Money Management

Being a stay-at-home parent could actually do some good things for your household finances. Read on to learn more. [[{“value”:”

The decision to become a stay-at-home parent isn’t an easy one. Not only might it mean giving up a career you’ve worked hard to build, but it might also mean losing a nice paycheck. That could leave you having to budget carefully to make ends meet.

That said, there are certain financial benefits to being a stay-at-home parent. Here are some you should recognize if you’re not sure whether taking a career break is the right choice for you.

1. Not spending money on child care

In 2023, the average cost of a week of infant daycare was $321 for a single child, says Care.com. For toddler care, the average weekly cost of daycare was $293 for one child and $556 for two children needing full-day care.

As a stay-at-home parent, you won’t have to pay those exorbitant fees and can keep that money in your bank account for other expenses. In fact, if you run the numbers, you may find that if you’re a moderate earner, your salary would be effectively wiped out by the cost of daycare.

Now, if it’s your job that provides health insurance for your family, that could be reason enough to consider keeping it. But if you have a spouse or partner who will remain employed and whose job provides health insurance, then you may come to the conclusion that working doesn’t make financial sense due to the cost of child care these days.

2. Having more time to bargain-hunt

As a working parent juggling a professional and home life, you might have very limited time to shop for groceries or household items. But as a stay-at-home parent, you might have more time to hit the stores during the week — and doing so might even serve as a way to get your toddler out of the house for a bit. That extra time could really work to your financial benefit, though.

Let’s say your schedule is such that you have time for an errand or two every day. If your family’s favorite cereal is on sale at one supermarket in your neighborhood, and kids’ underwear, which you need to load up on for your newly potty-trained toddler, is on sale at a big-box store across town, you may have time to take advantage of both deals. As a working parent, you might only have time to hit one of those stores, thereby losing out on one discount.

Plus, if your children nap during the day, you might have more time to research deals online and score better prices. You might also have more time to organize things like coupons so they don’t go to waste.

3. Potential tax savings

The loss of your income may be something your family has to adjust to. But one perk of being a stay-at-home parent may be that your family gets bumped into a lower tax bracket. This means you’ll pay a lower rate of tax on your highest dollars of earnings.

As an example, let’s say that at the start of 2024, you were earning $60,000 and your spouse was earning $90,000 for a total household income of $150,000. Let’s say you then had a baby in February and left the workforce. Now, your household income is down to $90,000. But that also means you’ve gone from the 22% tax bracket to the 12% bracket, so you’ll only pay a rate of 12% on your highest dollars of income.

The decision to become a stay-at-home parent, whether for a year, several years, or indefinitely, is certainly a hard one to make, and there are some financial pros and cons to consider. But make sure to keep these perks on your radar when making your choice.

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If you have money left invested when you pass away, the people who benefit from it depend on the specifics of your account. Learn more here. [[{“value”:”

You work hard to put money into your brokerage account. In some cases, you may not be able to spend the entire amount you have invested before you die. If that happens to you, you’ll want to be sure your hard-earned funds end up in the right hands.

So, what exactly does happen to the money in your brokerage account if you pass away? The answer can depend on the specifics of your account. Here’s what you need to know.

Here’s what happens if you have a joint account

In some cases, you may have a joint brokerage account, which means you and someone else, like your spouse, co-own the account. If that’s the case, the other account owner will usually just get to keep the investment account and it will become entirely theirs. But that’s not always the case.

If you are joint tenants with rights of survivorship or tenants by the entirety, then the account passes automatically to the co-owner when you die. There’s no need for it go through probate, which is the court process facilitating the transfer of assets when you die. And there’s no question about who gets the money invested. But if you are tenants in common, then you each have an individual claim to the account. Your interest in the account can be left to someone else besides the joint account owner.

You can ask your brokerage firm how you own your account with your co-owner to find out which of these types of accounts you have. This will help determine if you need to take more steps to specify who inherits, which would be the case if you own the account as tenants in common with your co-owner.

Here’s what happens if you designated a beneficiary

If you do not have a joint account that passes to the co-owner automatically, you may still be able to facilitate the quick and easy transfer of your brokerage account to someone of your choosing. You can do this if you have a transfer-on-death account.

A transfer on death provision is similar to a payable-on-death (POD) provision that applies to bank accounts. You can set up your account as a TOD account with most brokerage firms. What you’ll do is specify who gets the money after you die. You designate a beneficiary. That beneficiary will inherit automatically, and the brokerage account won’t need to pass through the probate process.

If you have a TOD account, it’s important to realize whoever you have as the beneficiary on file with your broker is the one who gets the money. This is true even if you have a last will and testament saying something else. So you’ll want to keep your beneficiary designation updated at all times. You can ask your broker how to do that.

Here’s what happens to other brokerage accounts

If you don’t have a joint account or a transfer on death account with a designated beneficiary, then your brokerage account will have to transfer through the probate process.

If you specified who will inherit it in your will, or your will names someone who inherits any property not otherwise left to someone specific, then the person who you named will get the money. For example, if your will says your son gets your house and your daughter gets anything else left behind, then your daughter would get your brokerage account. Or, you could specifically state that your daughter should inherit these funds.

If you don’t have a will, then intestacy laws set by your state will determine who inherits. These are laws for people who die with no estate plan and they distribute money to close family members.

Ideally, you’ll want to control who inherits your money, so you should consider options like a transfer-on-death account, a joint account with rights of survivorship, or creating a will so you can make sure your investments go to the person or people you care about most.

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It’s easier for homeowners to become wealthy, due to forced savings and property appreciation. Learn how renters can achieve the same. [[{“value”:”

Homeowners have around 40 times the net worth of renters. While some of this can be explained by the fact people who are already more financially stable are more likely to buy homes, there’s also another factor at play.

See, when you own your own house, you are essentially forced into saving for your future. Every mortgage payment you make gets you closer to acquiring ownership of a valuable asset. After many years, you’ll own something (your house) worth hundreds of thousands or even millions of dollars, and you can cash in by selling and downsizing if necessary.

If you are renting, you don’t get this forced savings. This can make it harder to end up wealthy — but not impossible. You just need to take a different approach. Here’s what you can do.

Keep your housing costs to a reasonable percentage of income

The general advice is to keep total housing costs below 30% of your household income. While it can make sense to follow this rule if you’re a homeowner who is getting the benefit of equity building with your payment, you may want to be more conservative if you’re a renter. After all, your money is just going to your landlord for housing and isn’t increasing your wealth over time.

One approach is to figure out how much it would cost you to buy vs. rent and try to make sure that your rent is cheaper than your mortgage payment would be. If you’re able to save, say, $300 a month by renting, then you can devote that entire amount toward building wealth since you won’t have equity in a home to help you do that. This can make it easier to find money to save and invest — remember, you won’t have the forced savings that comes with making mortgage payments that build equity.

Figure out how much you need to invest to hit target goals

Since you aren’t going to be acquiring a home as a renter, you will need to make sure you have enough money invested to cover housing costs indefinitely. You’ll also need a plan to make sure you have a lot of money in a brokerage account come retirement because you can’t just cash in your house to help supplement your income during that time.

You should figure out how much you’re likely to need, so you can ensure you’re on track. You can do this by estimating what your budget will be as a retiree — including housing expenses. One good rule of thumb is to assume you’ll need 10 times your final income invested to continue funding your lifestyle, but if you plan to pay rent in a high cost of living area as a retiree, you may want to try to set your goals just a little higher.

Once you have an idea of how much you want to end up with in your retirement account, you can use the calculators at Investor.gov to set a monthly target that will allow you to achieve your ultimate goal. Investing should be treated as a must-pay bill, along with your rent, so you can make sure your monthly payments are helping you build wealth just as a homeowner’s would.

Automate your investment process so you also have savings happen effortlessly

Finally, once you know how much to save, make it automatic. Homeowners save effortlessly without thinking about it when they make each mortgage payment. You can save effortlessly without thinking about it if you arrange to have a set amount taken from your paycheck and put into your 401(k) or withdrawn right from your bank account on payday and put into your IRA.

If you automate your investment account contributions, you’re less likely to miss one and more likely to end up rich even as you keep renting.

By implementing these three steps, you can set yourself on the path to financial success and perhaps help to close some of that big gap between the net worths of homeowners vs. renters.

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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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Credit card offers can be annoying if you’re not looking for a new card. Find out how you can get rid of them quickly. [[{“value”:”

Credit card issuers mail out offers to millions of Americans, often without the person ever showing any interest in applying for that particular card. Sending these offers helps creditors drum up new business, but it can be annoying for you. All that paper goes to waste if you don’t want the card, and you don’t want an identity thief to get hold of it and try to open a card in your name.

It’s possible to stop these credit card offers from coming, but there are a few hoops to jump through. Below, we’ll look at how to do it and how credit card companies get your information in the first place.

How do credit card companies get your information?

You can thank the Fair Credit Reporting Act (FCRA) for all the unwanted credit card spam you’re getting. This law permits the credit bureaus — Equifax, Experian, and TransUnion — to share your information with credit card issuers looking for individuals who meet certain requirements to be pre-qualified for a card. Then, the card issuer sends you an offer to see if you’re interested.

Credit card offers aren’t always a bad thing. They can give you an idea of the types of cards you qualify for, even if you aren’t interested in the specific card you’re offered. Some pre-approvals also include exclusive rewards that the standard online application may not have.

But if you aren’t shopping for new credit, getting those letters can be annoying, especially if you’re receiving multiple offers at once. Fortunately, the FCRA also created a way for you to opt out of these offers if you no longer wish to receive them.

How do you opt out of credit card offers?

The easiest way to opt out of most credit card offers is to visit OptOutPrescreen.com. You can also call 1-888-5-OPTOUT.

You can do an electronic opt out online or over the phone. You’ll need to provide your name, address, Social Security number, and date of birth. Completing this form will take you off of mailing lists for five years.

If you want to halt credit card offers forever, you can choose to do a permanent opt out. But to do this, you’ll need to print off a paper form from the website mentioned above and mail it in.

The credit bureaus will take action to remove you from their lists within five days of receiving your electronic or permanent opt out. But it might take longer for you to stop receiving offers altogether. Credit card companies that began preparing pre-qualifying offers before you filed your opt out request may still send you offers for a little while.

Will this get rid of all your credit card offers?

Taking the above steps will likely reduce the credit card offers you receive, but it may not eliminate them. Credit card issuers that don’t use lists compiled by the credit bureaus may continue to send you notices.

If you keep getting bombarded about a balance transfer card from a specific bank, for example,, your best bet is to contact that bank directly. Explain that you no longer wish to receive any offers from the bank and ask what you need to do to ensure you don’t receive any more.

You can also opt out of mail and phone offers on the Direct Marketing Association (DMA) website. There is a $5 online registration for this, and a $6 registration if you choose to mail in your form. Once you sign up, the company will remember your marketing preferences for 10 years.

It only takes a few minutes, and it could significantly cut down the volume of mail you receive. You can always change your mind if you decide later you’d like to begin receiving credit card offers again.

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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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If you’re not buying clothes at Costco, you might be missing out on a crucial perk. Here’s why Costco should be your next favorite place to buy clothes. [[{“value”:”

Most of us shop at Costco for the savings on groceries, gas, and other household items. And while buying your everyday needs in bulk at Costco can certainly help you cut down on your monthly budget, the warehouse has plenty of other products and services that can make that membership worth its cost of $60 or $120 annually. Like clothes.

Yes, though you may not associate Costco with apparel, the warehouse has plenty of styles and sizes for men, women, and children. Costco sells sportswear, winter coats, joggers, socks, bathing suits, even Halloween costumes. If you’ve never perused the clothing section at Costco, here are some reasons to check it out.

1. Return clothes at any time (without tags!)

Despite the vast size of the warehouse clubs, Costco doesn’t have fitting rooms. But if you’re willing to return clothes to Costco later, you can benefit from its 100% satisfaction guarantee, which entitles you to a full refund when you return clothes at any later date.

As Costco states on its website:

“With few exceptions, Costco has a 100% satisfaction guarantee. Simply bring the product to any Costco warehouse and our Member Services Team will be happy to assist you*. It helps if you have the receipt or original product packaging, but it may not be necessary to process your return.”

Although you can technically return any clothes (even those that have been gently worn), use your discretion. Your local Costco could refuse your refund if clothes are dirty, ripped, or otherwise in poor condition.

2. Variety of name brand items

Costco sells numerous clothing brands, including PUMA, Banana Republic, Reebok, and Calvin Klein. What’s more, it often sells these brands at much lower prices than what you’d find online. For example, here’s how Costco’s prices compare with Amazon for men’s clothes in three popular brands.

And here’s how Costco compares with Walmart for women’s clothes with two popular brands.

Now, this doesn’t include the deals you might find in department stores for name-brand items, especially discount or second-hand stores that sell older styles for lower prices. But even so, Costco’s prices are sometimes hard to beat. For example, the same mens’ Banana Republic dress shirt that sells for $9.97 at Costco is $20 on Poshmark — and it’s gently used on Poshmark, too.

3. Regular promotions

Every now and then Costco will run promotions when you buy several items of clothing at once. For example, right now you can save $20 when you buy five to nine items of clothing, or $50 when you buy 10 or more (offer expires April 14, 2024).

Often, these promotions are for Kirkland Signature products only, which is Costco’s private label. Since Kirkland Signature products are typically cheaper than name-brand items, this only increases the savings. In fact, you’ll often find Kirkland clothes that pretty much match popular styles at department stores, but at significantly lower prices.

Tip: If you see any clothes emblazoned with the Kirkland Signature logo, like hoodies with the logo printed all over, buy it while you can. These items have become a fashion trend of their own.

All in all, Costco could help you save on clothes, especially if you’re replacing your wardrobe for the spring or summer. Costco Executive members could save even more by getting 2% cash back on their clothing purchases in the form of a Costco voucher once a year. Check out Costco’s selection online and see if its prices can beat your favorite clothing store.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.

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Credit cards can help you to earn a good credit score, but they can also hurt your credit if you make mistakes, like paying late. Learn more here. [[{“value”:”

Credit cards can be a blessing or a curse, for a few reasons. If you overspend on your cards and owe interest, you could end up in a bad financial situation — the average credit card interest rate is 21.47%, according to the Federal Reserve Bank of St. Louis. But if you pay your credit card bills on time all the time and earn rewards, they can actually help improve your personal finances.

There’s another important reason why credit cards could make your financial life either much better — or much worse. Credit card usage can have a huge impact on your credit score. And this number is critical, since landlords and most other companies you want to do business with are going to look at this score. They use it to determine if you’re a reliable, good customer to work with, or unreliable and someone to be avoided (or charged more to borrow).

So, how can credit cards help — or hurt — your score? Here’s what you need to know.

1. They can affect your payment history

Your payment history is the most critical part of your credit score, accounting for 35% of your FICO® Score (one of the most popular and widely used credit scoring systems).

When you pay your credit card on time — or pay it late — this is reported to the credit bureaus and it becomes a part of your record. A single payment that’s 30 days late could cause a drop of more than 100 points in your credit score if you previously had good credit. But a history of on-time payments reflects well on you as a borrower, and you’ll see a better credit score as a result.

You can make sure you pay on time, and don’t hurt your credit record, by setting up autopay for the minimum amount due every month. Ideally, set up a payment for the full amount due, as long as you aren’t worried you could potentially overdraft your bank account. Doing this will help you avoid interest charges.

2. They can impact your utilization ratio

The second most important factor in your FICO® Score is your credit utilization ratio, which accounts for 30% of the FICO scoring formula. Basically, your credit utilization ratio is a measure of what you owe versus what you could potentially borrow. So if you have a $1,000 credit line and have borrowed $300, you’d have a 30% utilization ratio.

Higher credit utilization ratios are a red flag resulting in a lower credit score, because using too much of your available credit suggests you may not have control over your spending and could get in over your head. If you keep your ratio below 30%, on the other hand, you could earn a better credit score.

Maintaining a lower utilization ratio simply means you can’t charge too much at once. If you have a $1,000 limit, try to keep your card balance well below $300 if you can. You can make this easier by requesting higher credit limits when your card issuer offers them (you can sign into your online account to see if you have the option to request a credit line increase).

3. They can help determine the average age of your accounts

If you have a long history of using credit responsibly, that’s better than a short history since lenders have more data to determine if you’ll be responsible. As a result, 15% of your FICO® Score is determined by average account age.

Opening a bunch of new credit cards at once, or closing old card accounts, results in a shorter credit history that hurts your score. Keeping old cards open, on the other hand, can help it. If you have a card you’ve had for a long time, you should avoid closing it even if you don’t use it very often.

4. They can give you a different kind of credit

Under the FICO formula, 10% of your credit score is based on the different types of credit you have. So, if you’ve only got installment loans like an auto loan or mortgage, adding a revolving line of credit, such as a credit card, to the mix could help your score.

You can get a card even if you don’t want to use it much. Just sign up to have one streaming service paid with the card each month and set up autopay for that amount. That way, you won’t risk going into debt, but will still get the benefit of having a different type of credit on your record.

5. Applying for new ones can lead to inquiries on your credit record

Finally, each time you request new credit, you get an inquiry that stays on your record for up to two years. And the number of inquiries you have makes up 10% of your FICO® Score. Too many is bad news, as it suggests to lenders you could be going on a borrowing (and spending) spree.

Try not to apply for multiple cards within a short period of time. If you want a new card every couple of years that offers better perks or rewards, you can and should do that — but applying for several at a time isn’t a good idea. Nor is applying for a new card right before you try to get a big loan like a mortgage or car loan.

As you can see, credit cards could help or hurt your credit score, depending on how you use them. Focus on keeping charges low, paying off your balances every month, and not opening new accounts very often.

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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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