Money Management

Your 30s are a make-or-break decade for your financial future. Watch out for these bad money moves that could cost you. [[{“value”:”

Every decade of your life is important. But as far as your finances are concerned, your 30s are crucial. You still have enough time to fix any mistakes you’ve made so far and to establish good financial habits, including saving, investing, and staying out of credit card debt.

You don’t exactly have a ton of time, though. Your 40s are just around the corner (it’s a terrifying thought, I know). The older you get, the harder it is to radically change your financial situation.

There are a few bad money moves that are particularly common for people in their 30s. Here’s what you need to watch out for.

1. Taking on too many big expenses

Getting older isn’t all bad. One of the perks is that you may be making more money than you were before. Research by The Motley Fool Ascent on the average U.S. income found that earnings peak between 45 and 64 years old.

People often see some big pay increases starting in their late 20s or during their 30s. This is great news, but it can also lead to overspending if you’re not careful.

There’s nothing wrong with spending more as your income goes up. The point of making money is using it to live the life you want. Just be careful not to overdo it. Some people decide a higher salary is a good reason to upgrade practically everything. They get an expensive mortgage. They go shopping for luxury cars. And if they really want to deplete their savings account, they buy a boat.

Ideally, your fixed monthly bills won’t take up more than 60% of your income. If you can stay at or under that amount, you’ll have plenty of discretionary income.

2. Getting too career-obsessed

As you progress in your career, you could find yourself devoting more time to work. Working more hours is one of the simplest ways to increase your income if you have a job where you can work overtime or if you’re a freelancer.

This is one of those problems that can slide under the radar, because it seems like you’re doing everything right. Working long hours to be more successful is normally considered a good thing. Just read any puff piece about a CEO who gets up at 5 a.m. and works 16 hours a day.

Ambition is an admirable trait, but it’s still important to have a work-life balance. If you work too much, it can lead to burnout. You’ll also miss out on spending time with family and friends, which is something you can’t get back later.

If your work-life balance has tilted too far in the work direction, start scheduling more personal time for yourself. Make sure you have plenty of time each day for non-work activities, and commit to taking at least one vacation every year. You’ll likely find that recharging your batteries does you well.

3. Not saving for retirement

Everyone needs to save for retirement, and the earlier you start, the better. If you didn’t do so in your 20s, that’s normal. The median retirement savings for Americans under 35 was $18,880, the lowest of any age group, in 2022.

You can still catch up — but the clock is ticking. The reason so many experts recommend starting early is because your money will have more time to grow. When you have 30 or 40 years until retirement, that gives compound interest plenty of time to do its work. When you’re down to 10 or 20 years, your money won’t have time to grow nearly as much.

For example, let’s say you start contributing $1,000 per month to your retirement when you turn 35. You get an 8% annual return, in line with the stock market’s long-term average. After 30 years, you’ll have contributed $360,000, but you’ll have $1.47 million.

Now let’s say you start at 45. You contribute even more: $1,500 per month. You also get the same 8% annual return. After 20 years, you’ll have contributed the same total of $360,000, but you’ll have $889,613. Waiting 10 years costs you just over $580,000.

With any luck, you’ll be much more comfortable financially in your 30s. If you spent your 20s on a tight budget, this will be a breath of fresh air. But this period of your life isn’t without its challenges. Be careful not to start overspending or spending every waking hour on work, and make sure you’re saving for retirement every month.

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

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Some checking account features are worth your time, and others are just gimmicks. Learn how to tell which is which. [[{“value”:”

There are a lot of checking accounts vying for your business these days. This competition is great for you because it means banks have to offer more to attract new business, but it can also make it tough to know which accounts deserve to hold your cash.

Some perks sound great on paper, but they don’t offer any long-term benefit. Others aren’t as flashy, but they make your life a lot easier. Here are three checking account features that are overhyped and three that could seal the deal for you.

Three checking account features that are overrated

Here are three checking account perks that aren’t as special as they seem.

1. Interest-bearing option

Some checking accounts enable you to earn interest on your funds, just like you can with a savings account. But even the best checking account interest rates are usually under 1.00%. By contrast, some high-yield savings accounts are currently offering 5.00%. Given this difference, it’s much better to put extra cash in a savings account rather than a checking account if you’re trying to grow your wealth.

2. Free checks

Some bank accounts give you your first book of checks free when you open an account. It’s nice, but it’s probably not going to save you that much. Ordering checks from a bank might be expensive, but you can order 100 new checks online for less than $5. Plus, most people pay bills electronically these days rather than writing out checks.

3. Bonuses for new customers

Some banks offer bonuses that could be worth $100 or more to new checking account customers if they complete qualifying activities within the first few months of account opening. This could include setting up direct deposit, maintaining a certain minimum balance, or making a certain number of debit card purchases.

A checking account bonus can be a great tiebreaker if you’re on the fence about which bank to choose, but it’s a one-time deal. You’ll still have the account even after obtaining the bonus, so make sure you actually like its features. Otherwise, you’ll have to go through the hassle of closing it and moving your money elsewhere.

Three checking account features that actually matter

Here are three of the most important features to look for when choosing a checking account.

1. Lack of fees

Maintenance fees are still common among brick-and-mortar checking accounts. If you can’t get them waived, you could pay up to $30 per month to keep your money in the bank.

Fortunately, most online checking accounts don’t have maintenance fees. Some banks are also willing to waive overdraft fees in some situations, which could be a lifesaver if you occasionally spend more money than you have in your account.

2. Fee-free ATM access

Most banks give you access to a fee-free ATM network, but they can vary in size. A brick-and-mortar bank may only have fee-free ATMs at its branches, while an online bank might partner with a nationwide ATM network, like Allpoint, so customers can access cash anywhere.

But anyone can end up in a situation where they don’t have fee-free ATM access. Most banks don’t charge their customers for using these, though the ATM owner may tack on its own fee. However, some banks now offer monthly reimbursements for these fees. This could be a valuable perk for those who worry about losing money to out-of-network ATM fees.

3. Strong online and mobile tools

People do most of their banking online these days, and that’s only possible thanks to mobile banking apps and online tools that enable you to view your balance, transfer funds, and pay bills. But these tools differ in how easy they are to use.

A mobile app that’s clunky and prone to glitches could make managing your money too frustrating. That’s why it’s worth taking a few minutes to check out the bank’s mobile app reviews before opening an account there. Whenever possible, go with a bank whose app has favorable reviews.

What to do if you’re still on the fence

Hopefully, you’ve got a clearer idea of which checking accounts are worth your time and which you should avoid. But if you’re still on the fence, think about how you plan to use the account. Ask yourself questions like:

Will I need to deposit or withdraw cash often?Will I need to transfer money to other accounts or other banks often?How do I plan to withdraw money from the account most often?Are the bank’s limitations on daily withdrawals or electronic transfers restrictive for me?Am I comfortable with the customer service hours and methods the bank offers me?

Use this information to rule out banks that are poor fits. When you get down to your top two or three, do a deep dive into their features and fee schedules to determine which is the right choice for you.

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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.Kailey Hagen has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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The Fed just voted to keep interest rates steady. Read on to see why that might benefit you. [[{“value”:”

U.S. consumers have spent the past few years grappling with elevated living costs. And the Federal Reserve has been trying its best to cool that rampant inflation.

In 2022 and 2023, the central bank implemented a series of interest rate hikes that drove the cost of borrowing up. The idea was to encourage a pullback in consumer spending, thereby allowing the cost of goods and services to come down.

Since inflation has improved, many experts are anticipating that the Fed will cut interest rates in 2024. And the central bank itself has even stated that’s its intent.

But in its May 1 meeting, the Fed opted not to cut interest rates. Instead, it held its benchmark interest rate steady. And while that’s not the best news for consumers looking to borrow money, it’s great news for people with money in the bank.

Your impressive savings account rate might stick around for longer

While the Fed’s interest rate hikes have been a burden for consumers needing to sign loans or carry credit card balances, they’ve been great for people with money in the bank. That’s because savings account rates have been up since the Fed started raising rates. And given that the Fed didn’t cut rates this month, it means savers might get to enjoy their higher interest rates for longer.

CD rates are still holding strong, too

The Fed’s interest rate hikes have also had a positive effect on CD rates. These days, you can find shorter-term CDs paying upward of 5%. That’s a pretty sweet return, considering that CDs are virtually risk-free provided you bank at an FDIC-insured institution.

Because the Fed opted not to cut rates in May, you now have an opportunity to open a CD while rates are still strong and lock in a great deal. Of course, if you’re struggling with higher living costs, that may be a challenge. But if you’re sitting on newfound money — for example, if your tax refund recently arrived or you just received a pile of cash back from one of your credit cards — then you may be in a good position to open a CD and lock in an attractive rate, whether for six months, 12 months, or longer.

In fact, it could pay to set up a CD ladder. Instead of tying up all of your cash in a single CD with a single maturity date, divide your money up into multiple CDs that come due at different times. This could give you access to your money more regularly, which is an important thing with CDs given that many banks impose a penalty for taking an early withdrawal.

While the Fed’s latest decision on interest rates may be disappointing for borrowers, savers should be in the opposite boat. So if you have money you don’t need for emergencies or near-term goals, consider opening a CD or setting up a CD ladder. And if you’re not ready to commit to a CD, pad your regular savings account now to take advantage of higher interest rates while they’re still available.

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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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CDs continue to pay out at generous rates in May 2024. Find out how to make CDs work even harder for you this month. [[{“value”:”

As we begin May, the shifting interest rate environment might be calling for a more nuanced CD strategy.

If interest rates are expected to fall — which has been the consensus among policymakers and experts for much of 2024 — now might be the time to get long-term CDs, as you can earn at today’s high rates for longer periods. However, if inflation remains sticky, high interest rates could remain in place longer than most of us expected. If that’s the case, it might make sense to get short-term CDs, to see how the interest rate environment plays out in the near term.

The best CD strategy for this month might be to invest in several different kinds of CDs, not just one term or type. Yes, this can mean building a CD ladder. But, as I’ll explain below, it can also mean getting the best CDs that cover all your bases. Let’s take a look at what I mean.

Look for high-yield CDs that serve different functions

CDs come in different types. Most of us are familiar with the traditional bank CD, which locks your money up for the length of your term in exchange for a fixed interest rate. These CDs charge penalties for liquidating your account early, but may let you withdraw interest penalty-free throughout your term (though doing so will slightly reduce your CD’s APY). Since high-yield versions of this CD make up the most lucrative rates on the market, these CDs often form the backbone to a good CD strategy.

Branching off from the traditional bank CD is the no-penalty CD. As the name suggests, these CDs don’t impose a penalty for early withdrawals. In a way, they’re like the glass-breaking hammers you often see on trains (“break in case of an emergency”). If you need the savings in your account, you can “break the glass” without paying a penalty. This could work well if you notice CD rates are starting to rise again: You could exit your CD contract and reinvest your money in a more lucrative term.

Traditionally, no-penalty CDs have lower rates than standard CDs with the same term. This isn’t the case, however, if you get your CD on the savings platform Raisin. Right now, Raisin offers several no-penalty CDs that pay above 5% (as of May 1, 2024, the highest rate is 5.15%). This gives you the best of both worlds: high yield and an escape hammer.

Brokered CDs are also really interesting right now. These CDs are offered through brokerage accounts, like Fidelity, Charles Schwab, and Edward Jones. Like bank CDs, brokered CDs are FDIC insured and pay a set interest rate. However, like bonds, brokered CDs can be sold on a secondary market. For example, if you invest $1,000 in a 9-month Edward Jones CD with a 5.35% rate, you might stand to benefit if 9-month CDs drop to 4.95% a few months later.

Build a CD ladder with different terms and types

For most people, the best CD strategy is to build a CD ladder. This involves staggering CD terms to increase access to your funds. For example, you could open a 3-month CD, 6-month CD, 1-year CD, 2-year CD, and 3-year CD.

Now, to cover all your bases, consider adding no-penalty and brokered CDs to this ladder. For example, you could have a 5-month no-penalty CD and 18-month brokered CD. Both would earn high interest, but could help you capitalize on unexpected rate changes. For example, if CD rates start climbing higher, the no-penalty CD would let you cancel your contract without repercussions. Likewise, if rates dropped substantially, selling a brokered CD on a secondary market could result in profits.

That said, there are some CD types I wouldn’t recommend. Bump-up CDs, for example, could also capture rising interest rates. But these CDs don’t often have competitive APYs, at least not compared to no-penalty or traditional CDs. Likewise, there are CDs that track the stock market and others that invest in foreign currencies. These might be lucrative for some investors, but they’re complicated to use and would require more knowledge than your traditional bank CD.

All things considered, CDs are paying out at great rates in May 2024. While you could deposit all your savings into one or two CD accounts, you might get stronger net returns by diversifying your CDs. Take a look at some of the best CD rates on the market today and start building a ladder that works for you.

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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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