Money Management

It’s not easy to find money for an IRA. Read on for tips if you’ve been struggling so far this year. [[{“value”:”

In 2024, IRA contributions max out at $7,000 for workers under the age of 50 and $8,000 for those 50 and older. The more money you can put into your IRA this year, the more opportunity you have to benefit from investment gains in that account over time.

But let’s face it — it’s not easy to find money for an IRA when you’re juggling numerous bills. And while you probably do spend some of your income on non-essentials, it’s hard to give those up to put away money for a milestone that may be 30 or 40 years in the future.

Nonetheless, it’s important to fund your IRA to some degree this year. So if that’s been a struggle so far, here are a few key steps to take.

1. Start by automating a tiny monthly contribution

If you’re under age 50, maxing out an IRA this year means parting with about $583 a month. That’s a lot of money to give up if you only earn an average salary.

But remember, you don’t have to max out your IRA if that’s not in cards. Contributing even a small amount, like $50 or $75 a month, could have a huge impact over time. At the very least, set up an automatic transfer from your checking account to your IRA where a small amount of money you can afford lands in that account monthly off the bat.

Let’s say you’re 25 and that beginning in April, you’re able to automate a $60 monthly contribution to your retirement account. That will leave you with $540 at the end of the year.

If, through the years, your investments in your IRA generate an average annual 10% return, which is in line with the stock market’s long-term average, then by age 65, that $540 will be worth $24,440.

Now, you probably want to retire with a lot more savings than that. The point, however, is that if you manage to save $60 a month this year, it could end up being enough to pay for quite a lot of retirement expenses down the line.

2. Assess your spending

It’s reasonable and acceptable to spend a portion of your income on fun things, even if that means letting your savings fall by the wayside to some degree. After all, you can’t just work and save. You need to enjoy life, too.

That said, there may be certain non-essential expenses you’re paying for today that you can dump without feeling too bad giving those things up. Perhaps you pay $20 a month for a streaming service but haven’t really been watching it much. If so, why not try going without it for a few months and putting $20 more into your IRA each month instead? As we saw earlier, even small amounts in an IRA can turn into large sums over time.

3. Turn to the gig economy for extra income

It may be that your entire salary truly is earmarked for essential expenses. If that’s the case, getting a side gig could be your ticket to funding your IRA to some degree.

And remember, you don’t have to commit to a second job indefinitely. In time, your wages at your main job are likely to rise, and from there, IRA contributions may be more feasible. Your side hustle, therefore, is something you can view as a temporary solution.

In fact, to sweeten the deal, you don’t have to commit to putting every dollar you earn from your side gig into your IRA. Tell yourself that for every $100 you bring home, $50 goes into your long-term savings, but the remaining $50 is yours to spend as a reward.

The sooner you manage to fund your IRA, the more retirement wealth you might end up with. So try using these tips if finding money for your nest egg has been a challenge so far this year.

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Want to fight climate change? Change the way you spend and invest. See how to reduce carbon emissions and boost your bank account. [[{“value”:”

Earth Day is coming up on April 22, 2024, and climate change is top of mind for many people. The planet has just experienced 10 months in a row of record-high temperatures. If people cannot take action soon to fight back against climate change, we could see catastrophic consequences for the global economy, our homes, and our entire way of life.

Fortunately, there is still time to fight climate change, and the individual choices we make as consumers, as banking customers, and as investors can make a big difference. Let’s look at a few money moves you can make today to help fight climate change.

1. Buy an electric vehicle (EV) or hybrid vehicle

One of the biggest immediate moves you can make to help the climate is to change the car you drive. Switching from a traditional gas-powered car to a fully electric vehicle (EV) can make a massive impact in reducing carbon emissions.

The average EV emits about 2,727 pounds of CO2 equivalent per year, compared to 12,594 pounds of CO2 equivalent from a gasoline car, according to data from the U.S. Department of Energy. Switching from a gas car to EV can reduce your everyday driving’s climate impact by 78%!

In case you have “range anxiety” and aren’t ready to commit to a fully electric vehicle, that’s fine too. You can choose a hybrid vehicle or plug-in hybrid (PHEV). The average hybrid car emits 6,898 pounds of CO2 equivalent per year, which is still a 45% carbon reduction compared to a standard gas-powered car.

You can cut even more carbon emissions and avoid range anxiety with a plug-in hybrid vehicle. These zippy, fun-to-drive cars (disclaimer: I drive a Toyota Prius Prime plug-in hybrid, and I love it) only emit about 4,763 pounds of CO2 equivalent per year — that’s a 62% carbon reduction compared to a regular gas car! And some plug-in hybrids can qualify for a pre-owned EV tax credit of up to $4,000 — making them an even better deal for your budget and the planet.

2. Get solar panels for home energy

What if you could replace your monthly energy bill with the power of the sun? Installing residential solar panels, also called solar photovoltaic systems, can make this a reality. The exact amount of reduction in carbon emissions will vary based on the size of your home and how your local power grid is fueled; if your local grid is mainly powered by coal-fired electric plants, your carbon savings will be bigger by switching to solar.

The biggest immediate impact on your personal finances from going solar is that the federal government is offering a generous tax credit for installing residential solar. If you install solar panels on your home, you can qualify for a tax credit of up to 30% of the cost. For example, if your solar photovoltaic system costs $15,000 to install, you could get a tax credit of $4,500. See more details at the U.S. Department of Energy website.

Here’s another fun fact about going solar: it can make your home more valuable! Data from the U.S. Department of Energy finds that solar panels increase the value of a home by an average of $15,000.

3. Invest in ESG or “green funds”

If you want to put your money into a more climate-friendly direction, you can invest in a mutual fund that lets you buy stocks in solar energy and other renewable energy companies, or companies that do not produce fossil fuels.

Some “green funds” are designed to exclude fossil fuel companies. Others choose a mix of stocks of companies that rate highly for their environmental, social, and governance (ESG) practices, or that have a special mission to benefit society.

A few examples of climate-friendly, ESG, or “green” investment funds include:

Amalgamated Bank Fossil Fuel Free Portfolio

If you want to buy stocks in companies that are not creating more fossil fuels to be burned, Amalgamated Bank offers a special investment option. Its Fossil Fuel Free Portfolio helps you buy stocks in a diversified mix of companies that are directly involved with producing renewable energy, reducing carbon emissions, improving efficiency of water usage, supporting sustainable farming, and more.

Aspiration Redwood Fund

This mutual fund is offered to customers of Aspiration, a fintech that provides banking services and investments. The Aspiration Redwood Fund is designed to invest in companies that Aspiration believes have strong business fundamentals, as well as sustainable long-term environmental, social, and governance (ESG) practices. The Aspiration Redwood Fund requires a minimum investment of just $10, and has a goal of meeting or beating the performance of the S&P 500 index.

Vanguard Baillie Gifford Global Positive Impact Stock Fund

This Vanguard mutual fund is invested in companies that intend to deliver positive change by contributing to a more sustainable and inclusive world. As of Dec. 31, 2023, some of its 10 largest holdings included semiconductor companies, e-commerce companies, Moderna, and Duolingo. This fund doesn’t own any energy stocks, which makes it fossil fuel free.

To find more investment funds that don’t buy stocks in fossil fuel companies, check out FossilFreeFunds.org.

Bottom line

Changing the way we spend and invest our money can make a big difference in the climate change fight. Buying an electric vehicle (or hybrid, or plug-in hybrid) can significantly reduce the carbon emissions of your everyday driving. If you put solar panels on your home, the federal government could give you cash back at tax time. And investing in green funds can help your retirement savings while fighting climate change.

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Saving up an emergency fund increased my happiness by giving me peace of mind. Learn about this and other moves that have made a big impact. [[{“value”:”

I try to manage my money as wisely as possible. To do that, I’m always looking for ways to improve my financial situation, such as finding a new credit card offering great rewards.

Many of the steps I’ve taken have improved my personal finances — but some of them have made a far bigger difference than others, not only when it comes to my financial life, but when it comes to my life in general. In fact, here are the three money moves that I’ve made that have had the biggest impact on my happiness over time.

1. Saving up an emergency fund

Saving up an emergency fund with six months of living expenses has made a huge difference in my overall happiness for a few different reasons.

First, it’s given me peace of mind. As a financial writer, I know that unexpected emergencies are a fact of life. Pew Research found in 2015 that 6 in 10 Americans had experienced a financial shock over the prior year. Since I saved up an emergency fund, I no longer worry about whether I’ll have to borrow or struggle to afford unexpected expenses. I can feel confident the money is there.

Second, when unplanned bills have come up, I’ve been able to avoid getting upset and handle them easily. For example, my air conditioner going on the fritz is no longer a financial disaster or even a cause for concern. I know I have the money to cover it.

Third, my large emergency fund has also been used for things that have improved my life in huge ways, including paying for life-saving surgery for my beloved dog.

Saving up an emergency fund may not seem like the most exciting financial goal and it may be hard to believe the impact it could have on your happiness. But if you’ve ever worried about how to pay a bill, been concerned about an item breaking that you’d have to pay to fix, or been faced with a cost you feel is essential that you can’t afford, then you’ll likely find that you are a much happier person when you no longer face these concerns.

2. Buying a house

Buying a house is a major financial decision. And it’s one of the best ones I’ve ever made — again, for a few reasons.

One reason is that I know with each housing payment, I’m building equity. I’ve also been lucky enough to make money on past home sales, which enabled me to climb the property ladder and ultimately buy my dream home. And third, buying a house has allowed me to customize my property to my liking, which has a huge impact on my happiness.

Buying a home isn’t right for everyone. But if you want to set down roots, make a place your own, and acquire a valuable asset with each housing payment — and if you’re financially ready to qualify for a mortgage — then it can be a great thing for you, too.

3. Automating my financial life

Finally, the last big move I made that significantly improved my happiness was automating my finances. Basically, I arranged for all my bills to be paid automatically and for money to transfer to savings automatically. This way, I know I can spend whatever’s left in my bank account each month once that happens.

Making all of these steps automatic means I don’t have to think about where my money is going, worry whether I’m on track for my goals, or wonder if I’m overspending. If I just keep the status quo, I know my goals will be accomplished over time — and I can enjoy spending the rest guilt free. And you can do the same by having your paycheck sent automatically where it needs to go by signing up for automatic bill payments and automatic transfers to savings and retirement accounts.

Making these three moves has made me a much happier person, and if you are currently stressing about your own financial situation, you may want to consider whether any of them are right for you, too.

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You’re generally not barred from paying off a personal loan early. But it might cost you. Read on to learn more. [[{“value”:”

There’s a reason personal loans have become such a popular borrowing option, as evidenced by the 23.5 million consumers who had one as of the fourth quarter of 2023, according to TransUnion. With a personal loan, you can borrow money for any purpose, whether it’s to fix up your home, go on vacation, or start a business. And once you put that loan in place, your interest rate on it is fixed, so you won’t have to worry about your payments going up.

You may sign a personal loan that has you repaying the balance over several years. But what if you end up in a position to pay off that loan ahead of schedule?

Perhaps you’ve gotten a small inheritance that could satisfy your loan balance. Or it could be that you got a new job with a notably higher salary, and with careful budgeting, you can make higher payments to get your balance paid down sooner than planned.

You may be tempted to repay your personal loan early to save money on interest and just plain shake that debt. But while doing so might work to your benefit, you might face a surprising pitfall.

Will you be penalized for paying off a personal loan early?

Some loans, including personal loans, come with a prepayment penalty. As the name suggests, this is a penalty that applies when a loan is paid off ahead of schedule.

Why would a lender impose a prepayment penalty, you ask, when it means getting its money back sooner? The reason is that lenders make money by collecting loan interest. So the sooner you pay off a loan, the less interest your lender stands to take in.

Meanwhile, there can be costs and administrative work associated with putting a personal loan in place on your lender’s side, so it may only want to put in that effort to make a certain amount of money on interest. If you cut that amount by repaying your loan early, you might face a penalty.

Now that said, it’s not a given that your personal loan will have a prepayment penalty clause. To find out, you’ll need to check your loan documents, which you should have been given a copy of. You may find that your specific loan doesn’t charge a prepayment penalty, which means you’re off the hook.

Otherwise, find out what that penalty amounts to and run the numbers to see if your savings on interest will outweigh the penalty. If you’re looking at a $100 prepayment penalty but you stand to save $600 on interest, then clearly, moving forward with an earlier repayment date still makes financial sense.

Make sure you don’t need the money for something else

The idea of shedding your personal loan debt may be appealing. But before you take your extra money and use it to repay your personal loan early, make sure you don’t need that cash for another purpose.

For example, if you don’t have enough money in your emergency fund to cover at least three full months of essential bills, you may be better off putting your extra cash into savings instead of your personal loan. And if you owe money on a credit card charging 18% interest while your personal loan only charges 8%, then you’re probably better off using your cash to chip away at your credit card balance first.

All told, repaying a personal loan may or may not cost you in terms of a penalty. The only way to know for sure is to read your loan document carefully and find out what’s in store.

Our picks for the best personal loans

Our team of independent experts pored over the fine print to find the select personal loans that offer competitive rates and low fees. Get started by reviewing our picks for the best personal loans.

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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