idea to do so.

All told, CD rates are unlikely to climb from where they are today. So if you have the money on hand to open one, don’t wait.

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

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