Money Management

The next generation of investors has arrived — and they have a chance to excel financially. Keep reading to learn more. [[{“value”:”

More Americans than ever before own stocks in their brokerage and retirement accounts. Driving this upswing is a more diverse and engaged group of investors from different socioeconomic backgrounds. The percentage of traditionally underrepresented groups (including younger and lower-income Americans) investing in stocks has increased dramatically in the last 10 years. What is driving this trend and how can new investors make the most of their time in the market? Read on to find out.

Two key factors

While there are many reasons for the increase in stock market participation, two major drivers hit close to home for millennials and Gen Z. First is the recent ease of investing, thanks to changes to the traditional broker model. Second is the de-stigmatization of talking about money.

Investing in the market used to look a lot different than it does now. Only after brokerage apps such as Robinhood, Webull, and eToro arrived on the scene did trading become, well, fun. Even more impactful, Robinhood pioneered the zero-commission trading model, forcing competitors to drop fees too, or risk losing market share. Suddenly, investing became flashy, fast, and free.

The ways that Americans discuss their finances has shifted, too. Money talk has gone from taboo to trendy on social media, with terms like “loud budgeting” becoming popular as TikTok users share their finances to their feed. And these online trends have sparked conversations offline, too, among families, friends, and coworkers.

Avoid these mistakes

As a new investor, it isn’t always easy to identify hazards when putting your money to work. However, a healthy sense of skepticism is a great place to start when considering who you listen to and where you put your money. And while mistakes that cost you financially are bad, mistakes that turn you off from investing altogether are much worse.

While much of the money conversation on social media can be informative and helpful, it can’t all be trusted. After all, everyone’s financial situation is different, so advice that might be great for one person (or 500,000 people) might actually harm you. Unfortunately, some “finfluencers” don’t have your best interests in mind, and may be pitching life insurance or investments that are not suitable for you. Always confirm with multiple trustworthy sources before taking financial advice you find online.

You’ve likely heard the advice about not keeping all of your eggs in one basket. The same holds true for putting all of your investments in one stock or cryptocurrency. This so-called single-stock exposure adds enormous risk to your investments and resulting rapid swings in value can be difficult to stomach. If your savings are tied up in a single investment, your entire portfolio could go belly up along with the stock or currency you’re investing in.

Wealth building 101

With long-term investing, the best advice is the boring advice. One of the keys to building long term wealth is to save on a consistent basis. By putting regular amounts of money into the market with every paycheck, you can ride the highs and lows of the market over time by dollar-cost averaging. And saving on a regular basis, such as through a direct deposit into a brokerage account, can let you “set it and forget it” when it comes to saving for retirement.

The opposite of single-stock exposure risk discussed above is diversification. By investing in a risk-appropriate portfolio of investments including companies of different sizes and in different sectors, you can insulate your savings from any one bad investment. Through mutual funds or exchange-traded funds (ETFs), you can diversify your investments into some of the largest indices in the stock market.

Young Americans are increasingly being driven to invest, as the barriers to entry are lowered and the hype grows. For newer investors, it is important to avoid single stock (or cryptocurrency) exposure and to verify information before acting on it. With the right strategies, including diversification and consistency, the young investors of today can become the financially fit retirees of tomorrow.

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

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The thought of quitting work is sobering. However, keep reading to learn the financial impact of a stay-at-home parent. [[{“value”:”

As a young mother, I wanted nothing more than to be home with my boys. I knew I would want a career one day, but while the children were young, I wanted to be there. Some of my friends felt differently. They couldn’t imagine being with their kids all day or postponing their careers to stay home and change diapers — and that’s fine. All of our children grew up to be awesome human beings.

There are challenges to being a stay-at-home parent. They include having to get by on one income, having less money to save and invest, and occasionally, a sense that the world is passing you by.

There’s also an upside associated with being a stay-at-home parent (SAHP), including the opportunity to save money. Although they won’t have as much money coming into their checking account, here’s how much a household with two small children can save.

Child care: $33,384 annual savings

The average weekly cost of daycare in the U.S. is $321. Let’s say both children are in daycare. By having one parent at home to look after the kids, the family would save $33,384 annually.

Work attire: $638 annual savings

The average American spends $161 per month on clothing. If a person works in a professional setting, it may be more, but let’s use the $161 average. $161 monthly equals $1,932 spent annually on clothing. Naturally, the SAHP won’t want to walk around showing all their bits and pieces, so they’ll still need to buy clothes. There’s no need to traumatize the FedEx delivery person.

What if they cut their clothing budget by a third? That would lead to an annual savings of $638. Comparison shopping and using cash back apps could help the household save even more.

Morning drink: $520 annual savings

Despite stories to the contrary, Drive Research found that only 8% of Americans stop by a coffee shop daily on their way to work. New parents are among the frequent flyers, with 67% of them saying you’re sure to find them at a coffee shop once a week and 49% admitting they spend money in a coffee shop more than once a week.

For the sake of this illustration, let’s say a parent with a young child (or children) spends $5 a week at a coffee shop, but switches to making their own brew once they become a stay-at-home parent. That’s a savings of $520 annually.

Convenience meals: $1,800 annual savings

Let’s face it: We’re more likely to hit our favorite dining spot or order delivery when we’re tired from a long day at work. While it’s certainly not the case every day, ideally, a parent who stays at home will have more time (and perhaps energy) to prepare home-cooked meals.

The average American family spends about $300 per month eating out. That’s a whopping $3,600 annually. Since mom or dad has more time to cook, let’s imagine that they eat away from home half as often. That would give them an extra $1,800 to put in a high-yield savings account or help offset the SAHP’s loss of salary.

Transportation costs: $1,023 annual savings

According to the Institute for Transportation & Development Policy (ITDP), the amount of money spent on transportation in the U.S. is typically higher than that of other industrialized countries, mostly because Americans are more dependent on their cars than on public transportation.

As of 2023, car owners spent an average of $12,295 each year on their vehicles. Of that, $3,100 is spent on gasoline (or other fuels) and motor oil. We can’t assume that a SAHP will give up driving, but it’s safe to say that they may not be driving as far as they once did, especially if their previous job found them spending a great deal of time behind the wheel.

Even if a stay-at-home parent cuts their driving expenses by one-third, that’s a savings of approximately $1,023 per year. I say “approximately,” because less time on the road also means less wear and tear on the car and less frequent vehicle maintenance.

Income taxes: Depends on several factors

How much a household with a SAHP can save on income taxes depends on several factors, including how much the couple earned when they both worked and how much their annual income decreased after one parent left the job.

Let’s say that when both parents worked, they had an adjusted gross income of $127,700. The couple files their taxes jointly and doesn’t itemize their tax deductions. Instead, in 2023, they took the standard deduction for married couples of $27,700. Once the standard deduction was subtracted from their income, the couple was left with $100,000 of taxable income, putting them in the 22% tax bracket.

Again, for the sake of illustration, we’ll say that the parent who chose to stay home with the children earned $40,000 annually. That means that the household income fell from $127,700 to $87,700. Once the couple takes the standard deduction, they’re left with a taxable income of $60,000, putting them in the 12% tax bracket.

Their income dropped, but so did their tax burden.

I know that your personal finance situation is unique. You may have one child at home or five. And unlike this scenario, the SAHP may have once been the primary breadwinner. Still, the family described above would save a total of $37,365 annually, plus the amount their income taxes are reduced by.

There are strong feelings on both sides of the SAHP debate, but ultimately, you must do what’s best for you and your family. As long as you’re happy and can make ends meet, you’re doing pretty well.

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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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As one of the most popular retailers on the planet, there are plenty of shoppers who count on Costco. These five tips could help them save more. [[{“value”:”

If you’re a Costco shopper, chances are you’re a savvy consumer. Otherwise, you would not pay for an annual membership designed to help you save money throughout the year. No matter how savvy a shopper you are, though, it’s easy to get so busy that you fall into the habit of doing the same thing in the same way. If you want to save more on your next Costco run, why not adopt some of the following five tips?

1. Break down the cost of items packaged in bulk

Let’s say you see a 60-pack of toilet paper. The price looks pretty good, considering how long those 60 rolls will last you. However, it’s not the overall price of a product that matters. It’s how much you’re paying per unit.

One of the best moves you can make is to run a quick price comparison. There are two ways to do this.

Conduct a pre-shopping comparison

Sit down with your favorite warm (or cold) drink and your shopping list.Using one of these mobile apps, type each item from your shopping list into the search bar, one at a time.The app will quickly tell you which retailers sell that product and how much it costs.Let’s say you’re looking at a bulk package of toilet paper, and the Costco price is $55. By dividing $55 by 60, you find that the price per roll is $0.92.The app shows that a nearby store offers a 30-pack of the same toilet paper for $25, or $0.83 per roll. Picking up two packages of the toilet paper at that store instead (or, if free shipping is offered, ordering it online) saves you a total of $5.

Another (even easier) way to comparison shop works like this:

Once you’re inside Costco, use a price comparison app to scan the barcode of an item you’re interested in purchasing.Again, the app will supply you with retailers who sell the same item and give you the price.Before placing the item in your shopping cart, you know whether you got the best price or should pick it up elsewhere.

2. Go in with an exit strategy

One of the big complaints about all warehouse stores is the need to buy everyday items — like fruits and vegetables — in bulk. We don’t always need a large quantity of avocados or grapefruit, and some ultimately go to waste.

As you put together a shopping list, devise a plan for how you’ll use anything you plan to buy. That may mean spending a Sunday afternoon prepping meals for the week and popping them into the freezer until needed. It may mean talking to a friend or family member to find out if they want to go in halfsies with you. You’ll buy the massive bag of avocados, deliver half to them, and they’ll reimburse you half the price.

Remember: A bargain is only a bargain if nothing goes to waste.

3. Look at more than one Costco for large or special purchases

Even longtime Costco members may be surprised to learn that prices vary by warehouse location — even within the same city. Just because something is on sale at the Costco warehouse 20 miles away doesn’t mean you can pick it up for the same price at the store near your home.

If you see something you’ve had your eye on — like a new television, tennis bracelet, or kid’s backyard playset — make sure the sale price applies to the store you normally visit. The opposite is also true. If you want to buy a large ticket item, check Costco locations farther away from home to learn if it’s available elsewhere at a lower price.

While you’re focused on saving money, remember that you can get some of what you spend back via some of the biggest cash back apps available.

4. Request a price adjustment

Did you know you can ask the store to refund the difference if you purchase an item marked down within 30 days? It’s a pretty easy process. Simply bring your original receipt to the Costco customer service desk, and as long as it hasn’t been more than 30 days, you’ll receive an immediate refund.

In personal finance matters, it’s all about saving as much money as possible, and requesting a price adjustment is one of the fastest and easiest ways to save.

5. Start in the back of the store

There are a couple of spots in the average Costco warehouse where the sweet prices hide. Most of us grab a cart and begin our shopping excursion at the front, which is the part of the store commonly referred to as “action alley.” This is where many newer Costco products are available. However, action alley is also where you’ll find the highest prices since it’s the area of the warehouse that gets the most foot traffic.

In general, the deeper into the store you walk, the better deals you’ll discover. If you’re shopping to save money, begin in the back of the store and work your way to the center.

Most of us shop at Costco with the goal of leaving more money in our checking accounts each month. If that describes you, these tips should make it an easier goal to accomplish.

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.

Click here to read our expert recommendations for free!

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

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A 20-point credit score increase won’t always make a huge difference. But in some cases, it might. Read on to learn more. [[{“value”:”

Your credit score is a number that tells lenders how much risk they’re taking on by loaning you money. The higher your score, the less risky a borrower you appear, which could lead to not just getting approved for a loan or credit card, but snagging a more favorable interest rate.

Getting your credit score to rise by, say, 100 points could open a lot of doors for you on the borrowing front. But what about a 20-point increase? Will that make a difference? The quick answer is, it depends.

In some cases, you may not see an impact

In the context of FICO® Scores, the most commonly used credit scoring model in the U.S., here’s how credit scores are classified, according to Experian:

300 to 579: Poor580 to 669: Fair670 to 739: Good740 to 799: Very good800 to 850: Exceptional

Let’s say you have a credit score of 810, and it rises to 830. That’s great and all, but from a borrowing perspective, it may not really change things. Chances are, any lender that’s willing to loan you money with a score of 830 would’ve also written you a loan at 810, since both numbers are excellent.

Similarly, let’s say you’re able to boost your credit score from a 530 to a 550. That’s a step in the right direction, but you might still struggle to borrow in general due to poor credit.

When a 20-point credit score increase does help

In some situations, boosting your credit score by 20 points could do a lot of good for your borrowing options. For one thing, it takes a minimum credit score of 620 to qualify for a conventional mortgage. So if you’re able to take a score of 605 up to 625, that puts you over that threshold. (Granted, it doesn’t guarantee that you’ll get your mortgage, as you may not meet the income requirements for your lender, but at least it makes you a viable candidate.)

Similarly, it’s not unusual for certain credit cards to come with a minimum credit score requirement. Unlike mortgages, there’s no blanket requirement. One card may require a minimum score of 680 while another may require a 700. And usually, the better the rewards, the higher the credit score requirement is. But this is another situation where a small boost to your credit score might actually have an impact.

Slow and steady wins the race

A single 20-point boost to your credit score may or may not affect your ability to borrow for the better. But remember, a series of 20-point boosts might do you a lot of good.

If your credit score rises from, say, a 640 this month to a 660 next month, and then a 680 the month after that, suddenly, your score has gone from fair to good. That might help you qualify for a loan you may have otherwise been denied.

For this reason, it’s a good idea to work on boosting your credit score. And one of the best ways to do so is to pay all credit card bills and loans on time.

For the former, you’ll be considered timely if you send in your minimum payment by its due date. But it’s best to try to pay off your entire balance each month. In fact, another way to boost your credit score is to have a low balance across your various credit cards relative to your total spending limit.

Finally, make a point to check your credit report for errors once every few months. Correcting a mistake could lead to a quick boost. You can request a free copy of your credit report once a week from each of the three reporting bureaus.

A single 20-point credit score boost may not be such a game-changer for you. But make it a series of 20-point boosts, and you may end up much happier with your borrowing 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.The Motley Fool has a disclosure policy.

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Want to buy life insurance as a senior? Don’t forget about riders. Here’s how the best life insurance riders can help you with long-term care and other costs. [[{“value”:”

Buying life insurance for seniors is often a good financial strategy. If you still have children living at home with you, or if you have grandchildren that you want to provide for, life insurance can protect your loved ones in case of your death. There are also many types of life insurance riders, or special policy add-ons, that can help you customize your life insurance coverage with additional benefits.

Especially if you’re buying life insurance as a senior (defined for this purpose as “age 65 or older”), life insurance riders can be helpful. Getting the right riders on your policy is a creative way to make your life insurance work better for you — and protect yourself from some of the special risks that seniors are more likely to face later in life.

Here are a few life insurance riders that can help seniors meet their families’ unique financial needs.

1. Long-term care rider

One of the biggest worries that seniors might have about the financial risks of getting older is how to pay for nursing home care. Nursing home care and other types of long-term healthcare are often not covered by Medicare. This can take a terrible toll on people’s life savings.

Fortunately, many whole life insurance policies offer a long-term care rider. This allows you to use your life insurance policy’s death benefit to pay for costs like assisted living center care or nursing home care. Long-term care riders are not necessarily as good as or a replacement for long-term care insurance. Based on your age, health, and insurability, buying a separate long-term care insurance policy could be a better choice. But a long-term care rider is worth considering if you can qualify for it.

2. Living benefit rider or accelerated death benefit rider

Some life insurance policies will let you get access to some of your death benefit while you are still alive. This is called a “living benefit rider.” These can include special riders for critical illnesses or disability, in case your health takes a turn for the worse (but does not necessarily result in death).

Another common type of living benefit rider is known as an “accelerated death benefit rider,” and it’s for people who have been diagnosed with a terminal illness and have 12 months or less of life expectancy. The accelerated death benefit rider gives you (and your loved ones) an immediate lump sum of cash. This can be helpful for paying for healthcare, paying household bills, or any other purposes that you wish.

Using a living benefit rider (or accelerated death benefit rider) will reduce the amount of money in your policy’s death benefit. But it can provide much-needed financial support during some of the most challenging times of life.

3. Waiver of premium rider

This type of rider provides extra help in case you become disabled or have to leave the workforce — it waives your premium so you can still keep getting coverage, even if you lose your job income. The waiver of premium rider is often not available for people over the age of 60, but you could check to see if your life insurance policy offers it.

4. Spousal rider

If your spouse does not have their own life insurance policy, you can add a spousal rider to yours. This provides a small death benefit in case of the death of your spouse. It’s best to get a life insurance policy for each spouse, but this rider can be better than nothing — the amount is usually enough to cover a funeral and other final expenses.

Bottom line

Life insurance riders give you options to customize your life insurance policy with extra protections and flexible benefits. Not all life insurance companies offer every type of rider. The exact choices you can get for life insurance riders as a senior varies based on the insurance company, the type of life insurance you have (whole life vs. term life), and the details of your policy.

But if you are shopping for life insurance as a senior, be sure to ask about riders. These can be a useful way to maximize the value of your life insurance and protect your loved ones from multiple complex risks.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.

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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Credit card mistakes can be expensive. Check out three of the mistakes I’ve made so you know what not to do. [[{“value”:”

I’ve been writing about credit cards for eight years and using them for over 15. Safe to say, I’m pretty familiar with how credit cards work at this point. For the most part, I’ve been able to use them to my advantage. I have a high credit score, and I’ve saved money with credit card rewards.

It hasn’t all been smooth sailing, though. I’ve made credit card mistakes here and there that have cost me money. It’s always good to learn from other people’s mistakes instead of your own, so without further ado, here are mine.

1. Forgetting the spending requirement for a welcome offer

Credit cards often have welcome offers, sometimes referred to as sign-up bonuses. Most of them follow the same rules. Spend a certain amount of money within a time limit, and you’ll earn a bonus.

These are a fast way to earn rewards, and I’ve earned a lot of them. But there is one that got away: Earn $200 in bonus cash back after spending $1,000 in the first 90 days.

I spent $750, gave myself a nice pat on the back for spending enough, and stopped using the card. Why did I think I was done? I have no idea. For some reason, I got the idea in my head that the spending requirement was $750 instead of $1,000.

When I hadn’t received the bonus, I went back and double checked. By the time I realized my mistake, it was past the 90-day time limit, so I had cost myself $200. Always keep close track of the requirements to earn a welcome offer. If you miss out, there usually aren’t any second chances.

2. Paying my rent with a cash advance check

I was 21 when I got approved for my first credit card without a cosigner. Like a lot of people, I applied for a card through my bank to have all my accounts in one place.

When I received my new card in the mail, it came with a sheet of checks. “That’s convenient,” I thought. And when I had to pay my rent next month, I filled out one of these checks and mailed it off to my landlord.

I assumed this money was coming out of my checking account. So I was shocked when I saw a large transaction on my credit card, and I even called my card issuer thinking it was fraud. Fortunately, the representative went over the details of the check with me, and it all clicked into place.

What I didn’t realize was that these were cash advance checks. Cash advances are expensive, for a few reasons:

They have a cash advance fee — usually 5%.Card issuers often charge a higher cash advance APR.Interest charges begin immediately, without the grace period you get for purchases.

My rent, if I remember correctly, was $800 (hooray for 2011 prices). The 5% cash advance fee was $40, and I also paid some interest, since I didn’t realize that was getting charged right away. Once I found out what happened, I immediately paid off the balance.

3. Using a card with a foreign transaction fee abroad

Last August, my wife and I were in Italy. We had just arrived in Naples, and since we were tired after traveling that day, we decided to order pizza. I placed an order through Glovo, a food delivery app, and paid with Google Pay.

A few weeks later, I realized that I hadn’t selected the right credit card in Google Pay. I was trying to get the order placed quickly, and I used a card with a 3% foreign transaction fee.

It cost me $0.74. In all fairness, not a big deal, but I kicked myself at the time. I have so many travel credit cards, and I chose one of my few cash back cards that charges extra when used internationally. A rookie mistake on my part. And it’s a mistake that could cost you much more if you use a card with a foreign transaction fee for an entire overseas trip.

Now you know three of the mistakes I’ve made with my credit cards over the years. None of them were huge issues, but they’re all avoidable. To recap, keep track of the spending requirement when you open a card with a welcome offer. Never trust checks that come with your credit card. And when you’re aboard, only use cards with no foreign transaction fee.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! 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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