Money Management

Different savings accounts offer different rates. Learn why it may not be worth changing banks to get a higher APY on your saved cash. [[{“value”:”

There are many great high-yield savings account options out there. But the account offering the best rate can change at any time, because the yields offered by different banks fluctuate regularly.

When I opened my account, I chose the financial institution offering the best rate at the time. But this was years ago, and new competitors have come along and offered more competitive returns.

I haven’t moved my money elsewhere, though, and I won’t be doing so anytime soon. Here are the two primary reasons why I don’t shift around my savings to try to make sure I always have the account offering the best yields.

1. Rates change too often for it to be worthwhile

One big reason why I don’t bother to change my savings account to chase the best rates is because doing so is simply too much of a hassle to be worth it. I wouldn’t be guaranteed to keep the new higher rate for any length of time. That’s because interest rates are variable on high-yield accounts, and they can and do shift due to changes in market conditions.

I don’t want to have to move my financial accounts every couple of months just because a competitor to my bank makes a slightly better offer. It’s much easier to just pick a bank offering a good enough account and then just leave my money alone to grow. I don’t want to constantly be checking rates with competitors and be forced to take swift action to move the funds over to get the best deal every couple of weeks or months.

2. A brokerage account is a better bet to grow my money over time

The cash I keep in savings isn’t in that account with the goal of maximizing returns, so chasing a higher rate doesn’t make sense.

I know that brokerage accounts typically provide the chance to earn much higher rates than even the best high-yield savings account can provide. So I’d rather keep as much of my money as possible invested in an S&P 500 index fund, which is a financial index made up of 500 of the largest U.S. companies. The S&P 500 has consistently produced 10% average annual returns, which is far higher than a savings account offers.

Since I want to invest as much as I can, rather than stick money in savings, I keep only the bare minimum in any high-yield accounts. With the amount I have in the account, it doesn’t make a huge difference to get paid a very slightly higher rate on savings from one bank to another.

Say, for example, I have $5,000 in my savings account and one bank offers a 5.00% rate and the other offers 5.15%. Here’s what my account balance would look like in each account over time.

Making a few extra dollars a year isn’t worth the trouble. It would involve keeping tabs on which bank is offering the best deal all the time and switching my account and moving balances regularly. Instead, I have a good account with a reasonable rate, and I just leave my money where it’s safe.

If you have only the minimum in savings to cover emergencies or pay for short-term goals, you may or may not decide that it’s worth it for you to switch savings accounts to try to chase the best rate possible at all times. Just remember, that great rate may have a short shelf life — so be sure you’re ready and willing to act to switch accounts again if needed.

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

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

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.

“}]] Read More 

Are you teaching your kids about debt? Read on to see why you should. [[{“value”:”

During the fourth quarter of 2024, U.S. credit card debt reached the $1.05 trillion mark, according to TransUnion. That’s up from $931 billion — an already large number — during the previous quarter.

Sometimes, credit card debt comes as a result of tough financial circumstances more so than reckless spending. But part of the reason credit card debt may be so prevalent among U.S. consumers is many don’t really understand the dangers of racking it up.

That’s why it’s so important to teach your children how credit cards and debt work. And there’s good news there. Data from Empower show that 57% of families are doing just that. If your children are old enough to discuss financial matters, here are some key points about credit and debt to touch on.

1. How compound interest works for credit cards

In the context of investing, compound interest is a good thing. It can help you turn a modest amount of money into a much larger sum over time.

But in the context of credit card balances, compound interest can work against you in a really serious way. As you accrue interest on a credit card balance, that interest is then added to the sum you owe so that when more interest accrues, you’re paying interest on interest.

All told, even a small credit card balance has the potential to turn into a large one over time because of the way interest accumulates. So make sure to stress the importance of paying off credit cards in full whenever possible.

Also, you may want to actually show your kids — with numbers — just how much a seemingly innocent credit card balance might escalate. You might, for example, start off with a $1,000 balance you need to carry forward. But if it takes you five years to pay it off on a credit card with a 24% interest rate, you’ll end up spending $726 extra, or $1,726 in total.

2. How credit card rewards work

Credit cards tend to get a bad rap as a financial product consumers should avoid. But that’s not a healthy approach to credit cards.

It’s not a great thing to carry a credit card balance forward due to the whole issue of interest just discussed. But when you pay off your credit cards in full every month, they can help your finances by putting rewards or cash back in your pocket. You may want to tell your children that it’s perfectly OK to use credit cards for recurring expenses like groceries and gas as long as they’re paying the bills in full.

3. How debt isn’t necessarily a bad thing, provided you can manage it

The word “debt” tends to have a very negative undertone. But the reality is that not all debt is a financial mistake, and it’s important that your children understand that.

Indeed, it’s generally best to steer clear of credit card debt due to the costly nature of it. But there’s nothing wrong with taking out a reasonable mortgage to finance a home purchase. Doing so could help your kids grow their net worth in a meaningful way.

That said, it’s important for your kids to make sure that any debt they take on is one whose payments they can handle. If they sign up for a $2,000 monthly mortgage and can swing that sum with ease, then there’s really no problem.

A big reason some consumers run into trouble with credit card debt is that they don’t fully understand how it works. So if you teach your children about credit and debt, you can put them in a really strong position to make savvy financial decisions once they leave the nest.

Of course, these aren’t conversations you’re going to have with your 8-year-old. But they’re great ones to have with your teens. And they’re definitely worth discussing with any kids you have who are going off to college and are looking at managing money on their own to at least some degree.

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.

“}]] Read More 

A new rule for small business owners took effect in 2024. Do you know what BOI Reporting is? See how to protect yourself in just five minutes. [[{“value”:”

Lots of small business owners might not know this, but the federal government is requiring you to file some new documentation this year. Anyone who owns a small business with a legal entity, like a limited liability corporation (LLC) should pay attention to this new rule. Just like filing taxes, if you don’t do it, the consequences are severe. You cannot afford to miss this deadline.

The U.S. Department of the Treasury has started a brand new reporting requirement in 2024 for small business owners called Beneficial Ownership Information (BOI) Reporting, or “BOI Reporting.” The goal of this new rule is to fight financial crime, and help the feds prevent drug cartels or foreign oligarchs from using the U.S. financial system for money laundering or terrorism.

The new BOI Reporting requirement is complicated, and it was not clearly communicated or widely announced; I only happened to find out about it because of a news headline and a monthly newsletter from my state’s Secretary of State office. So in case this is the first time you’ve heard about BOI Reporting, don’t worry — you still have time to get it done.

Let’s look at what the BOI Reporting requirement is about, how it works, and how long it takes.

What is the BOI Reporting requirement?

BOI Reporting is a result of the Corporate Transparency Act. The U.S. government is trying to make it harder for criminals and bad actors to set up shell companies in America, and then use those phony companies to launder money or get access to the U.S. banking system. Just like banks have to file reports about suspiciously large deposits of cash to stop money laundering, the U.S. Treasury Department wants to prevent suspicious LLCs and other legal business entities from being used for financial crimes.

As a result, many small businesses in the U.S. are being asked to file a new document that shows exactly who benefits from their business entity (such as an LLC or S Corp). The federal government wants to make sure your business is really owned by a “real person” or a legitimate group of owners, not by a tangled web of shadowy crime lords. If you own an LLC, S Corp, or other legal business entity that was created or formed at the state level, you probably need to do BOI Reporting.

Keep in mind that BOI Reporting is a new federal requirement in 2024. This is different from your usual state-level annual report or biannual report that you have to file with state authorities. Don’t delay, ignore, or forget about this new requirement!

How to file BOI Reporting

No one ever looks forward to filing taxes or dealing with government bureaucracy, but this BOI requirement is crucially important. Fortunately, it’s fast and easy. It only took me five minutes to fill out the BOI forms for my small business.

Here’s how to get it done:

Go to the Financial Crimes Enforcement Network (FinCEN) website at https://fincen.gov/boiRead the BOI Reporting FAQs to make sure you understand the rules for your business. Some types of small businesses and nonprofits are exempt from BOI Reporting, but don’t assume that you’re exempt — you probably need to do BOI Reporting.Use the BOI E-Filing System to file your BOI Report.

If you own an LLC and have a simple ownership structure, you’ll just need a few pieces of information to file your BOI report. For example, when I filed my BOI Report, the system asked me for details, including:

Company nameCompany tax identification number (Employer ID Number)Company addressBeneficial owner’s name and addressIdentifying document (like a driver’s license or passport)

It only took me about five to 10 minutes to fill out the information and complete the process of the BOI E-Filing System. And BOI Reporting doesn’t cost any money; there are no fees. This is much easier than filing taxes!

What are BOI Reporting deadlines?

BOI Reporting deadlines depend on when your business entity was formed. If you own a small business that already was created or registered to do business prior to Jan. 1, 2024, your BOI Reporting deadline is Jan. 1, 2025.

If you start a new business in 2024, your BOI Reporting deadline will be within 90 days after the company’s creation or registration. The deadline will be even shorter (just 30 days) for new businesses formed in 2025.

Bottom line

BOI Reporting is a new rule in 2024 that small business owners need to follow. Do not ignore this, forget about it, or think it doesn’t apply to you. Most small business owners, unless their companies fit into a few exempt categories, are probably required to file a BOI Report in 2024.

Just like failing to file your taxes, not filing BOI Reports can bring big financial penalties and even send you to prison. Small business owners can help fight financial crime by sharing a few pieces of information with the U.S. Department of the Treasury. File your BOI Report in 2024!

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.

“}]] Read More 

Are you a stay-at-home parent feeling financial strain? Making a few changes could allow you to save money. Find out how to stretch your dollars further. [[{“value”:”

Being a stay-at-home parent can be a rewarding experience. You can watch your child grow up and spend more time together. Many families have one parent stay home to avoid paying costly child care expenses. For some families, a second paycheck would be spent entirely on child care so there is little reason to continue working.

While saving money on child care costs can be a win, no longer working can significantly impact your family’s checking account. However, parents can make strategic moves to stretch their dollars further. Here are some ways stay-at-home parents can maximize their savings.

1. Follow a budget

Budgeting is an excellent strategy for helping your family maximize their money. Setting spending limits could help you reduce spending on unnecessary purchases and free up more money for other financial goals. If you need help, you may want to use one of the best budgeting apps. Many of these apps are affordably priced or offer free versions.

2. Shop the sales and compare prices

When shopping, it pays to be prepared. Before you head to the store, whether for household essentials or groceries, take some time to get organized so you have a plan. Reviewing sales flyers for your go-to retailers can help you honor your budget as you create your shopping list.

It’s also a good idea to compare prices across retailers so you get the best deals. Another tip is to use the best cash back apps to earn cash back when you shop for your everyday needs.

3. Take advantage of free community resources

Many stay-at-home moms and dads seek affordable activities and events to participate in with their kids. You don’t have to spend money to have a fun day together. Using free community resources like public parks, community centers, and libraries could offer savings.

Your library has books, movies, and more available to borrow for free. Many libraries and community centers also host fun and complementary events and activities for children and their families. Stay alert to these opportunities so you don’t waste money unnecessarily.

4. Buy in bulk

Another way to maximize your savings as a stay-at-home parent is to buy in bulk. The savings can be significant if you have several family members and space to store bulk essentials. Many families invest in warehouse club memberships to score discounted prices on bulk goods. If you have a Sam’s Club or Costco near your home, consider whether investing in an annual membership could help you trim your spending.

5. Avoid buying new

Kids grow fast, so buying new clothes and accessories can be wasteful, especially if they’re going through a growth spurt. The good news is you don’t have to buy new essentials. Many stay-at-home parents save money by purchasing used clothing from consignment stores, community groups, and yard sales. You can free up more money for other expenses by looking for used clothing and shoe deals whenever it’s time to restock your child’s closet.

6. Meal prep

Meal prepping is another way stay-at-home parents can boost their savings. Many families waste money on food because life gets busy, and food goes to waste before they eat it. Meal prepping can allow you to maximize the ingredients you buy so you don’t waste food or money. Knowing that you have some meals already prepared in the fridge can also make life easier.

Small lifestyle changes can make a big difference

If your funds are limited right now, look for small ways to save money. Every dollar you save adds up and can make a big difference in your household finances. Are you looking for other ways to save money? For additional tips, check out our free personal finance resources.

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.Natasha Gabrielle 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.

“}]] Read More