Money Management

How do your allowance practices stack up against other parents’? Read on to find out. [[{“value”:”

There’s an argument that takes place in my house pretty much every week, and it centers on the topic of allowances. My three kids (aged 9 to 12) do not get an allowance. Period. And there’s a reason for it.

First, I’m of the mindset that you don’t get money just for being a member of this household. Secondly, I’m not going to give my kids an allowance as a reward for doing their chores. As I like to tell them, “Your chores are your contribution to this household, and in this family, everyone helps in one way or another.”

I also don’t give my kids an allowance because I’m not super confident in the likelihood of them using that money wisely. I’ve seen my daughter, for example, take her Tooth Fairy money into school and use it to buy Doritos — something I can load up on at Costco for a fraction of the cost at the school cafeteria. So I’m not going to just hand out money week after week only to see it get blown similarly.

Now I do acknowledge that my $0 allowance is a bit, well, stingy, to put it mildly. But when I did some research into the average weekly allowance that U.S. kids get, I was downright shocked.

A really big number

Data from T. Rowe Price shows that parents give their kids an average weekly allowance of $19.39. And yes, that’s on a per-child basis.

Now I’ll be honest. My first reaction to that number was something along the lines of, “What on earth are these people thinking?” My next thought was “How much money are these people making that they can afford almost $20 a week — per kid?”

Of course, it’s certainly not my place to judge other people’s financial habits. And it is commendable that parents are being generous with their children.

Still, that average figure worries me. While I could sort of see giving a high-schooler $20 a week, giving that much money to a 9-year-old is a different story.

What adds to my concern is that many children are not taught how to manage money at school — though thankfully that’s changing, and now, 25 states mandate that students take a personal finance course prior to graduation. But for those who aren’t getting that education, I hate to think of all the money that could potentially be getting spent on useless things, like overpriced cafeteria Doritos.

How to help your kids make the most of their allowance

Let’s be clear — there really is nothing wrong with giving your kids an allowance, especially if they’re going above and beyond to earn it, like taking on extra household chores. But if you’re going to give your children money on a weekly basis, make sure to give them the gift of guidance along with the cash.

First, explain the benefit of keeping money in the bank and teach them how interest works. Next, take them to open a savings account so they feel like they’re part of the experience. (If you have an older child, you can probably skip the fanfare of a bank visit and open an account online. But for a younger kid, the former might be pretty cool, especially if there’s free candy in the lobby.)

From there, encourage your kids to save at least some of their allowance — both for big-ticket items they want in the near term, and even bigger-ticket items, like their first car. And if you want to take things a step further, you could open a brokerage account you manage and have them invest a portion of their allowance.

Unfortunately for my kids, I’m not about to change my tune on allowances anytime soon. But when money does come their way, whether as a holiday gift or a payout from the Tooth Fairy (who my kids all know is me, but they insist), I absolutely emphasize the importance of putting it into savings. You may want to do the same so you’re reassured that the allowance money you’re working hard to earn isn’t being lost or spent on nonsense.

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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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It’s a good idea to pick up a side gig if you’re a mom who’s eager to shed their debt. But there’s one gig you should aim to avoid. Read on to learn more. [[{“value”:”

TransUnion reports that as of the fourth quarter of 2023, U.S. credit card debt hit $1.05 trillion. And an estimated 169.9 million consumers owe money on a credit card balance.

If you’re a busy mom who’s trying to pay off debt, you may have tried cutting expenses from your budget. But if that didn’t work, well, it’s not so shocking. There may only be so many bills you can slash to free up money, especially when you’re dealing with child-related expenses.

For this reason, a better road to paying off debt may be to pick up a side hustle. This is something you can try to do on top of a full-time job, or it’s something you can try to work into your schedule as a stay-at-home parent with young kids afoot.

But there’s one specific side hustle it really pays to steer clear of. Not only might you end up wasting your time and not making much money, but it could also be a gig that causes you to alienate friends and loved ones.

Do not fall for an MLM

When you’re pressed for time and don’t have a ton of flexibility in your schedule, you may decide that selling a given product, whether it’s skincare items, cookware, or handbags, is a good gig to pick up. Often, you can advertise the items you’re selling on social media, take orders online, and get paid without having to leave your house.

If you’re a mom with an infant and toddler and no child care whatsoever, a side hustle that requires you to leave the house during the day may not pay off. You might spend as much on a sitter as you bring in. So in that sort of situation, an MLM might sound like a smart bet.

If you’re not familiar with MLMs, or multilevel marketing businesses, they go something like this: You’re recruited to sell a product to the people you know (and the people you don’t) via a number of channels. You could host parties showing off your wares, attend local craft fairs, or simply stick to advertising your products on social media and sending email blasts to your contacts.

Under this type of setup, the more products you sell, the more commissions you earn. But the way to really make money with an MLM is to recruit people to sell products under you, because you then get a cut of their sales.

But it’s this very setup that often makes MLMs a waste of time.

First of all, the commission you earn on a per-product basis may be quite small. Part of the reason is because the person who brought you into the business is getting a share of your profit. So unless you either sell a lot of products or build a team under you, you may find that the money you make from an MLM is so minimal that it virtually does nothing to help you chip away at your debt.

But that’s not the only issue. Not only might you waste a lot of your time with an MLM, but you might also alienate people in the process.

If you’re constantly nagging your friends to check out your new products or pushing people in your life to make purchases, it could make them extremely uncomfortable. That could impact your relationships and potentially get you excluded from social plans. After all, who wants to deal with a sales pitch for a jar of $60 face cream over what’s supposed to be a casual dinner?

A better route to take

There’s nothing wrong with picking up a side hustle to chip away at your debt. But don’t make that side hustle one that requires you to sell products (often, overpriced products) and effectively badger people into helping you dig your way out of a hole. Instead, find a side gig that works for your schedule, even if it’s a busy one.

If you’re a stay-at-home parent to young kids with no child care, but your partner is home in the evenings, you could try finding a gig you do at night, like waiting tables at a restaurant in your town or driving for a ride-hailing service. And if you prefer a work-from-home gig, look at things like doing product reviews, data entry, and blogging, if you have the skills.

Another thing that might help you pay off your debt is consolidating credit card balances into a personal loan. That way, you lock in a fixed interest on that debt, leaving you with predictable monthly payments.

It’s definitely a hard thing to be in debt. And it’s respectable to try to do what you can to work your way out of it. But pushing products on your friends and family whose sales barely yield you any money probably isn’t the best way to go about things.

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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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Earning interest on your savings is great, but some accounts offer you more than others. Here are three to stay away from. [[{“value”:”

One of the most appealing reasons for keeping money in the bank as opposed to in a safe inside your house is that you can earn interest on bank account funds. Banks use money you keep there to help fund loans to other customers, and then they give you a piece of what they’ve earned from lending as the bank account’s annual percentage yield (APY).

Some accounts can pay you hundreds or even thousands of dollars per year in interest, depending on the interest rate and your balance. But there are other accounts whose APYs are little more than a marketing gimmick. Here are three types of interest-bearing accounts you probably want to stay away from.

1. Traditional savings accounts

Brick-and-mortar banks have long had interest-bearing savings accounts, but even today, these accounts usually don’t have high interest rates. The national average savings account APY is just 0.47%, and there are still plenty trying to get away with offering you a measly 0.01%. That would grow a $1,000 balance by just $0.10 in one year.

Part of this comes down to the high overhead costs of maintaining a physical network of bank branches. There are a lot of employees and buildings to maintain and costs like salaries, property taxes, and utilities limit how much extra cash these banks have on hand.

This isn’t a problem with online banks. Since these have no branch locations, their overhead costs are a lot lower. They pass along their savings to their customers through lower fees and higher interest rates on bank accounts.

Currently, the best high-yield savings account rates are near a whopping 5.00%. They’re expected to dip later this year when the Federal Reserve begins slashing interest rates. But they’ll remain a lot higher than what most brick-and-mortar banks can offer. So this is probably a better fit than a traditional savings account for most people.

2. Interest-bearing checking accounts

Interest-bearing checking accounts have become popular among online banks, and some brick-and-mortar institutions have them as well. These can seem more appealing than checking accounts that don’t pay interest, but in practice, you probably won’t notice much difference between them.

Interest-bearing checking accounts often have rates that are well below what high-yield savings accounts offer. This means you’ll earn interest more slowly on your checking account funds. You’re often better off stashing extra cash in a high-yield savings account if you hope to maximize your money’s growth.

When choosing a checking account, it’s more important to focus on how easy it is to access your funds. The account should come with strong online and mobile tools as well as a debit card and, if it appeals to you, check-writing capabilities. A large ATM network is also ideal if you’ll need to withdraw cash regularly.

3. Long-term CDs

Long-term certificates of deposit (CDs) may not be a bad fit in all circumstances, but there are times when it makes sense to stay away. CDs require you to leave your money untouched for the full CD term or risk penalties. In a long-term CD, this could be several years. It doesn’t make sense to put money here if you believe you’ll need to access your funds before the CD term ends.

Long-term CDs also aren’t a great choice when interest rates on banking products are rising. Your CD interest rate is usually locked in for the full CD term. Opening one when rates are rising means you could stick yourself with a much lower interest rate than you could’ve gotten by keeping your cash in a high-yield savings account over the same time frame.

On the contrary, some people find long-term CDs appealing when interest rates are falling, as they’re expected to do later this year. This enables them to lock in a higher rate than they might get with a savings account over the same period. But there’s still that tradeoff in accessibility to consider.

It’s best to explore all available bank accounts and compare your options against what matters most to you. If maximizing your savings’ growth is your top priority, a high-yield savings account is a great option. But if easy access is paramount, you can’t beat a checking account with few fees.

These savings accounts are FDIC insured and could earn you 11x your bank

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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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Being single can be tough financially at any stage of life — including retirement. Read on for ways to cope with being on your own as a senior. [[{“value”:”

There are certainly advantages to being single. You get to live life on your own terms, and you can use your financial resources to cater to your own needs rather than having to also think about a partner’s.

But there’s a big downside to being single — having no one to split the bills with. If it costs $2,000 a month to rent the average apartment in your area, as a member of a couple, you might have another earner to share that tab with. When you’re single, every bill of yours is one you have to cover alone.

That could be extremely challenging in retirement, though. Many seniors find that they’re forced to live on a lot less money in retirement due to the absence of a paycheck from work. While it’s one thing to tackle your bills alone on, say, an $80,000 annual salary, if your annual income shrinks to $40,000 in retirement, you may have a real challenge on your hands.

The good news, though, is that there are steps you can take to attain more financial security as a single retiree. Here are some to look at.

1. Boost your savings, especially as retirement nears

Being single at, say, age 35 or 42 doesn’t automatically mean you’ll be single in retirement (unless you’re someone who knows you’re just plain not interested in coupling up). But if, by, say, age 55, you’re still single and are used to that lifestyle, you may be inclined to remain single as a retiree. If so, push yourself to save more during the tail end of your career so you have a larger financial cushion to fall back on.

Once you turn 50, you can contribute an extra $1,000 annually to an IRA and an extra $7,500 to a 401(k) on top of the regular limits set by the IRS. So let’s say that by age 55, you have a $300,000 IRA.

The contribution limit this year for people under 50 is $7,000, but you have the option to contribute $8,000. If you do so through age 65, and your IRA generates an average annual 7% return during that time (which is a bit below the stock market’s long-term average but accounts for a shift toward more conservative investments as retirement nears), you’ll end up with $700,000.

2. Look at relocating to a less expensive area

During your working years, you might need to live in a city with higher rent prices to give yourself access to a more robust paycheck. Once you retire and stop working, you don’t need to worry about proximity to jobs. It could pay to research options for relocating. If you find an area with a lower overall cost of living, you might manage to stretch your savings more.

Now, you may be inclined to retire in a state with no income tax. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming don’t have a state income tax. New Hampshire doesn’t tax income, but it does tax interest and dividend income, which you may need to live off of to some degree in retirement, so that may not be the best option for you.

Of course, some of the states on the no income tax list may not be optimal for retirement. Alaska can be quite an expensive place to live despite not having an income tax, and you might struggle with the weather. The point, however, is to research your options and see if moving somewhere else helps stretch your senior income.

3. Be strategic in claiming Social Security

If you work and pay into Social Security all your life, you should be in line for retirement benefits. When you’re part of a couple, you get to enjoy having two sets of benefits coming in. When you’re single, there’s only one monthly benefit coming in.

However, you can boost that benefit of yours by delaying your Social Security claim until age 70. If you were born in 1960 or later, you’ll be entitled to your full monthly benefit at age 67. But you get an 8% boost for each year you hold off, up until age 70. Growing that benefit by 24% could help you better manage your expenses as a single retiree.

It’s not easy being single in retirement from a financial standpoint. But on the plus side, being single could work to your advantage in other ways. You can travel to the places you’ve always wanted to without being held back, and you can spend your money in a way that optimizes your quality of life. And if you follow the tips above, you may find that you end up faring quite well and avoiding money problems once your career wraps up.

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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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