For many Americans, buying a home is a major financial goal. However, with the rising cost of housing, it’s becoming increasingly difficult for families to make this dream a reality. According to recent statistics, housing costs now make up almost 40% of the average household income. This is a sharp increase from previous years, and it means that many people are struggling to afford even a modest home.
Why are housing costs so high?
There are several factors that have contributed to the rising cost of housing. One of the main reasons is low housing inventory. Over the past few years, there has been a shortage of homes for sale, which has driven up prices.
Additionally, low interest rates during the pandemic made it easier for people to afford higher home prices. However, this increased demand has also led to those higher prices. Plus, many people were forced to work from home, leading to an increased demand for homes.
To combat high inflation, the Fed has drastically increased interest rates. The monthly mortgage payment for a $500,000 home is over $1,000 more now than it was before the Fed began raising interest rates in March of last year.
Homeownership affordability near all-time lows
The Home Ownership Affordability Monitor (HOAM) index calculates the affordability of homes. It measures the percentage of median household income required to purchase a median-priced home in that area.
If the index number is less than 100, it indicates that the median household income is insufficient to cover the annual costs of owning a median-priced home and housing cost exceeds 30% of household income. If the index is 100 or greater, it signifies that the median household income is sufficient for a median-priced home, and the housing cost is below 30% of income.
More: Check out our picks for the best mortgage lenders
The HOAM was above the affordability threshold from February 2019 to May 2021. Since then, it has dropped drastically to 68.6, the lowest since the Federal Reserve began monitoring homeownership affordability in January 2006.
The impact of the pandemic on the housing market has been significant. In July 2020, during the height of the pandemic, the cost of a median priced home accounted for 27.5% of a household’s income. However, by October 2022, the median home price had skyrocketed to an alarming 43.7% of the median household income, almost half of what people were earning.
Although there has been a slight improvement in the most recent data (from April 2023), with the total payment share of median income at 40.9%, it is still significantly above the recommended 30% for a household’s income allocation.
This disparity between home prices and income levels highlights the challenges many individuals and families face in trying to afford a home in these unprecedented times.
How to afford a home in the current market
If you’re looking to buy a home in the current market, there are a few things you can do to improve your chances of finding an affordable option. The first step towards achieving this is to determine how much home you can afford.
Analyze your income, expenses, and debt-to-income ratio to decide on a realistic budget. Researching various loan options and interest rates is also essential to finding a mortgage that aligns with your budget.
Additionally, it is important to save for a down payment and to minimize unnecessary expenses along the way. Owning a home may be a significant investment, but with proper planning and determination, it can be a feasible option for many. Consider applying for an FHA loan or another type of mortgage with lower upfront costs.
Finally, work with a knowledgeable real estate agent who can provide guidance and help you navigate the market with expertise. With careful planning and some savvy moves, owning a home can be within reach despite current market conditions.
How to save money on your mortgage
Another way to make homeownership more affordable is to save money on your mortgage. This can be done by comparing rates from different lenders and finding the one that offers the lowest interest rate.
Additionally, you may want to consider putting down a larger down payment or paying points. This can help you get a better interest rate and reduce the amount of interest you pay over the life of the loan.
Finally, it’s important to shop around for your homeowners insurance as well. By comparing rates from different companies, you can save hundreds of dollars per year on your insurance premiums.
The rising cost of housing is a challenge for many Americans. However, by understanding the factors that are driving up prices and taking steps to prepare yourself for the market, you can still find an affordable home. Whether you’re looking for a fixer-upper or are focused on saving money on your mortgage, there are solutions out there that can help you achieve your goal of homeownership. With the right mindset and a little bit of preparation, you can find a home that fits your budget and your lifestyle.
In my last post, I explained why your financial time horizon may be longer than you think, since you may be investing well into your 90s. The discussion was in the context of retirement, but in response to the article, reader kk brought up some excellent points, which I’ll summarize thusly:
What if you scrimp and save your whole life and then die in your 50s or 60s (as happened to kk’s parents)? Plus, retirement isn’t the only financial goal, especially since “retirement” will mean different things to different people.
These are all very important ponderables. In fact, even though I’m the retirement-planning guy at The Motley Fool, I have a confession to make: I don’t plan to retire. I think I would be like many of the ex-retirees I’ve met through the years; I’d find unlimited free time fun for a while, but after a while, I’d get kinda bored.
Here’s what Mitch Anthony, author of The New Retirementality, told me a few years back:
Disillusionment rates are sky-high for retirees. According to one survey, 41% say retirement was the most difficult adjustment of their life and most still struggle with the monotony, boredom, lack of purpose, and lack of intellectual stimulation that traditional retirement offers. There is a good reason these retirees are not happy — retirement is an unnatural idea. The concept runs contrary to the preservation of the human spirit.
Reasons to Save So if I don’t plan to retire, why have I been shoveling money in IRAs and 401(k)s ever since I was 25 (and back then, I was just making $20,000 a year as a teacher)? Here are seven reasons why I continue to delay gratification:
I might change my mind. Sure, as a newly minted 40-year-old, I feel like I could work forever. But will I feel the same when I’m in my 60s? I think it’s better to save now and plan on working, rather than being a burnt-out 65-year-old with no savings.
I might not have a choice. Many older workers are forced into retirement due to health reasons, others as companies let go of older (and higher-paid) workers to save money. I want to have a big enough nest egg in case I can’t work well into my 70s and beyond because my body or my employer won’t let me.
I want my wife to be taken care of. If genetics, family history, and personal hygiene matter, I will die in my 70s and my wife will live well into her 90s. (She’s quite a catch, so you might want to look her up in about 30 years.) I have mentally earmarked part of our retirement savings to be used to put an addition on any of our children’s homes so that my wife can live with them when she can no longer take care of herself, or just doesn’t want to live alone. I don’t have a lot of expectations for my kids once they’re adults; they can grow up to be whatever they want. But they better take care of their mother, and I’ll make sure there’s enough money to do so.
Take a sabbatical. While I hope to work forever, I can see the value of taking a few months or even a year off once my kids graduate from college. Once my kids have fled the nest, I want to have enough money saved up to take a temporary break.
The 2029 West Virginia cabin fund.Wall Street Journal columnist Jason Zweig, author of Your Money & Your Brain, calls his 401(k) his “June 24, 2034 Villa in Tuscany Fund” because, he told me, “It is ridiculous to expect something like ‘I am going to save for my 401(k)’ to motivate a human being.” You need to make your financial goals more concrete. I like Zweig’s idea of a vacation home, though I’d prefer mine to be just one state over, rather than an ocean away. My wife and I could easily slip away for a weekend of mountainous reading and writing (although by then computers will communicate with our brains directly through routers implanted in our heads, and information will be simultaneously absorbed and excreted). As for seeing Europe, I’ll do that with…
The 2029 international travel fund. One of our biggest financial goals is to be able to take an international vacation once a year. Maybe Zweig will let us stay with him.
The work I want to do decades from now may not pay much, or at all. I could see myself returning to teaching one day, or devoting myself full-time to one cause or another. I want to have enough money saved up so that I can do what I want without a prohibitive drop in our standard of living.
But What About Now? In her response to my last column, kk brought up a difficult issue: How much do you sacrifice today for a goal decades from now, when you may not even be around to enjoy it? That’s a toughie.
I’ll start by being the good financial planner and point out that contributing to IRAs, 401(k)s, 403(b)s, and so on do provide advantages today in the form of tax breaks. But that’s pretty boring.
The truth is, you have to do a little of both — enjoy today, plan for tomorrow — and the exact balance will change throughout your life. I certainly hope I don’t have to wait 20 years to take my next international vacation, but with four kids and a Washington, D.C.-area mortgage, I have other priorities right now.
So much about financial planning is about how you want to spend your time as much as it is about how you spend your money. If you want to retire as soon as possible — I know people who’ve retired by their early 40s — then you have to do things very differently from someone like me who plans to work forever.
Rachel Richards retired at age 27 thanks to real estate. Whether you’re looking to retire or hit a short-term financial goal, you won’t want to miss today’s podcast. In this interview, Rachel shares the secret to accomplishing any goal and offers financial tips that will help you achieve that next milestone. Rachel also talks syndication, discusses how to reduce the cost of divorce, and more.
Listen to today’s show and learn:
How Rachel Richards retired at age 27 [4:23]
Why cutting costs is only part of the financial-freedom equation [7:56]
An argument for frugality [11:38]
How delayed gratification ties in with financial freedom [14:43]
Aaron’s five-day water fast [15:50]
Why motivation really matters [17:27]
About Rachel Richards’ books: Money Honey and Passive Income, Aggressive Retirement [23:05]
Why Rachel sold most of her rentals [24:50]
The problem with cheap real estate rentals [27:26]
What syndications are and why Rachel Richards loves investing in them [30:18]
How to find the right syndicator [32:54]
How to vet potential syndicators [34:47]
Rachel Richards’ financial advice on prenups [39:34]
How to reduce the cost of divorce [46:35]
Why it makes financial sense to cut the attorneys out [48:44]
Where to find and follow Rachel Richards [50:18]
Rachel Richards
Rachel Richards built a real estate portfolio of 38 rental units by the age of 26. She is a 2X bestselling author and has been featured in Forbes, CNBC, and Business Insider. She makes the topic of money management fun, entertaining, and simple for her 450,000+ millennial followers. Rachel helps women feel excited, capable, and confident about their financial futures.
Rachel has a Bachelor of Science in Financial Economics from Centre College. She has held roles as a licensed financial advisor, a real estate analyst, and a senior finance analyst.
Rachel is based out of Colorado.
Related Links and Resources:
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It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email.
If you’re considering refinancing some or all of your student loans, you may wonder what comes next on your financial to-do list.
On June 3, President Biden signed the debt ceiling bill into law, ending the three-year federal student payment pause. Payments are expected to resume in October.
Refinancing student loans can often result in a lower monthly student debt payment, either due to a lower interest rate, a longer loan term, or both. A lower monthly payment can be a big relief to borrowers who are still reeling financially from the effects of Covid-19 and higher inflation.
Lower payments can also free up some of your income for other key financial goals. That’s what we’ll look at here.
What Happens When You Refi Student Loans?
Understanding what happens after a refinance is key to planning your next steps.
As mentioned above, when you refinance, you may find a more favorable interest rate or more flexible loan terms that will help reduce your monthly payment. The SoFi Student Loan Refinancing Calculator can help determine how much refinancing could save you.
Keep in mind, when you refinance a federal student loan into a private loan, you lose the benefits and protections that come with a federal loan, like deferment and public service-based loan forgiveness (PSLF).
What Is Your Next Financial Goal?
As you consider refinancing, it’s a good idea to keep your other financial goals in mind. How can refinancing student debt — and perhaps lowering the percentage of income dedicated to repayment — help you achieve those goals? Take a look at the following scenarios that might apply to you.
1. Pay Down High Interest Debt
Once your student loan debt is under control, turn your attention to any high-interest debt you may be carrying on credit cards. There are two common ways people approach paying down debt. Which one you choose depends on your financial situation.
• The Debt Avalanche. With this system, you start by paying your highest interest rate card first, with payments above the monthly minimum. You do this while still keeping up with minimum payments on any other debt. When you eliminate your highest rate debt first, you can more quickly lower your overall debt picture.
• The Debt Snowball. In this scenario, you pay off your debt in order of the smallest to the largest balances, regardless of interest rate. This way you see some of your smallest debts paid off quickly and get a psychological boost from doing so. As you pay off each debt, you assign the amount of the payment you were making on that balance to the next debt. Your debt repayment builds momentum, known as “the snowball effect.”
Recommended: Which Debt to Pay Off First: Student Loan or Credit Card?
2. Start an Emergency Fund
Having money saved for unexpected expenses is a vital part of financial wellness.
But saving for emergencies is a challenge for many Americans. According to Bankrate’s 2023 annual emergency fund report, less than half (43%) of U.S. adults could pay for an unexpected emergency expense from their savings.
Starting or boosting your emergency fund with money saved on student loan payments is a great way to help keep your budget intact and stay out of debt.
How much should you save in your emergency fund? At least three to six months of living expenses (or take-home pay) is the rule of thumb. That way, if you lose your job, have an accident, or get sick, you’re likely to have enough to see you through until your situation improves.
3. Increase Retirement Contributions
Are you putting as much as you can away for retirement? Starting early can pay off big down the line, thanks to the magic of compound interest — and the fact that earnings grow tax-free in most retirement accounts such as IRAs and 401(k)s.
If your employer offers a matching contribution benefit, upping your game may be even more important. This is free money. Whenever possible, contribute the amount necessary to qualify for the full match so you take the best advantage of this key benefit.
4. Save for the Next Stage of Life
Life goes on well after student loans. Now with less student debt burden, you’re probably looking at what’s next. That may mean buying a car, saving for a down payment on a home, starting a family, or expanding a business.
Careful budgeting means you can put the difference between your old student loan payment and your new one toward other important life goals.
Once you establish the goal you’re saving for, consider opening a high-yield savings account dedicated to that purpose. You’ll earn interest while your nest egg accumulates but still have liquidity so your money is available when you’re ready to pursue your goal.
5. Invest
Starting an investment account outside of retirement savings can be an important financial goal in and of itself. The reason? Long-term stock market returns consistently outperform many other types of investments. Over the past decade through March 2022, the average annual return for the Standard & Poor’s 500 Stock Index was 14.5%.
Returns vary, of course, depending on the years you are invested and the economic environment. But over the long haul, investing in stocks early — even small amounts — can pay off in the future.
Mutual funds and exchange traded funds (ETFs) are two easy ways to start investing. A mutual fund is a collective investment which pools funds from many investors to invest in stocks, bonds or other securities. ETFs work much the same way but unlike mutual funds, ETFs can be bought and sold like a stock as the price goes up or down during the day.
How to Pay Off Student Loans Ahead of Schedule
As we’ve seen, a refinance can help lower your monthly payments and perhaps bring some much-needed wiggle room to the rest of your finances.
That may motivate you to keep the momentum going and look at ways you can repay your remaining student debt faster. Here are two tried and true strategies.
Pay More Than the Monthly Amount
Your monthly payment amount isn’t set in stone. You can always pay more than the minimum amount, and in most cases you probably should. Payments over the minimum monthly amount owed are applied directly to the principal. So even a little bit extra can lower the amount of your loan and help you save on interest over the life of the loan.
Recommended: Why Making Minimum Student Loan Payments Isn’t Enough
Dedicate a Windfall to Student Loans
Another strategy for paying student debt faster: Whenever you get a windfall, use some or all of it to make a lump sum payment toward your student loan principal. Think tax refunds, cash gifts, work bonuses, or income from a side gig or inheritance.
What to Avoid After Refinancing Student Loans
After refinancing student loans, be careful not to fall into a common trap: It’s called “lifestyle creep,” and it happens when you spend all of your discretionary income instead of directing some of it to financial goals.
To avoid creep, mindfully adjust your budget to account for any increase in income — such as lower student loan payments. That way the money will be put to good use instead of being frittered away.
Recommended: Living Below Your Means: Tips and Benefits
The Takeaway
Refinancing your student loans may help you lower your monthly payments, freeing up funds to put toward other financial goals. You might choose to pay down high-interest credit card debt, boost your emergency fund or retirement account, or even pay off your student loans faster. With the end of the federal student loan payment pause in sight, now may be a good time to consider refinancing all or part of your student debt.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
Photo credit: iStock/RossHelen
SoFi Student Loan Refinance If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.
CLICK HERE for more information.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
The ripple effect of a financial mindset can be seen in every aspect of your life.
Think about it: If you are not mindful of how you spend and save money, then you will be in a constant struggle each and every month.
If you are simply someone who is struggling to make ends meet, there are many things we can do to save money. If you are trying desperately to reach financial freedom sooner, then you need these best money hacks to make it happen sooner.
Around here at Money Bliss, we spend a lot of time on our money mindset and setting goals.
Everyone is in a different season with their finances.
But, one thing is true… Most of us never learned proper money management.
Do you find yourself in a constant cycle of financial struggle? Do you feel like you are constantly trying to live up to unrealistic standards?
It is easy for people to feel that they are constantly broke, and in some cases this is true. But, it is also important to remember that there are ways in which you can make more money and start saving for your future.
Since changing money habits does not always come easy and often requires some serious changes in our mindset, we are here to support you to find the top money hacks.
Read on as we share 50+ ways you can start saving more money as well as making more money while also saving your sanity!
What are Money Hacks?
Money hacks are the ways in which people stretch their money.
These money hacks can come from a variety of sources, such as personal experience, family members or friends, and other individuals on social media.
Money hacks can come in many forms such as:
Simple money saving hacks
Ways to make money on the side
Strategies to make every dollar count
Thrifty ideas to be more frugal
Ideas to be more conscious of our waste
All in all, money hacks will help you to spend less money. Thus, saving more money.
As you will learn at Money Bliss, saving money opens up doors of opportunities
Best Money Hacks
Money hacks are ways to build long-term wealth.
Even though most of the hacks for money include quick saving wins, over the long term, you will actually start a snowball effect of more money in your bank account.
Sometimes, it can be difficult to find the motivation to save money, but these 7 best real money hacks will help you reset your financial mindset and start saving!
The best money hacks are the overarching big picture concepts that you must master for long-term success.
1. Think Big
Open up your mind.
One way to reset your financial mindset is by opening yourself up to new ways of thinking about spending and saving.
Too often, we are focused on what is directly in front of us instead of thinking about the big picture.
A great way to think big with your finances is to decide how you want to live life with intention.
2. Habit of Saving Money
Get back in the habit of saving.
If you have been beyond your means or barely scraping by, the best way to get back on track is by saving at least 20% of your income.
This may seem a little ludicrous. However, by prioritizing saving first, you will be pleasantly surprised how well you live off the rest.
In this post, there will be so many simple and easy ways to start saving today.
3. Make a Plan for Your Money
Create a spending plan (aka that dreaded word budget).
Creating an outline for what you want and need will help you to make smarter decisions about your spending.
This concept has been made too difficult over the years.
The bottom line is you want to spend less than you make. So, make a plan for that to happen today.
4. Make Money on the Side
This one is huge!
Personally, making extra money has been a priority for the last 5 years. We spent many years trying to cut our expenses and hating our inability to actually spend less as a growing family. So, we changed our focus to finding ways to make more money instead.
Start a side hustle. If you are not making enough to live comfortably, start a side hustle! Use your unique skill set to make extra cash.
Pick up a second job or ask for more hours.
There are plenty of ways to make money fast.
5. Invest in Stock Market
This means a way to make money or increase your net worth. AKA make your money work for you.
Too many times, the concept of investing is big and scary. The thought of starting is way too overwhelming. So you put it off until next week or next month. Then, a couple of years go by and you have not invested your money.
That is the biggest financial mistake you can make.
Start small by investing in an index fund. Each month consistently add more money.
If you want to learn to trade stocks, then you must enroll in the best investing course I have found.
Read my in-depth investing course review.
6. Pay Off Debt
Ugh… debt is the cash flow killer.
You are unable to make forward progress if you are straddled by debt.
Figure out how to pay off debt ASAP.
When calculating how long it will take to pay off high-interest debt, you should consider paying the highest interest rate first. Here is the best debt payoff app available.
7. Watch Your Spending
Be mindful of your spending.
This is a great practice that many people need to start doing again, regardless of how much money or how little money they have.
Every few months, you need to evaluate your spending to see if it matches up with your values.
As you can imagine there are many money hacks that can help you save, but the list above is the money hacks that will make the biggest difference the quickest. Below we have many more money hacks for you to explore.
Hacks for Saving Money
Money app hacks are small, quick, and easy ways to improve your finances.
They can range from things like automating your budget or creating a money jar that pays for itself, to more complex solutions like changing your tax withholding or moving money around to get a higher return.
Honestly, there are so many life hacks for saving money.
8. Automatic Savings
This is a practice of automatically transferring money from your checking account into your savings account on a regular basis.
It is best to set a transfer amount and stick to it.
Since it is easier to save your money before you spend it, you must save as much money as possible in order for this strategy to be effective.
9. Financial goals
A financial goal is a long-term, quantifiable expectation for how much money you want to have, or what you plan on doing with your money. Your goals can be as simple as saving for the down payment on a house or as involved as saving for retirement.
Our financial goals allow us to set specific, numerical targets that help us achieve our desired lifestyle in a more concrete way.
You must set smart financial goals.
10. What brings you joy?
At the end of the day, it is important to remember that life is all about finding what brings you joy.
The question is open-ended, but your money must line up with what brings you joy.
Spend a few minutes and stew on the question.
11. Build an emergency savings fund
Building an emergency savings fund is a great idea if you are in the habit of saving money and want to make sure that you have some money saved up when times get rough.
If you are struggling to save, there are a few ways you can increase your savings.
For example, you might be able to set up automatic transfers from your checking account into an investment account. You should also make sure that you have a way to save money outside of your checking account.
Saving cash in a jar or saving up coins are ideas for some people.
12. Invest spare change
If you go shopping and buy something, most stores will give you change. If you use a debit or credit card, you can do the same thing with help of a popular app!
Simple money hack: investing your spare change.
In order to invest your spare change in an account, you can open one for as little as $5. Acorns then automatically invest the money from your checking account and into a savings acorn account.
As the round-up feature continues to add upon each purchase, it is a good idea to invest in this app so that you can save more dollars!
13. Challenge Yourself to Save
If you are looking to save money, it is best to set up a budget that includes challenging yourself.
A great way to do this is with the no spend challenge.
A no-buy is when you decide to simply not make any purchases for a certain amount of time.
A no-spend is when someone decides to not spend any money in a certain period of time.
When you are struggling with spending too much money and want to reset your wallet, then give up spending money. Period.
14. Join a buy nothing group
The buy nothing groups are a growing movement that started in order to help people cut their ecological footprint, save money, and break free of consumerism.
This is a great way to find things you need as well as declutter your house.
15. Negotiate everything
The key to successful negotiation is preparation.
Research the company’s past sales, price changes, and discounts offered in order to get a better understanding of what you’re negotiating for.
Don’t be afraid to negotiate.
What is the worst thing that can happen when someone says no!?!
16. Refinance Your Mortgage
It is never too late to refinance your mortgage.
In fact, it might be a good idea if you’re in the market for a new home or refinancing your loan on an existing property.
You must weigh the costs of refinancing to how much you will save over the time period of the loan.
Ask around for mortgage broker recommendations and get at least two quotes.
17. Downsize your Home
Downsize your home is the term for reducing a residence in size. This can be done by either moving to an apartment or buying a smaller house. There are many benefits of downsizing, including living a more affordable lifestyle and having less upkeep.
Downsizers use their homes as investments and save money on rent or mortgage payments.
18. Cut the cord
With the internet becoming accessible to everyone, people have started cutting their cable and watching shows online. People can save up to $500 a year by cutting cable from their bills.
Cut the cable & stop watching TV!
19. Learn about Finances
Ask for help.
If you are struggling, there is no shame in asking for assistance from your friends or family members.
The goal is to get ahead with money and not keep digging further into a hole.
Check out any of our courses to help you.
20. Save for What You Want
Decide what you want most and work towards it with the money you have now, instead of waiting for a windfall or a large inheritance.
This may mean setting aside $200 a month.
For example, as a reminder of your long-term goal of buying a beach property, you may buy something you would hang in the new place. Every time you see it, you will be reminded of what you are saving towards.
Budget Hacks
Financial hacks are not unusual.
Since it is so easy to overspend, you must know a few budgeting hacks ahead of time.
21. Need vs Want
A want is a desire for something, while a need is something that fulfills the requirement of your body like food or shelter.
When you think about buying something, ask yourself if it is a want or a need.
By uncovering needs vs wants, you are quickly able to find ways to spend less and save more.
22. Avoid Temptation
To avoid temptation, it is important to maintain a healthy amount of physical and emotional distance from the things that tempt you.
Sometimes, spending triggers are easy to avoid but other times they’re not.
However, people should always be aware of their temptations and try to stay away from them because it will lead to unnecessary debt or stress in the long run.
23. Practice the 30-day rule
Many people wonder what’s the 30 day rule with money…
The 30-day rule is the principle that states that you should practice a new habit or stop an old habit for at least thirty days before expecting success.
When it comes to your money, it means to wait thirty days before making big purchases or changes.
24. Keep a Budget Binder
A budget binder is an important tool that helps people keep track of their finances.
The binder can help people plan out their finances by providing a place to record expenses and income.
Keeping a budget binder is an effective way to track your spending and keep yourself accountable.
By keeping it, you can easily plan for future expenses in advance as well as see what money could be saved or spent on different items over time.
25. Get a spend tracker and use it regularly
Track your spending for 30 days. It can be a good idea to track your spending for at least a month to get an idea of what you’re spending and where.
A spending tracker is a tool that helps people keep track of how much they are spending on a certain item. It is important to use this tool regularly in order to be able to see patterns in your spending.
Then, review your spending. Share it with a trusted friend or family member to come up with some goals to reduce expenses in order to save money.
26. Create a budget
Create a budget, and follow it.
When you schedule your spending, make sure to leave room for savings. This is the easiest way to ensure that you can stick to your budget.
Find more budgeting resources on our site.
27. Pay Bills on Time
This should be a simple statement that we all know. However, life can throw curveballs.
Try to pay your bills on time and in full every month, and make sure all of your bills are paid each month.
This will show lenders that you are responsible and that you are taking care of your credit. Plus you don’t rack up those pesky late fees and high interest rates.
28. Avoid Missed Payments
Don’t miss any payments, and pay off your balances each month to avoid paying high interest rates or fees on late or missed payments.
Read again… do not miss paying your bills.
29. Reconcile Your Checking Account
Balance your checkbook monthly. Okay, no one really uses a checkbook anymore, but you can still do this with pen and paper.
Even better, use Quicken as a simple way to balance your checking account. Read my Quicken review.
This is a great way to check for being charged too much or find a subscription you don’t use anymore.
30. Avoid Summer Budget Busters
Avoid spending money for the summer by just being conscious of your spending and reviewing what is different than the norm.
It is too easy to get into the trap of spending money because the weather is warm.
31. Review your Credit Card Statements
If you’re like most people, you probably review your credit card statements once every six months.
What’s the best way to go about reviewing them?
It depends on how often you use your credit card, how much debt you have, and what your credit score is. You should review your statements at least once a year if you’re carrying a balance on your credit cards.
If you use your credit card, then you should review your statements at least monthly.
32. Use the Cents Plan Formula
While the 50/30/20 budgeting rule is popular, our method of budgeting your money will be more helpful.
Learn how to divide your income into various categories.
Check out the Cents Plan Formula.
33. Use Cash
Use cash instead of credit cards to spend, which will make it easier to limit yourself to how much you can spend.
The envelope system helps you save money by only spending from one designated cash stash each month and withdrawing a set amount for different types of expenses (like groceries).
34. Spending Freeze
Implement a spending freeze, which helps you get used to not buying things for an allotted time so that when the freeze is over, it’s easier to buy what you want.
You will be surprised how much random online shopping you do.
Begin your spending freeze now.
35. Use a Budgeting App
Use your bank’s budgeting tools, like Quicken, which can help you track how much money is coming in and out of your account.
This is the simplest way to manage your money wisely.
Using a money app or a personal finance website can help you to stay organized and get more creative about your budgeting.
Check out this list of the best budgeting apps available.
Hacks to Make Money
Hacks to make money are a list of ways to generate income for yourself. Many ways to make money include blogging, affiliate marketing, or day trading. These money making hacks are great, but they can take more time and energy invested.
36. Use cash back apps
Cash back reward apps like Ibotta are a way to get extra money for your purchases.
They take some time getting used to and you only have access to partner stores that offer cash-back offers. It only takes a few seconds to make some extra cash.
Check out the best cash back apps available.
37. Ask for a Raise
A raise is an increase in pay for a job, labor, or service.
If you are concerned about asking for a raise, then you are missing out on lost money.
Your boss may be receptive to it, then try negotiating more money. Not only will this be good for your career, but also the relationship between you two can improve as well.
38. Get a side hustle
A side hustle is an additional job or career, usually, one that requires only a small amount of time and effort.
For example, someone who wants to work on the weekends might start a side hustle as a bartender.
Side hustles are a form of entrepreneurship that allows you to earn money and do little tasks. They are not difficult or time-consuming, but they can still help you make extra cash on the side.
Pick one of the best gig economy jobs.
39. Rent out a part of your home
A part of your home is often a room, which can be rented out on Airbnb.
Airbnb is the largest and most successful company in the world that lets people rent their extra space or properties. They are a well-known company that provides an easy way for people to make money from their extra space.
Use Neighbor to lend out your space in your home.
40. Declutter: sell your junk for cash
Decluttering is the act of getting rid of excess or unnecessary items.
In order to declutter, you must be willing to give up something that has been a part of your life for a long time. It is important to remember that decluttering does not have to be a quick or easy process.
Then, sell your stuff on Facebook Marketplace, Nextdoor, eBay, etc.
Learn more at Flea Market Flippers.
41. Earn Money While Watching TV
Although it is not a fast way to get rich, this can be used as a side hustle.
It’s better to use the money earned from watching TV or something else that takes up your time for other things like bills and groceries.
Survey platforms are online sites that allow people to earn money while watching TV.
The survey platform will send surveys through the mail or email, and then they can choose whether they want to take the survey for a set reward amount or if they would like cash back on their purchase.
One of these options is MyPoints, which allows users to earn points by completing tasks such as taking surveys and shopping online at specific retailers.
Others include:
42. Maximize Your Income
Find ways to increase the amount of money you bring in, whether that’s through a side hustle, increasing hours at work, or asking for a raise.
In today’s society, there are plenty of ways to make more money.
Only you put a limit on what you are capable of earning.
43. Build Your Credit
Building your credit can be a long process, but it’s worth the effort. If you’re trying to establish or improve your credit score, here are some tips that might help:
Try to keep your credit utilization rate below 30% at all times.
Do not open too many new lines of credit in a short period of time.
Pay your bills on time.
This will help you avoid damaging your credit score.
Hacks for Free Money
Hacks for free money are a form of fraud wherein the perpetrator solicits payment via PayPal, credit card, or other methods in exchange for access to what they promise will be a legitimate business opportunity.
Hacking free money is a way to make more cash, fund your financial goals, or help you pay off debt. There are lots of ways that people hack their finances and use cash back apps for some extra income.
Other options include signing up for bank bonuses or credit card bonuses.
Honestly, real free money hacks are more likely to be scams. So, beware when searching online.
Money Hacks in the Kitchen
You can save the most money by looking at what you eat.
Typically, people waste over 25% of their grocery budget and throw out food. Would you willingly throw out $250 a month? Probably not.
So, learn how to stretch your money for food.
44. Start meal planning
Meal planning is a money-saving strategy that can help in the long run. It’s also important to eat healthily and reduce food waste when meal planning.
But planning ahead will help save on the grocery budget, and it’s not too late to start now.
Start meal planning by deciding what you want to eat for each day. Then, make a list.
45. Say no to prepackaged foods
Packing your lunch for work or school can be time-consuming, especially if you have a family.
Some people prefer to buy prepackaged foods because they save time, but this is not always the best option.
A better choice is to make your own food at home and pack it for lunch, which you can then eat in peace without worrying about what other people might be saying about the food you packed.
46. Eat at home
Eating at home is a way to save money. It may be uncomfortable for those who do not enjoy cooking as it requires extra effort and time.
Instead of getting food at restaurants, consider cooking your favorite meals at home.
You can save money and time by eating the same meal over and over again.
Learn about the frugal home must haves.
47. Grow your own herbs and food
The most common methods of gardening include container gardening, hydroponics, and both indoor and outdoor gardening.
Many people are growing their own herbs and food for the satisfaction of being able to eat something that was grown with their hands.
48. Take your lunch
If you are interested in saving money, consider taking your lunch. This will save you up to $1,000 a year on work lunches and make it easier to meet the recommended daily intake of fruits and vegetables as well.
“Take your lunch” is an invitation to eat at home. There are many benefits of eating out less often, such as saving money and gaining more control over food choices.
Travel Hacks to Save Money
The following are travel hacks that can help you save money on your next trip.
Some of these hacks include traveling during weekdays, using public transportation, staying at hostels and Airbnb instead of hotels, and using a travel credit card.
49. Use foreign websites for lower prices abroad
Foreign websites are websites that have been created by people from other countries, and they sell products in the language of their country. These websites often offer lower prices on products than what is offered in the United States.
If you’re traveling abroad and need to find a place to stay, there are plenty of websites that can help. A few websites have deals on places where travelers often stay while they travel internationally.
50. Stay for free or get paid to house sit abroad
A house sitter is someone who looks after someone’s property for a certain amount of time in exchange for the promise of payment.
House sitting is typically offered by homeowners to travelers and others who are looking to stay in a particular location for an extended period of time.
The main types of house sitting include:
– full-time house sitters, who are responsible for all aspects of the house and who are typically paid a monthly salary,
– part-time house sitters, who may be responsible for taking care of one or more specific tasks such as gardening or handling the mail
51. Hide your search
To avoid being taken advantage of by airlines, it is best to open a new incognito or private window between searches.
This will make sure that you are not tricked into buying tickets that may be significantly more expensive than they need to be.
Airlines use cookies in your browser to make you believe the prices are going up and up.
Money App Hacks
Money app hacks are ways that people have figured out to make their money work for them in terms of saving and spending. These apps offer different features, such as budgeting, tracking your spending, and saving money.
If you want a simple way to save money, then any of these money apps are designed to find excessive spending.
52. Billshark
This is a legitimate way to save money on monthly bills. Billshark offers you the opportunity to save up to 25% each month (when compared with regular bill payments).
All of this can be done for you by BillShark team, and there are no fees involved!
Try Billshark for free!
53. Trim
Review your spending habits to find what you can cut out, like subscriptions.
Find other ways to save by looking for ways to reduce costly bank fees or getting a discount on your cell phone plan. By using Trim, you are saving money and improving your financial health.
Sign up with Trim now.
54. Truebill
Truebill can help you to track your spending, save money and get a clear picture of your financial life.
This helps you identify services that you are no longer using but continue to pay for. It will help save money by automatically negotiating prices with your service providers and receiving a refund of the money going to waste, which is free money.
Get started with Truebill.
Which Life Money Hacks Can You Start?
This is a lot to take in, but don’t worry.
Take the time to read through each suggestion and consider how you can implement it into your life.
The more hacks you try out, the closer you’ll get to a healthy financial mindset.
These are the life hacks to save money I have found to work for me and my family in order to reset our financial mindsets and grow our net worth.
Everyone will find their niche and what will work best for them.
Personally, you need to figure out how do I make more money. That will make the biggest impact the fastest.
What have you done with your money lately?
Know someone else that needs this, too? Then, please share!!
Whether you should halt your retirement contributions in order to focus debt is one of the most heavily debated dilemmas in personal finance.
Unlike “spend less than you earn” or “track every penny you spend“, there’s no cookie-cutter answer to this question. Variables such as age, career, risk tolerance, and even personality type make each individual situation unique.
You’ll Never Win a Race Against High-Interest Debt
Regardless of your personal situation, there are very few circumstances where high-interest debt should not be the top priority. What’s high interest? Well, that’s another fun question to debate. For the purpose of this article, we’ll assume a broad range of anything in excess of 8-12%.
Once you start trying to race against debt with double-digit interest, you’re destined to fail. It’s risky at best and downright irresponsible at worst.
Let’s be honest. If you’re still relying on high-interest debt, 99% of the time it’s a result of not living within your means. There are rare exceptions, but for most of us (myself included), the issue boils down to spending less than we earn.
On Monday, J.D. wrote about the importance of paying yourself first. Like many, I love this advice. However, I’d like to challenge you with this: Only pay yourself first if you deserve it.
You could spend decades socking away 15% for retirement, but if you are living beyond your means, you’ll still lose. You’ll be tapping your 401(k) for a hardship loan. You’ll be upside down in a house with two mortgages and a HELOC. Even with the best intentions, this is a game that you need to get very, very lucky to win.
I don’t want to rely on luck. I don’t want to race high-interest debt.
For me, having positive cash flow with at least a minor emergency fund is a prerequisite to retirement investing. This proves I deserve to pay myself first. Otherwise, it’s my high-interest debt against my retirement contributions. Not a race I’d like to see.
Ready to Rumble
So now where are we?
Positive cash flow? Check.
Short-term savings? Check.
Only student loans and a mortgage…what now?
Now we’re ready to debate! At this point we’ve covered the basics. We’ve plugged the leak in the ship, but still have a bunch of nasty water to bail from the hull.
Once our remaining debt has interest rates in the single digits (setting an exact percentage isn’t the point), the situation becomes less cut-and-dried. There are two schools of thought on the issue.
The first preaches that this is the perfect time to make retirement a priority. These folks point out that starting the contributions is the hardest step. They show that the earlier we adopt this as a habit, the better our situation is in the long run.
The second school emphasizes the power of focusing on a single goal with all your energy and passion. They profess that intensity and commitment increase the probability that we ultimately succeed in tackling our financial goals. After all, once you eliminate your debt payments, you’ll have an enormous amount of your income to allocate to wealth generation.
I have to admit, I can see both sides. Like many debatable issues, most of us are going to end up somewhere in the middle. In the quest to find balance for our own situations, there are several common factors that are beneficial to explore.
The 401(k) Match
Dave Ramsey suggests going so far as turning down an employer match on 401(k) contributions for a short amount of time (fewer than 18 months) to really focus on your debt. This is where many people draw the line. Actually, that’s putting it nicely. This drives some people absolutely bonkers.
Many exclaim, “But… but.. it’s free money!” That phrase tends to be thrown around a lot. I’m not a full supporter of either side, but I would like to point out that nothing is free, folks. So please stop saying “free money”! Pretty please?
There’s a real and tangible cost to allocating your money in any specific way. There are indirect opportunity costs. There’s the risk that diluting your intensity means you stay in debt longer and thus pay more interest.
Often the math does work in favor of taking an employee match, but that doesn’t make the money “free”. Some 401(k) plans have limited investment options. Or they have vestment periods that stretch out for years. If you aren’t planning to stay with your current employer this could dwindle the value of “free” even further.
Ultimately, there are several reasons someone may decide to opt out of a matching 401(k) program for a short time. Of course, the factors at play vary drastically from employer to employer. Before making a decision either way, it’s important to know as much as you can about your particular 401(k) options.
Other Factors
There are a couple other situations where investing may make sense. Consider the following:
First, you only have a specific limit per year that you can contribute to a Roth IRA. (This is currently $5,000 per year — $6,000 per year if you’re 50 or older.) Once you miss the window of availability, you’re out of luck. Your new contributions go toward the current year’s limit. You can’t go back and make up contributions you missed for the past two years once you are out of debt.
Second, if you don’t have the discipline to actually apply any new money to accelerate your progress on debt, then don’t halt your retirement. Decreasing your contributions only to spend the difference at the local comic books store (or your vice of choice) may be the single dumbest financial move you can make.
There’s no single answer to this dilemma. In my own life, Courtney and I have chosen to not to invest while still in debt. We live a turbulent life right now, and enjoy the benefits that come with focusing on one financial goal at a time. We’ve also decided to allocate what limited funds we do have into investing in ourselves: training, education, and building a business (our current focus).
Your situation is different. The only thing I will push you to do is consider all your options. Don’t continue making a certain decision just because it’s what you’re doing right now.
Start from a blank slate. Could you benefit from a singular focus? Are you willing to make further lifestyle cuts to increase you current contributions? Examine your options and consider the choices.
How have you attacked this dillemma in your own life?
Opening a bank account online has not only become an effortless task but also a smart move towards managing your finances with ease. This guide will help you understand the benefits, requirements, and steps to transition your banking experience into the digital realm.
This will give you control and accessibility like never before. Embrace the future of banking today and discover how opening a bank account online can be a game-changer for your financial journey.
Understand Your Banking Needs
Determining your banking needs is a crucial first step in choosing the right account. Are you looking for a secure place to deposit your paycheck, withdraw cash, and manage your bills? A checking account could be your answer. It’s an excellent tool for everyday transactions, providing features like check writing, debit card access, and often, the ability to set up direct deposits.
Alternatively, if you have a financial goal in mind, such as saving for a down payment or creating an emergency fund, a savings account could be more suitable. These accounts typically offer higher interest rates compared to checking accounts, allowing your money to grow over time.
It’s worth noting that many people maintain both checking and savings accounts. The checking account serves as a hub for daily transactions, while the savings account functions as a reservoir for longer-term savings and investment goals. Your specific mix will depend on your personal financial needs and goals.
Choosing the Right Bank
Finding the right bank depends on your individual needs and preferences. There are three main types of banks to consider: traditional banks, credit unions, and online banks.
Traditional banks offer a wide array of services like various types of accounts, credit cards, and loans. They are great if you prefer having in-person access to services and a large network of ATMs.
Credit unions are member-owned and often excel in customer service. They generally offer better interest rates on savings accounts but may have less online and physical accessibility than traditional banks.
Online banks operate purely online, which often allows them to offer lower fees and higher interest rates. They’re a good choice if you’re comfortable doing all your banking digitally.
No matter which type of bank you choose, make sure it’s FDIC insured to protect your money. Also, consider the bank’s fees, such as monthly service and ATM fees, as they can add up over time. A bank with fewer fees or options to waive them could save you money.
Requirements for Opening a Bank Account Online
Once you’ve decided on your banking needs and the financial institution, it’s time to gather the necessary information to open your bank account online.
Most financial institutions will require:
Personal Information: Your legal name, date of birth, and Social Security number.
Contact Information: A valid mailing address and phone number. Banks typically require these to verify your identity and as part of their communication and security protocols.
Identification: A valid form of identification such as a driver’s license, state ID, or passport. You may need to provide the ID number and expiration date.
Initial Deposit: Some banks may require an initial deposit to open the account. You can usually fund this by transferring money from an existing account or using a credit or debit card.
Before starting, it’s helpful to check the specific requirements of your chosen bank, as requirements may vary from one financial institution to another.
Step-by-Step Guide on How to Open a Bank Account Online
Taking your banking experience online might seem intimidating initially. However, the process is typically straightforward, taking just a few minutes. Follow this step-by-step guide to set up your bank account online.
Visit the bank’s website: Begin by visiting the official website of your chosen bank or credit union. Look for the “Open an Account” or “Apply Now” option, typically found in the main navigation or home page.
Fill out the application form: The bank will prompt you to fill out an application form requiring your personal information. This includes your full name, mailing address, and Social Security number. You may also need to provide a valid form of identification and employment information.
Verify your identity: As part of the process, you’ll be asked to verify your identity. This could involve answering security questions based on your credit history or providing a valid ID. This step is crucial to protect against identity theft and fraud.
Fund your account: Most banks require an initial deposit when opening a new account. You can fund your account via a transfer from an existing bank account, a credit or debit card, or even a check. The required deposit varies from bank to bank, with some online banks allowing you to open an account with no initial deposit.
Confirm and finalize your account setup: Once you’ve completed these steps, you’ll receive a confirmation email or message from the bank. This message usually contains instructions on how to set up online banking, including setting up your username and password.
What to Do After Opening Your Account
With your bank account online set up, it’s vital to get acquainted with all its features and maximize them for your convenience and financial growth.
Set up direct deposit: Direct deposit is a crucial feature to set up as soon as your account is active. It allows your paycheck to be automatically deposited into your account, saving you from manual deposits and giving you quicker access to your money.
Learn to use online banking features:Familiarize yourself with key online banking features. Bill pay, for instance, can automate your monthly payments, ensuring timely transactions without manual intervention. Mobile check deposit lets you deposit checks without the need to visit a bank branch, and the money transfer feature enables seamless transfer of funds between accounts or to friends and family, making your banking experience both quick and hassle-free.
Regularly review your account statements: Regular monitoring of your account statements is a good financial habit. It helps track your spending, review any account fees, and promptly detect any suspicious activity or discrepancies. This practice keeps you aware of your financial status and ensures the security of your account.
The Importance of Regularly Reviewing Your Banking Needs
As life unfolds and your circumstances evolve, so too do your banking needs. Major life events – a career shift, marriage, welcoming a child, or even retirement, could alter your financial landscape significantly.
Perhaps a job change comes with a pay increase, necessitating a better savings strategy, or marriage might call for a joint account. A new child could lead you to start a college savings account. These changes underscore the importance of regularly reassessing your banking arrangements.
Every few years, or at the occurrence of significant life events, it’s beneficial to review your banking needs. This regular review ensures your financial arrangements align with your life’s dynamics, ensuring your money is working for you at every stage.
Bottom Line
Opening a savings or checking account online is an easy and efficient process, offering you the freedom to manage your finances at your fingertips. But remember, the process doesn’t stop with opening an account.
Make sure to fully utilize the features of your online account, keep a close eye on your statements, and adjust your banking needs as your life changes. Stay informed and proactive in your approach to banking – this way, you ensure that your online bank account serves you effectively in every phase of your financial journey.
Frequently Asked Questions
Can I open a bank account online without a deposit?
Yes, certain banks allow you to open an account with no opening deposit. However, they may require you to fund the account within a specific time frame to keep it active.
What should I do if I don’t have a Social Security number?
If you’re an international resident without a Social Security number, you might still open a bank account using an Individual Taxpayer Identification Number (ITIN), passport, or other forms of identification. It’s advisable to contact the bank directly for their specific requirements.
How old do I need to be to open a bank account online?
Typically, the minimum age to open a bank account online is 18. For those under 18, many banks offer the option of joint accounts with a parent or guardian, or specific accounts designed for minors.
Can I open multiple bank accounts online?
Yes, you can open multiple bank accounts online, including a mix of checking and savings accounts, depending on your financial needs. It’s important to consider potential monthly fees and the ease of managing multiple accounts.
Is it safe to open a bank account online?
Opening a bank account online is generally safe as long as you’re using a secure network and are applying through the official website of a reputable bank or credit union. Always look for indications of security, like the “https” at the beginning of the web address.
What should I do if I face issues while opening a bank account online?
If you encounter any issues while opening a bank account online, the best course of action is to contact the bank’s customer service for assistance. They can guide you through the process or resolve any technical glitches you might be facing.
Whether you want to save for retirement or buy stock in your favorite company, you’re going to need a brokerage account before you can get started. Brokerage accounts are different from regular bank accounts because they give you access to securities like stocks and bonds. Not to mention some brokerage accounts come with special tax advantages.
This article will cover the best brokerage accounts you can choose from. For those who are new to investing it will also cover the basics of what brokerage accounts are and how they work.
What’s Ahead:
Overview: Best brokerage accounts for beginners
TD Ameritrade: Best overall for new investors
What sets TD Ameritrade apart is its extensive library of free educational resources that new investors can use to learn about investing.
thinkorswim is TD Ameritrade’s trading software that allows you to make trades anywhere. New investors can use paper trading to simulate investing without risking any money, while experienced investors can use the same software to test new strategies or learn new skills.
Pros
Educational library and training tools. TD Ameritrade’s suite of free resources and simulation software makes it one of the best platforms for new investors.
Customer support. TD Ameritrade is known for its world-class customer support, which is available 24/7 on most communications platforms, including Twitter.
Cons
Fewer no-cost mutual funds. TD Ameritrade only offers around 1,600 no-cost mutual fund options. This is less than some of its competitors.
No crypto trading. TD Ameritrade does not currently support cryptocurrency trades.
Visit TD Ameritrade to learn more or read our TD Ameritrade review.
Robinhood: Best mobile trading app
Robinhood was a disrupter when it launched its mobile trading app in 2015. Its mission is to provide everyone with access to wealth-building investing activities and it does this by offering users commission-free trades.
Robinhood’s app is designed for digitally-native investors. With just a few swipes, you can buy stocks and begin building your own portfolio.
Advanced traders can join Robinhood Gold, which allows you to trade on margin. Proceed with caution: Margin trading is a risky business.
Pros
No-fee trades. Buy and sell stocks, ETFs, and crypto without paying trading fees.
User-friendly app. The app is easy to use, allowing you to make trades right from your phone.
No minimum to get started. You can open a Robinhood account and start with as little as $1.
Cons
Trade suspensions. Robinhood got into some hot water after it suspended trading during the GameStop short squeeze of 2021. They’ve run into trouble with regulators over a few other issues too.
Limited options. Robinhood doesn’t give you the full suite of investment options you might find at other firms. While you can buy stocks, ETFs, and crypto on the platform, you can’t buy mutual funds or bonds.
Visit Robinhood.com to learn more or read our Robinhood review.
Advertiser Disclosure – This advertisement contains information and materials provided by Robinhood Financial LLC and its affiliates (“Robinhood”) and MoneyUnder30, a third party not affiliated with Robinhood. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Securities offered through Robinhood Financial LLC and Robinhood Securities LLC, which are members of FINRA and SIPC. MoneyUnder30 is not a member of FINRA or SIPC.”
E*TRADE: Best for active traders
E*TRADE is a financial services company that is part of Morgan Stanley. It offers $0 commission trades and an advanced trading platform that makes it perfect for active traders.
The platform gives you access to a wide variety of investment options including stocks, bonds, ETFs, and mutual funds. More than 4,700 mutual funds are available with no transaction fees.
Active traders have access to a suite of data tools including the Power E*TRADE app. This software offers traders access to real-time data feeds and the ability to build custom graphs.
Pros
Advanced analytics. Power E*TRADE is an advanced app with great charting tools.
$0 commissions. E*TRADE eliminated its $6.95 trade commission back in 2019. It is now one of the most cost-effective brokerage options available.
Wide selection of investments. Investors can choose from a wide variety of investment options including stocks and bonds.
Cons
No crypto trading. E*TRADE does not support cryptocurrency at this time.
Transfer fees. If you want to move money out of E*TRADE to another brokerage, be prepared to pay $25 for a partial transfer and $75 for a full transfer.
Visit E*TRADE to learn more or read our E*TRADE review.
Webull: Best for casual traders
If you’re looking for an easy-to-use, no-frills trading platform, Webull could be a good fit for you.
Webull provides a very readable dashboard of the top stocks and best-performing industries. Its mobile trading app gives you access to a range of investment options — including crypto — with no trading fees.
New investors who fund an account on the platform can even get free stocks just for joining. Terms apply.
Pros
Lots of investment options. Webull gives investors access to 44+ different cryptocurrencies, as well as fractional shares.
No educational resources. Inexperienced investors with a lot to learn probably shouldn’t turn to Webull.
No interest on uninvested cash. Some other brokerage firms partner with banks to offer interest for uninvested cash. But any cash at Webull that isn’t invested will sit idle in your account.
Visit Webull to learn more or read our Webull review.
Fidelity: Best all-in-one brokerage
Fidelity is one of the most well-known financial services companies out there. In addition to offering taxable brokerage accounts, Fidelity also has a number of tax-advantaged options, like health savings accounts (HSA).
One of Fidelity’s key selling points is its zero-expense-ratio index funds. An index fund typically tracks a specific index in the stock market, like the S&P 500. It gives you the opportunity to invest in a basket of top-performing companies without having to pick individual stocks. While most index fund managers typically charge a small fee, Fidelity is the first company to offer index funds with no fees.
Fidelity’s variety of account options also makes it a good one-stop-shop for investors. You can have a taxable brokerage account at Fidelity, along with your retirement accounts, an HSA, and a 529 College Savings Plan. Fidelity also offers a suite of educational resources to help new investors build a comprehensive portfolio to meet their personal financial goals.
Pros
Zero-expense ratio index funds. These are highly cost-effective, low-fee funds to maximize the return on your investments.
Retirement planning. Fidelity offers a library of educational resources that are great for someone looking to start saving for retirement.
Cons
No crypto. Fidelity does not support crypto at this time.
High broker fees. Fidelity doesn’t charge a commission on self-initiated trades but it does charge fees to tap into its network of financial advisors.
Visit Fidelity to learn more or read our Fidelity review.
Charles Schwab: Best customer service
Charles Schwab is another well-known financial services company that offers both taxable and tax-advantaged brokerage accounts. Schwab invests in research to build in-house expertise that anyone can use, no matter how much money they have. If you have questions or want to learn more, an expert is only a phone call away.
Charles Schwab also offers its own index funds tracking a variety of indices, including the S&P 500, large-cap stocks, the bond market, and REITs. With low expense ratios, Schwab’s index funds are a cost-efficient passive investing option.
Pros
World-class research. Schwab customer service reps are experts who can help you learn more about investing and the products Schwab offers.
Cost-effective index investing. The suite of Schwab’s low-cost index funds makes it a great option for passive investors.
Cons
No crypto. Schwab doesn’t offer direct crypto investing, but it does give you access to crypto-related products like Grayscale Bitcoin Trust.
Foreign stock fees. Schwab offers low-cost options for U.S.-traded companies, but not for foreign companies.
Visit Charles Schwab to learn more.
Vanguard: Best for passive investing
Vanguard is one the leading brokerage firms out there thanks to its famous founder, Jack Bogle. Fans of Vanguard — known as Bogleheads — follow Jack’s simple investing philosophy of letting compound interest grow over time, making Vanguard one of the best platforms for passive investors.
Vanguard is a pioneer of low-cost index funds. Investors use index funds to save money without having to develop technical expertise or make active trades. The “set it and forget it” mindset works well with Vanguard, where investors can benefit from compounding interest without paying expensive management fees.
Pros
Low-cost index funds. Vanguard offers some of the most cost-effective and best-performing index funds.
Cheap mutual funds. In addition to index funds, Vanguard’s Admiral Shares mutual funds are some of the cheapest mutual funds available. The minimum required to invest in their mutual funds is $3,000.
Cons
Not user friendly. Vanguard’s platform is a bit old school and might not be the best option for active traders.
Basic. It’s another no-frills option, so you won’t get access to advanced analytical tools or research with Vanguard.
Visit Vanguard to learn more or read our Vanguard review.
Ally Invest: Best account options
Ally Invest is the trading platform affiliated with Ally Bank. It offers no-cost trades that appeal to both new and experienced investors.
Ally Invest offers a variety of account options depending on how involved you want to be. You can choose to open a self-directed account, invest in a robo-advisor portfolio, or work with Ally’s wealth management team. This gives you the flexibility to invest on your own or to capitalize on Ally Invest’s in-house expertise.
Pros
Options for all types of investors. You can manage your own investments if you want, but Ally Invest gives you options so you don’t have to.
Integration with Ally Bank members. Ally Invest allows you to move money easily between all your accounts if you already bank with Ally.
Cons
No crypto. Ally Invest offers a variety of securities but does not support crypto at this time.
No in-person branches. Ally is fully digital, so if you’re looking for in-person support this brokerage firm might not be the best for you.
Visit Ally Invest to learn more or read our Ally Invest review.
How I chose these brokerage accounts
I chose these brokerage accounts based on three core factors:
Securities available to investors
User experience
Fees
My logic: If a platform is hard to use and has a lot of fees you’re probably not going to benefit from it. Plus, a brokerage firm with limited offerings can make it hard to build a well-diversified portfolio. A good beginner brokerage account should have low fees, a variety of investment options to choose from, and a good user experience.
What is a brokerage account?
A brokerage account is an investment account where you can buy and sell securities. These are things like stocks, bonds, ETFs, mutual funds, and sometimes even crypto.
Most brokerage firms allow you to open an account online. Many even have apps where you can get started right from your phone.
You also don’t need a lot of money to get started either. Once you fund your brokerage account, you can begin trading stocks. An important thing to note: The brokerage firm doesn’t buy securities for you. After you fund your account it is up to you to begin investing. If you don’t, your cash will just sit there collecting dust.
Types of brokerage accounts
The brokerage account you’re probably most familiar with is your retirement account. Whether you have an employer-sponsored 401(k) or your own IRA, retirement accounts are actually brokerage accounts.
Read more: A beginner’s guide to saving for retirement
Aside from retirement accounts, there are a couple of other types of accounts you’ll want to be aware of.
A self-directed brokerage account is one where you make your own stock picks. Robinhood is a good example of this type of account. Unlike your retirement account, there are no tax benefits with self-directed brokerage accounts.
If the idea of picking your own stocks is overwhelming, you can opt to work with a financial advisor. These are individuals who act as brokers and are paid on commission to make trades on behalf of their clients. Sometimes they are paid a percentage of the total assets they manage. Other times they are paid on a per-trade basis.
When you work with a financial advisor you’re essentially paying for their expertise. They pick stocks and build a portfolio based on their knowledge of the market. The more active your advisor is, however, the more it will cost you.
Read more: Do you need a financial advisor?
An alternative to using a human financial advisor is to work with a robo-advisor. These are proprietary algorithms that use technology to manage your portfolio. They basically automate the entire investing process.
One of the benefits of using a robo-advisor is that it allows you to invest in a pre-picked portfolio while leveraging investing strategies like tax-loss harvesting. You essentially get a lot of the expertise a human advisor would give you at a fraction of the cost.
These different types of accounts each come with their own costs and benefits. You’ll need to first identify your overall investing goal before figuring out which type of account will work best for you.
How do brokerage accounts work?
Brokerage accounts work like bank accounts with extra benefits. Like a bank account, you can deposit money into them. But instead of letting the money just sit there and collect interest, a brokerage account allows you to buy assets, like stocks or bonds.
Whatever assets you purchase through your brokerage account are yours to keep. At any time you can sell them (although there are some tax implications when you do this) to turn them back into cash. Some assets earn dividends that generate passive income.
You can have as many brokerage accounts as you want and there is no limit to how much money you can invest (except for tax-advantaged accounts). There are no fees to open a brokerage account, although there may be fees to make trades or to work with a financial advisor.
What is a brokerage fee?
Brokerage fees are commissions a broker charges to make trades. Sometimes you are charged a flat fee while other times you are charged a percentage of the assets your broker holds for you.
Where you’ll find the most fees is if you work with a full-service broker. These individuals are paid a fee for the trades they make on behalf of clients. You’re not actually paying them just to make trades though. You’re also paying for the research they do to build your portfolio and the expertise they bring to help you manage your investments.
FAQs
How many brokerage accounts can I have?
You can have as many brokerage accounts as you would like. In fact, you’ll probably want to have several different accounts depending on your goals.
A retirement account, for example, is going to be different than an account where you buy and sell stocks frequently. Retirement accounts are tax-advantaged and because of that, they have contribution limits. If you use an employer-sponsored retirement plan, you might not even get a say in who brokers your account.
A taxable, self-directed account where you buy and sell individual stocks is different than a retirement account. For a self-directed account, you might prefer to use a brokerage firm with an easy-to-use app to make daily trades.
Are brokerage accounts FDIC insured?
No, brokerage accounts are not FDIC insured. But that’s not exactly a bad thing.
The FDIC — or Federal Deposit Insurance Corporation — protects deposit bank accounts (aka your checking and savings account). They don’t protect money invested in the stock market or other investment instruments.
Those investments are protected by a different agency called the Securities Investor Protection Corporation (SIPC). The SIPC will intervene if a broker goes bust. In that event the SIPC will either transfer your portfolio to another firm, or they will work outright to rebuild it, buying new assets to make up for any that are lost.
Like the FDIC, SIPC does come with some stipulations. For one, a brokerage has to be a member that qualifies for SIPC coverage. And that coverage is limited to up to $500,000 per customer.
How are brokerage accounts taxed?
Brokerage accounts are taxed differently depending on the type of account you have and how long you hold assets for.
Retirement accounts are usually tax-advantaged. In the case of a traditional 401(k), this means that you won’t pay taxes on your account contributions, but you will pay taxes later when you withdraw money in retirement. However, in the case of a Roth IRA, you will pay taxes on your account contributions, but won’t pay taxes on the withdrawals in retirement.
Read more: IRA vs. 401(k)
Self-directed brokerage accounts don’t come with any tax benefits. You invest money that has already been taxed and you pay taxes on your investments when you sell.
Selling an asset triggers a taxable event. If you’ve held it for less than a year it is considered a short-term capital gain. This is taxed at your current income bracket.
If you hold an asset for a year or more, however, it will be counted as long-term capital gains. You’ll pay between 0% and 20% depending on your tax bracket. Long-term capital gains taxes are usually lower than income taxes, which is why it’s advised to hold onto a stock for at least a year before selling it.
Summary
A brokerage account gives you the ability to put your money to work. Most firms offer access to securities like stocks and bonds, while others give you access to cost-effective index funds. These are ways you can grow your money beyond collecting interest in a savings account.
You can have as many brokerage accounts as you would like, and those accounts can vary depending on your goals. If you’re not sure where to get started, set a financial goal — like saving for retirement — and find a brokerage firm that gives you the best bang for your buck with respect to that particular goal.
Paying off existing debt is the top near-term priority for Gen Z college students, along with having financial freedom, goals which set them up for future home ownership, a study conducted for FinLocker, which provides a financial fitness app, found.
More than 27% declared that their financial goal for the next two-to-five years is paying off student loans, auto loans and credit cards. Meanwhile, 10% said it was a goal for the next five-to-10 years.
Financial freedom is the short-term goal for 24.5% and a longer term aspiration for 27.8% of respondents.
But the top goal in the five-to-10-year range is home ownership, with 29.6% of respondents prioritizing that. However, a significant share has this as their short-term objective, at 9.4%, the study found. The mortgage and real estate industries should find this last point encouraging, the report accompanying the survey said.
Among those Gen Zers planning to buy a home, 43.5% are looking to act between the ages of 28 and 32. The next largest cohort, 36.1%, expects to buy between the ages of 23 and 27.
Just under 14% said they were planning to become homeowners between 33 and 37.
Mortgage lenders need to figure out how to engage these Gen Z borrowers. In general, these firms reach out to potential customers using “high-cost lagging indicators,” such as trigger leads from credit report pulls and multiple listing service searches, FinLocker said.
“However, as the survey validates, a more equitable opportunity exists to engage a consumer: connecting at the top of the marketing funnel through social media,” the report noted. A recent report from National Mortgage News’ parent company Arizent also noted the importance of having a mobile strategy to reach this group.
Friends and family was the top source respondents said they learned about finance from, at 41%, but social media was second at 15.8%.
“The recent rise of ‘finfluencers’ exemplifies how social media has become a financial education source for millions of young people,” the report stated. “As 40% of Gen Z need to ‘trust’ the source of their financial advice, this is an opportunity for mortgage professionals to establish themselves as trusted resources by creating short and long videos on the topics Gen Z want to learn more about.”
When asked how they would determine if they were ready to purchase a home, 63.5% said when they had significant savings for a down payment. This was down over 5 percentage points from 73.9% reported in a similar FinLocker study conducted in 2022.
Only 4.6% said they’d be ready to buy when they had a good credit score, down from 11.9% in the 2022 survey.
On the other hand, nearly one-quarter of the 2023 respondents, 24.1% said it would be when I have a family versus 12% the prior year.
Among the barriers they feel exist to achieving all of their financial goals, other priorities were cited by nearly 32%. Next was a lack of financial education at 19.4%; uncertainty about how to create a financial plan also came in at 19.4%.
Unable to save enough money was the response of 14.8%, while 10.2% declared they had no barriers.
FinLocker partnered with the students in the American Marketing Association group at the University of Southern California to conduct the survey over a three-week period in April.
The survey featured answers from 171 respondents, with 83.5% being between the ages of 18 and 22; 10% between 0 and 17; 4.6% between 23 and 30 and 1.8% between 31 and 40. The U.S. Census Bureau uses 1997 as the start year for this generation, making the oldest members approximately 25 to 26 years old.
By gender, 62% said they were female, 35% male, 2% non-binary and 2% preferred not to say.
It seems we’re constantly bombarded with information about how we should manage our financial futures.
It can be tough to sort through all of those messages to figure out exactly how it all applies to our individual financial needs.
That’s where personal economics comes in.
According to financial planner and author Carl Richards, we should all spend less time trying to keep up with the latest financial news and investment strategies. Merely keeping up and trying to wrap your head around it is tough, says Richard.
So what’s a savvy person to do? In a New York Times article, Richards urges savers to simplify their financial lives by focusing on personal economy, which he defines as the financial strategies that are relevant to each saver’s specific goals.
Richards says that when you focus on the financial info that’s relevant to you, you won’t risk being overwhelmed by fears that you’re not doing the right thing with your money. “Global” worries about troubles in Europe or the U.S. housing market recovery, for instance, become irrelevant. “Personal” strategies like saving for a vacation to a theme park, for instance, becoming clearer to define and easier to execute.
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Your personal economy If you’ve ever felt overwhelmed by your finance options, defining your own personal economy as Richards suggests might be helpful. Take a second to consider your greatest financial goal: do you want to save for a new car? To buy a home? To go on vacation? Or to retire?
To get on the path to achieving your goal, Richards suggests asking yourself these questions:
How much can I save each month?
What am I investing in?
Can I pick up extra work so I can save more?
Could freelancing or starting a side business help me save more?
The questions are laser-focused to help determine what you could do immediately to move toward your personal goals. Thinking in simple, focused terms helps you spend less time second-guessing your decisions.
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Renting as a key part of your saving strategy As you consider your personal economy, think about how renting might help you achieve your savings goals. According to a Federal Reserve Bank official, renting may sometimes be a better financial savings strategy. For some people, renting an apartment and then investing each month leads to more wealth in the long term.
Renting can be a particularly good savings strategy for those who live in areas with a high cost of living. If housing costs are sky high, you’ll have to make a large down payment as well as pay higher taxes, homeowners insurance and monthly payments to own a home. While you are creating equity with your purchase, your money is tied up in a house instead of being available to you whenever you need it.
Renting can also be a good savings strategy if you don’t plan on staying in one location very long. In order to build wealth with a home purchase, your home must increase in value — something that happens over a long period of time. If you plan on staying put, you could potentially make a profit — but if you move around, renting and investing your savings in other financial vehicles like stocks, for instance, could help you see better return on your money in the long run.
When you add up all that apartment living has to offer – great locations, included amenities, flexibility plus the potential to save money — renting could play a key part in your personal economy.