Money Management

Over 90% of Americans are planning to travel this year. Find out how they plan to pay for it to get ideas for financing your next getaway. [[{“value”:”

Flights and hotels could be busy this year. A recent survey by Empower found that over 90% of Americans are planning domestic travel in 2024, and they expect to spend an average of $1,163. For the 37% who are planning an international trip, they expect to spend an average of $2,904.

If you’re hoping to take a trip of your own, one of the main challenges is figuring out how to pay for it. For some helpful ideas, here are the top five ways Americans said they plan to budget for and afford travel.

1. Extra money from side jobs (45%)

Getting a side hustle to earn extra money is popular financial advice. Americans appear to be taking that advice, too, as nearly half are using side jobs to fund their upcoming trips.

If you have the time for it, a side job could be a great way to increase your income. Let’s say you start working for a food delivery app and net $20 per hour (after setting aside money for taxes). By working two or three weekends per month, you could make another $300 to $400.

There are lots of side hustle options. Some of the most common are deliveries, driving for ride-hailing services, dog walking, and tutoring. Try to find one you enjoy doing, so it doesn’t feel like a chore.

2. Extra money from gifts, tax refunds, bonuses, etc. (34%)

About one-third of Americans pay for travel using a windfall of extra money. At this time of year, many Americans are getting tax refunds, and it could be a sizable amount. The average tax refund in 2023 was $2,903 — coincidentally, almost exactly the same amount people are expecting to spend on international travel.

You can’t always rely on this kind of extra money, but when you have it, there’s nothing wrong with spending some on yourself. Consider using a portion of it for saving or investing, as well. That way, you can also make progress on your financial goals.

3. Travel rewards/loyalty programs (32%)

Another popular way to pay for travel is with travel rewards. Many airlines and hotels operate loyalty programs where you can earn points or miles every time you use them. There are also travel credit cards that earn rewards you can redeem to cover travel expenses.

This is my favorite way to save money on travel. I usually save $5,000 or more on travel expenses each year thanks to my travel cards.

At a minimum, it’s a good idea to sign up for a loyalty program account with any airlines and hotels you like. It’s free, after all. If you don’t mind opening a new credit card, check out The Motley Fool’s Ascent’s picks for the top travel rewards cards to get started.

4. A dedicated savings account (21%)

About 2 in 10 Americans have a savings account set up specifically as their travel fund. You could either open a new savings account for this or see if your current account lets you set up savings buckets for different goals you have.

A dedicated savings account for travel is a good way to keep your savings organized and to motivate yourself to set aside money for traveling. You could transfer over $100 per month, $200, or more, so that you always have some money saved for your next trip. Make sure to check out high-yield savings accounts, so you can earn as much interest as possible.

5 (tie). Physical travel fund and budgeting apps/software (19%)

Instead of a savings account, 19% of Americans prefer a physical travel fund. Some go with the cash stuffing method, where you put cash into envelopes for all your expenses and savings goals. Others go with an old-fashioned piggy bank.

Equally popular were budgeting apps and softwares. These can come in handy if you’re looking for places to cut back on your spending and free up more money for your trips.

There’s more than one way to pay for a vacation

Those numbers add up to way more than 100%, because most people don’t use just one method to pay for travel. They use two, or three, or more.

If you want to travel more without worrying about how you’ll pay for it, setting up your own travel fund is a good place to start. A high-yield savings account is normally the best way to go, since your money will be safe and earning a competitive rate.

Using travel rewards cards and joining loyalty programs are also great ways to cut your travel costs. And if you want to give your travel fund a boost, setting aside extra money you receive or earn through a side job are both good options.

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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 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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The average net worth across all Americans is $192,700, but net worth can vary by age. Learn how to calculate yours here. [[{“value”:”

Net worth is an important measure of your financial situation. You can calculate your net worth by adding up the value of all that you own, such as your cars, house, the cash in your bank account, and other personal possessions, and then subtracting all of your obligations, like your mortgage and credit card balances.

When you’ve calculated your own net worth, you may want to compare that number to your fellow Americans to try to get an idea of how you’re doing financially. The Motley Fool’s recent research into average net worth can help you to do that.

Here’s the average net worth by age in the United States

According to The Motley Fool’s research, here’s the median net worth for every age group based on 2022 data from the Federal Reserve.

As you can see, net worth tends to go up as you get older. However, once you’ve reached age 75, it starts to decline again. This is because seniors dip into the retirement savings they’ve acquired in their brokerage accounts to cover their expenses.

How to increase your net worth

Net worth is an important measure of your financial security. You want to own more than you owe, and eventually you want to have enough assets that you can live off of them without bringing in a paycheck.

So, whether your net worth is above or below average for your age group, you’ll still want to work on growing it over time. And there are a few ways you can do that, including the following.

Increase your income

Earning more money doesn’t automatically grow your net worth. If you spend the extra cash you bring in on disposable goods, it won’t help at all. But if you earn more money, it’s easier to find spare cash to invest that can help your asset balance to grow.

Acquire assets that produce income for you

It’s hard to grow your net worth just by saving money alone. You’ll want to invest it so it can work for you. You can do this by buying assets that ideally produce positive returns, such as stocks or certificates of deposit (CDs), which are paying especially high rates right now.

Pay down debt

Reducing your liabilities is another great way to grow your net worth. You should focus on paying off high interest debt, such as that held on credit cards. Paying extra each month toward your principal can bring your balance down faster. You could also use a personal loan to pay off higher interest debt, which can reduce the interest you pay and make debt payoff easier. Paying off low-interest debt like a mortgage early usually doesn’t make sense, though, as you can get a better return by investing than the return on investment (ROI) from saving on interest costs.

The more of these steps you take, the higher your net worth can grow, and ideally you can end up with many more assets and many fewer debts than the average American has.

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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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While some banks take money out of your pocket, others add to your bottom line. See why you may want to examine your banking relationship more closely. [[{“value”:”

Most of us were taught as children that loyalty is important, and it is — sometimes. It’s important to be loyal to our family and friends. It’s even important to be loyal to deeply held beliefs. But gone are the days of loyalty to a bank that may cost us money. As tough as it can be to break away from an institution you once felt a sense of loyalty toward, here are four reasons you might want to consider it.

1. Fees are a ridiculous waste of money

While some banks advertise “fee-free” accounts, Americans are still spending, on average, around $14 per month for the privilege of having a bank account. For those who sometimes deal with insufficient funds, the monthly total can be much higher.

Boiled down to its simplest form, banking works like this: We deposit money. The bank uses some of that money to make investments that can result in profits, and it uses some of the money to loan us money. Consumer loans carry interest rates that also profit the bank.

Of course, there are unnecessary fees. Any money we pay as customers only adds to the bank’s bottom line.

Paying a bank for the privilege of allowing it to use our money is an outdated practice and one that most bank customers should not have to deal with.

If you’re still paying fees for everyday banking services like checking or savings accounts, you should know that plenty of banks provide those services for free.

2. Rates vary dramatically

I don’t know about you, but when I was young, I assumed that all interest rates paid on deposit accounts, like savings and certificates of deposit (CDs), were pretty much the same. In other words, I believed that the rate I was offered by my home bank was the same as the rate the folks banking down the street were offered.

Nothing could be further from the truth. Rates vary based on many issues, including how much overhead a bank carries.

If you’re sticking with your bank even though your money could earn a higher interest rate elsewhere, it’s time to consider other banks.

3. It’s possible to outgrow your bank

When we’re just starting out, things may be a bit more black and white. It’s possible that we barely have enough money to cover our bills and can’t begin to think about investing in interest-bearing deposit accounts.

However, as our situations change, so do our banking needs. Let’s say you’re about to send your first child off to college and want to open a student checking account for them. If that’s not something you can find at your current home bank, it’s okay to look for a bank that provides the service.

4. Your bank doesn’t help pay your bills

Ultimately, we’re responsible for our own financial situations, including how comfortable we are in retirement. Unless your bank charges no silly fees and offers competitive rates on your deposits, it’s doing nothing to help you prepare for your golden years (or anything that happens between now and then).

Every penny you save today by not paying fees and by earning interest on the cash in your deposit accounts is money you’ll have available for the future.

Fortunately, there are a lot of great banks out there, and if you’re making deposits with one of them, congratulations! You’re on the right track. However, if you have a niggling doubt that your bank is doing you wrong, feel free to look around for a new one. We won’t tell anyone.

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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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Some items I buy regularly seem to always cost less at the dollar store. Read on to learn more. [[{“value”:”

The $139 credit card charge I incur each year for my Amazon Prime membership is more than worth the money. That fee gives me access to unlimited two-day shipping, and it spares me numerous trips to the store every month for things like birthday gifts, household items, clothing, and more.

But while my Prime membership has bailed me out on many occasions, there are certain scenarios where I have to turn to my local dollar store instead of Amazon. Here are three things I always buy at the dollar store — and why I do so.

1. Goody bags and fillers

As Class Mom for several years running, I’m constantly putting together goody bags for a room full of kids. On Halloween, those bags are typically filled with things like plastic bats and ghost erasers. On Valentine’s Day, there’s usually some sort of heart-shaped chocolate.

The reason I turn to the dollar store for goody bags and fillers is because it pretty much always results in savings compared to Amazon. For example, right now, Amazon is selling a 30-count package of goody bags for $4.99. But I only need 24 bags for my daughter’s class, and lo and behold — I can get a 24-count at my dollar store for just $1.25 (sadly, as is the case in many areas, $1.25 is the new go-to price point at my local dollar store).

2. Last-minute school supplies

My kids are constantly running out of school supplies — or they’re constantly forgetting to tell me when they need new items. I often have to make a last-minute run for school supplies. And while Amazon Prime gives me the benefit of free two-day shipping, sometimes, I don’t have two days to wait.

Also, I tend to find that Amazon’s prices aren’t so great for school supplies. Recently, my daughter needed colored pencils, and Amazon had a box of 24 for almost $6. I’d rather spend $1.25 at the dollar store for the same quantity — and stock up on extra for the next colored pencil emergency.

3. Brown paper bags

I run a number of programs at my kids’ school where I need paper bags to send home purchases or giveaways. On Amazon, a 500-count package costs $24.99, which is $0.05 per bag. But my local dollar store sells a 30-count package for $1.25, which is slightly less expensive per bag (more like $0.04). And since I’m usually buying these on behalf of our school’s Parent-Teacher Organization, I have to be mindful of savings, even if it’s a small amount.

Also, as is the case with school supplies, sometimes, brown paper bags are something I need in a pinch — such as if we’re running a school program and need more bags on the day of. So in that case, two-day shipping doesn’t do me a ton of good.

My Amazon Prime membership has worked wonders for my budget. But sometimes, it pays to turn to the dollar store rather than rely on Prime. If you’re used to buying just about everything on Amazon, the next time you have an opportunity, check out prices at your local dollar store and make a list of the items you regularly buy that are cheaper there. That’ll help you decide which source to turn to the next time you need those items specifically.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

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Today’s high CD rates could boost your savings. Find out whether you should include CDs in your retirement plan. [[{“value”:”

Certificates of deposit (CDs) are all the rage right now. With annual percentage yields (APYs) as high as 5% on some accounts, it isn’t hard to see why. When you buy a CD, you commit to leaving your money alone for a set period. In exchange, you’ll earn a fixed rate of return that’s often higher than you’ll get with a savings account.

If you’re planning for your old age, those guaranteed returns may seem like a good option. Particularly as CDs are almost always FDIC-insured. However, CDs usually work best as short- or medium-term savings vehicles, rather than investments. As such, depending on how close you are to retirement, CDs may not help you reach your goals.

If you’re considering including CDs in your retirement planning, here are two factors to consider.

1. Investing is riskier, but it could generate higher returns

Knowing the difference between saving and investing is crucial when it comes to building up a retirement fund.

Saving is a lower-risk way to put money aside for the near term. That might mean your emergency fund, a deposit on a house, or your vacation money.Investing is about buying assets you think will accumulate value over time. That might mean buying stocks, bonds, property, or other assets. It’s riskier than saving but has the potential to grow your money more. For example, in the past 30 years, the S&P 500 has generated average annual returns of just under 10%.

Put simply, if you’re trying to build money for your twilight years, savings accounts and CDs will only get you part of the way. Not only do you need to beat inflation, you’ll also need to build up enough money to cover your living costs for several decades. That means taking some risks in order to earn higher annual returns.

Even if top CD rates stay at 5% for the coming couple of decades — which is extremely unlikely — they still won’t beat any potential investment gains. If we assume your investments might earn 8% a year, that can make a big difference over time.

Let’s say you start with $10,000 in your retirement account and contribute $500 each month. Here’s a simple illustration of how much you might accumulate, without factoring in inflation.

Actionable takeaway:

The risk-to-reward ratio changes as you get closer to retirement. If you have 30 or 40 years to build wealth, it makes sense to take on more risk for higher returns. You’ll have time to handle short-term market fluctuations or recover if an investment doesn’t pan out.

But if you are nearing retirement, you’ll likely want to decrease your risk exposure. In that scenario, the current high CD rates may make them worth including in your portfolio. Even then, bear in mind that CDs are not your only option. Investigate the risks and rewards of other low-risk investments, such as Treasury bills or bonds.

2. You may have to pay tax on your CD returns

It is not easy to build up a nest egg for your old age. One way the government helps is by offering tax breaks on the money you invest for retirement. If you buy stocks through a work 401(k) or an individual retirement account (IRA), you either reduce your taxable income now or make tax-free withdrawals later on. This can be a significant boost for your nest egg.

Many CD accounts are taxable, so you’ll need to declare and pay income taxes on any gains. However, it’s possible to get the tax benefits of an IRA alongside the guaranteed returns of a CD. Some brokerage IRAs allow CDs, or you could open an IRA CD with a bank.

Actionable takeaway:

If you want to make CD investing part of your retirement portfolio, learn more about IRA CDs. Be aware that there are annual limits on the total amount you can contribute to your IRAs, whatever assets you buy.

Plus, you need to be sure you won’t need to access that cash early. There’s usually an early withdrawal penalty if you take out the money before the end of the CD term. Worse? If you withdraw cash from the IRA before you reach age 59 1/2, there’s also a 10% tax penalty.

Bottom line

There’s no single magic formula for saving for retirement. The trick is to build a diverse portfolio of assets that works for your situation in life. As such, in some scenarios, it may make sense to include CDs in your portfolio — particularly if you can do so in a tax-advantaged way. Just be aware that CDs rates will almost certainly fall at some point. And in the long run, you may well get higher returns by investing in the stock market.

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

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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