Money Management

With the right approach, you can go from someone who struggles to save to a person who saves consistently. Read on to learn more. [[{“value”:”

If saving money were easier, more people would likely have overflowing savings accounts. But 2023 data from SecureSave notes that 63% of Americans could not cover a $500 emergency expense by tapping their savings. That leaves many people vulnerable to debt in the event of a financial emergency.

If you’ve struggled to save money in the past, you might chalk it up as an impossible task. But here are some tips that could make it much easier to save money from this point forward.

1. Set small goals

When you overwhelm yourself with lofty savings goals, you run the risk of getting discouraged and giving up. If that’s happened before, stop setting yourself up for failure and start establishing goals that are more attainable.

For example, if you have under $500 in savings now, then it’s probably not so realistic to tell yourself you’re going to save $5,000 by the end of 2024 unless you happened to recently get a giant raise. But it may be more than reasonable to set a savings goal of $700 by the end of the year if you’re willing to budget carefully and reduce some spending.

It’s also okay to start with a very small goal and work your way upward. So for example, if you can’t remember the last time you contributed anything to savings, tell yourself that in May, your aim is to sock away $30. If that works, then in June, aim for $50, and then $100 in July.

It’s kind of like running. When you first start out, you might get winded by the end of your first quarter-mile. After a few weeks, you might be able to make it a mile without having to stop. Keep at it, and you’ll be running a three-miler before you know it.

2. Put contributions to savings on autopilot

Sometimes, the reason we don’t succeed in saving our money is that we’re tempted to spend more of it than we planned. If impulse spending has gotten in the way of your savings efforts, it’s time to put the process on autopilot.

The way this works is simple. Decide on a monthly savings goal that isn’t burdensome, and that leaves you with a little wiggle room for extra costs in your budget that are essential (such as if you’re switched to a new prescription medication that costs more). Then, set up an automatic transfer from your checking account to your savings at the start of the month.

Let’s say you start by automating a $50 transfer each month. If, next month, you’re invited out to dinner with friends but you’ve already maxed out your restaurant spending for that period, you’ll have to say no, because the money just won’t be there — it will be in your savings. Without that automation, you might say yes to dinner, but that could mean leaving your savings neglected.

3. Create your own rewards system

It’s definitely not easy to put more in your savings account. So when you are able to meet your goals, reward yourself by celebrating your financial wins. That could mean treating yourself to a $5 specialty coffee for every $50 you manage to save, or treating yourself to an Uber home from work once a week instead of the bus once your savings account hits $2,000.

There are many options you can play around with, but the goal is to motivate yourself to work on your savings. When you have a reward waiting, it’s often easier to stay on track.

And if you’re part of a couple, set savings goals and rewards together. Your reward for saving $500 could be dinner at the new restaurant that recently opened in town. Your reward for saving $5,000 over time could be a weekend getaway at a nice hotel.

Saving money is definitely hard. But is it impossible? Not necessarily. However, you may need to tweak your approach to saving money, and that could mean employing the above tips.

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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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Rental prices have jumped over the past couple of years. Read on to find out where the hot spots are and how to lower your rental costs. [[{“value”:”

Housing has been a huge disappointment for many Americans recently. Soaring house prices and rising interest rates caused housing to fall to its lowest level of affordability in 40 years in 2023.

The result is many people have turned to renting homes and apartments, which has caused some rental markets to heat up. Here’s where rentals are the most in-demand and how you can lower your rent if it’s weighing down your budget.

The five hottest rental markets

Data from RentCafe shows that rental demand isn’t quite as high as it was last year, but it’s still competitive. Nationwide, seven people are competing for every one apartment this year, compared to eight last year.

These rental markets are seeing the highest demand:

Miami-Dade, FloridaMilwaukee, WisconsinNorth Jersey, New JerseySuburban Chicago, IllinoisGrand Rapids, Michigan

The Miami area is the hottest market right now, with 14 prospective renters for each apartment available. With that level of demand, it takes just 36 days to rent a vacant apartment, compared to the national average of 41 days.

Unfortunately, even if you’re not in a hot rental market, your rent has likely gone up substantially over the past few years. Rent.com says average rents have increased 21% from their pre-pandemic levels. The result is median rent prices jumped from $1,584 in January 2020 to $1,981 in February 2024.

Tip: Most financial experts recommend not spending more than 30% of your monthly income on your rent. Staying within this financial boundary may make it more likely that you’ll get approved for your rental when submitting your application.

How to pay less in rent

With rents rising quickly over the past few years, you may be on the lookout for a good deal. Thankfully, there are a few things you can do to help ease the pain of rising rents. Here are three.

1. Negotiate your monthly rent

I once negotiated my rent down by $100 per month after the homeowners had a difficult time renting out the home. That saved me $1,200 in the first year of renting. It’s certainly worth a try, considering 1 in 4 renters successfully negotiate their rent down to a lower price.

2. Sign for a longer lease

Signing up for a longer lease is a good strategy when trying to get a lower monthly rental payment. Realtor.com says negotiating for a lower monthly rental price is easier if you give something in return, like signing up for a two-year lease instead of one year.

3. Sign a lease during off-peak months

The rental market is seasonal, which allows renters an opportunity to lower their costs during the offseason. For example, ApartmentList says rents typically fall nationally by an average of 1.7% in December and January.

This means you can probably get good deals during the winter and may also be able to negotiate a lease renewal for a lower amount. Realtor.com says some rental managers are open to a good tenant negotiating a temporary rent reduction during the winter months.

While rental prices probably won’t continue to climb as quickly as they have over the past couple of years, rental affordability will likely be an issue for many Americans this year. Negotiating for a lower monthly payment, signing a lease during the offseason, or committing to a longer lease term can all be great ways to lower your costs. Just remember that picking the right time and suggesting a reasonable price are crucial to increasing your chances of getting a good deal.

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Entertainment spending can make or break your budget. Keep reading to find out whether yours is average — and what it could mean for your finances. [[{“value”:”

Spending money on entertainment is a luxury, but for many people, it also feels really necessary. After all, who wants to go through their life never seeing a movie or going to a concert or enjoying a trivia night out with friends?

The key, though, is to keep your entertainment spending reasonable so it doesn’t drain your bank account or — worse — leave you in debt. To see if you are spending a good amount, too much, or too little, it can sometimes be helpful to see what your peers are doing.

So, here’s the data on what the typical American spends to have fun.

Here’s what your fellow Americans are spending on entertainment

According to research from Ramsey Solutions, the typical American spends 4.7% of their income on entertainment.

This category of spending includes streaming services, pets, electronics purchases, and any hobbies that people like to take part in. It also means that the amount the average American spends on entertainment is around $288 per month.

This makes entertainment more expensive than some other kinds of discretionary spending. For example, the average person spends around 2.7% of their income, or about $162 a month, on apparel and services. That’s over $126 less than they are devoting to their entertainment expenditures.

Your overall budget impacts your entertainment spending

When you’re comparing your entertainment spending to what most people pay, it’s most helpful to look at the percentage of income spent. After all, someone who makes $20,000 a month is going to spend more on fun purchases than someone who makes $2,000 — and that’s OK.

The key is to not let things get out of hand and end up in credit card debt or find yourself unable to accomplish other financial goals because so much money is going to your knitting habit or your baseball card collection. And if you’re devoting a lot more than 4.7% of your income to entertainment, it just may be that you are overspending on this budget category.

After all, it’s a good idea to keep 20% of your money for long-term goals and limit fixed costs for necessities to 50% of your income. That leaves you with just 30% left over for everything else. You have a lot of other things to fit into that 30% besides just entertainment, such as grocery costs.

Are you spending too much?

You can see how much you are spending on entertainment by going over your past credit card and bank statements and adding up what your expenditures were for things like concerts, sporting events, movies, or other fun activities you participated in. If you use a budgeting app that categorizes your spending, this is pretty easy. If not, you can just input the numbers in a spreadsheet.

Once you’ve figured out what you’re spending, compare it to your income. If you are spending more than about 4.7% of your money on entertainment, it’s worth asking yourself if you can make some cuts — perhaps by looking for free activities in your area. You can find great no-cost events that appeal to people of all ages on local social media pages or via your library or community center.

It’s your money

The reality is, it is your money and your spending habits should match what matters to you. If you don’t care about clothing and would rather shop at thrift stores so you can afford to go see Taylor Swift’s Eras tour, then there’s absolutely nothing wrong with that at all — as long as you realize that there are tradeoffs to be made. You may have to sacrifice something else.

That’s why comparing your spending to others only goes so far in shedding light on what you should be doing with your own money. What you don’t want to do is sacrifice retirement savings or building up an emergency fund to spend more on entertainment. But if you’ve got the big stuff taken care of and paying for hobbies is what you want to do with the bulk of your money that’s left over, just make a plan for that and you should be fine.

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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.
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You have to spend money to make money. Take a look at why you should open a business credit card to do that spending. [[{“value”:”

Running a small business is more expensive than many people realize. The average cost of starting a small business was $35,000 in 2022, and that’s for an online-only business. Business owners who rent a physical storefront spend an average of $100,000 in the first year.

There are plenty of ways to cut costs and bootstrap it, so you certainly don’t need to spend that much. But every business has its fair share of expenses, and you’ll need a way to pay for them.

While some small business owners use their own personal credit cards, that’s not a good idea. When you have a business, you should get a business credit card, for a few important reasons.

1. Keep business expenses separate from personal expenses

When you use the same account for personal and business expenses, things get messy. It will be more complicated and time-consuming to review business expenses later. If you want to see how much money your business is spending, you’ll need to filter out your personal expenses first. The same is true if you want to check for tax deductions.

A business credit card makes your life much easier. All your business spending will be on a separate account, so you can more quickly sort through transactions and see what you’ll deduct from your business taxes. Many business credit cards also include detailed spending reports and other helpful features, such as integration with popular business accounting software.

2. Earn rewards on your business spending

If you have a good credit score, you’ll probably qualify for business rewards cards. Just to be clear, this is referring to your personal credit score. Card issuers still check this on business credit card applications. You don’t need a business credit score to qualify for a card.

Business rewards cards are a simple way to earn cash back or travel points on your business spending. This can be a sizable amount back. Some business cards earn a flat rate of 2% back on purchases, no matter the spending category. There are also cards with a lower base rate (normally 1%), but rates of 3% more in bonus categories.

Let’s say you open a business card that earns 2%. Your business spends $100,000 per year. That’s $2,000 in cash back every year that you could reinvest into your business.

3. Build your business’s credit score

Business credit scores work in much the same way as personal credit scores. There are three major business credit bureaus: Dun & Bradstreet, Equifax, and Experian. You’ll need to apply with Dun & Bradstreet to get a business credit score with it. Registration isn’t required with Equifax and Experian.

These bureaus will calculate a credit score for your business based on the information they receive. If you use a business credit card and pay the bill on time, that will help build your business credit score.

You’ll need a good business credit score if you decide to apply for a business loan in the future. Even if you’re not planning on that at the moment, it’s good to have the option.

4. Boost your spending power

With credit cards, it’s to your advantage to pay the bill in full every month. If you do that, you won’t be charged interest on your purchases. This is true with personal and business credit cards.

But there is a way to finance purchases on a business credit card without paying expensive interest charges. Some business cards have a 0% intro APR on new purchases. During the intro period, you’re not charged any interest on purchases you’ve made. You only need to make the minimum payment.

For example, if a card has a 12-month 0% intro APR on purchases, then you have a year to finance purchases interest-free. A word of caution: The APR goes up to the card’s standard rate after the intro period ends, so aim to pay off your balance before then.

Opening a business credit card

It doesn’t take long to open a business credit card. Start by picking the card you want — you can find suggestions on The Ascent’s list of the best business credit cards. I recommend figuring out the features that are most important to you first, such as cash back, a 0% intro APR, or travel rewards, to narrow down your choices.

Choose the option to apply for the card. In the application, you’ll need to provide your personal information and business information. If you haven’t registered your business, that’s fine. You can apply as a sole proprietor, meaning you apply with only your Social Security number and no Employer Identification Number (EIN).

A business credit card is a valuable financial tool that every small business should have. And the application process is straightforward, once you’ve found a card you qualify for. Open yours early on and you’ll have a convenient way to handle all your business expenses.

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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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Tapping an IRA before age 59 1/2 will usually cost you 10% off the bat. But read on to see why there may be an even worse financial consequence. [[{“value”:”

There may come a point when you feel compelled to withdraw money from your IRA ahead of retirement. It may be that you need a few thousand dollars to repair your car, and you don’t have the money in a regular savings account to cover the expense. Or maybe you need some money to fix up your home and are having trouble qualifying for a loan due to a recent hit to your credit score.

The problem with tapping your IRA early is that if you take a withdrawal prior to age 59 1/2, you’ll face a 10% penalty on the sum you remove. So if you take a $5,000 withdrawal, you’re saying goodbye to $500 of that right away.

Now there are some exceptions to this rule. You can get out of paying that penalty if you remove up to $10,000 from an IRA to buy a home for the first time. You can also access IRA funds penalty free to pay for college. Otherwise, expect that 10% hit.

But actually, losing 10% of your withdrawal to a penalty isn’t the worst financial issue associated with tapping an IRA early. There’s a much bigger financial loss you may be in for.

Your lost investment gains might far exceed your penalty

When you take an early withdrawal from an IRA, you lose some money to a penalty. But worse than that, you lose out on the opportunity to keep your money invested. And that’s where the big issues tend to arise.

Over the past 50 years, the stock market has rewarded investors with an average annual 10% return, accounting for both strong years and poor ones. Over time, the average return in your IRA may be the same.

So let’s say that’s the case and you remove $5,000 from your IRA at age 30 to address an immediate need. You may be at peace with losing $500 of that to a penalty. But you may also be losing out on 10% growth on that sum for three decades. All told, that amounts to over $87,000 in lost retirement income. Compare that to a $500 penalty, and the latter starts to look like pocket change.

Don’t just think about the penalty

You may be willing to accept a 10% early withdrawal penalty if it allows you to access the money you need in your IRA. But remember, the financial hit you’ll take by not investing that money over time could be way worse than what your penalty amounts to.

If you need money for an urgent bill and don’t have the cash in savings, try taking out a loan. And if your credit score isn’t strong enough to qualify for one, see if you can work out an arrangement with a friend or family member where you borrow money and sign an agreement to pay them back. Another option may be to pick up a side hustle to earn the money you need, but this may not work if you truly need money in a pinch (such as if your car won’t start and you need it to get to your job).

Of course, it’s also a good bet to try to build emergency savings so you never have to think about tapping your IRA early for an urgent need. But either way, explore every other option possible before raiding your IRA early. It’s a move that might truly cost you much more than you imagined.

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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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You might think extreme couponing sounds like a great way to save money. Here’s why it may not be. [[{“value”:”

If you’ve ever admired those people who manage to buy $100 worth of groceries for just $32, then you’ve probably toyed with the idea of trying extreme couponing yourself. And why not? With a little effort, you might end up slashing your costs and working wonders for your budget.

But while extreme couponing might seem like a great idea, you might encounter some challenges along the way. Here are three issues that could make extreme couponing a less viable option for you.

1. It can be extremely time consuming

The time commitment it might take to pull off extreme couponing could be overwhelming. First, you’ll need to actually find those coupons. And while there are coupon apps you can use to speed up the process, you should still expect to have to put in the time.

You’ll then need to organize your coupons by store and product to make sure you’re able to use them efficiently and by their respective expiration dates. To make the most of your coupons, you might also need to hit up a few different stores on a weekly basis.

All of this may be feasible if you have a lot of free time on your hands. If you’re retired, for example, and you kind of get a kick out of extreme couponing, then sure, put in the time and chalk it up to an activity that keeps you busy. Similarly, maybe you’re a stay-at-home parent of older kids and have flexibility during the day when they’re at school to hunt down coupons and drive to multiple stores. In that case, why not do what you can to save your family a little money?

But you may not have the time to practice extreme couponing if you work full-time or are a stay-at-home parent with an infant or toddler at home. Also, even if you can squeeze out the time to find your coupons, think about how much fun it is to go to the grocery store with a two-year-old. Do you really want to repeat that process several times over week after week?

Furthermore, if you’re self-employed, you might come out ahead financially by sinking more time into earning money at your job than seeking out coupons. Let’s say a week of coupon-hunting and store-hopping saves you $50. When you add up the time you spent doing all of that, it may be that you could’ve earned $300 by billing more hours.

2. The coupons you find may not align with your purchasing needs

You may find your fair share of deals once you get into the habit of extreme couponing. But that doesn’t guarantee that the deals you identify will be convenient ones for you to capitalize on.

Let’s say you find a coupon that cuts the cost of the yogurt you usually buy from $1.25 per container to just $0.50. Clearly, that’s some big savings. But if your fridge is already bursting with yogurt and you don’t have the room to store any more, those coupons may not do you all that much good.

Also, in some cases, you may have to buy more of a product than you’d normally buy to reap savings. For example, you might find a coupon offering $2 off frozen chocolate chip pancakes if you buy three boxes. But if you normally only buy one box at a time, now you’re stuck having to find the space for the extra boxes to get the deal.

3. You may not even really want or use the products you buy

Just because you’re able to find coupons for different products doesn’t mean you should use them. It’s one thing to reap savings on an item you buy and use regularly. But if you find a coupon that reduces the cost of a popular face cream from $9.99 to $4.99, you’re not really getting a good deal if that’s not the cream you prefer — say, because you don’t care for its scent.

Also, you may find a coupon that gives you $2 off when you buy $15 worth of products from a specific brand. But what if you only use that brand’s lipstick, which costs $7, and mascara, which costs $6? Now, to get that deal, you have to spend an extra $2 to get your $2 back. Only what might happen is that you can’t find a single product for $2, so you end up buying a $3 eye pencil you don’t really need to get $2 off of your total purchase.

In that case, you really only wanted $13 worth of products. But you had to spend $16 to save $2, bringing your total cost to $14. You didn’t save $2 in this case — you spent an extra $1.

There are other ways to save

While you can save money with extreme couponing, there are other steps you can take to lower your costs at the supermarket and other stores. For one thing, rather than practice extreme couponing, just read your grocery store’s circular to see what’s on sale, and load digital coupons that are useful to you to your store loyalty card.

Next, consider signing up for a warehouse club membership, like Costco. You might enjoy a lot of savings by purchasing household essentials in bulk.

Finally, be savvy about the credit card you shop with. If there’s a card you own that gives you extra cash back at the grocery store, swipe it. But if you’re not getting such generous rewards from your current cards, sign up for a new credit card with a program that works better for you.

It’s true that some people have a lot of success with extreme couponing. But don’t assume you’ll be one of them. And if you do decide to give it a try, don’t fall into the trap of denying yourself income-earning hours to clip coupons or buying things you really don’t want or need just to save money on them.

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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 Costco Wholesale. The Motley Fool has a disclosure policy.

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