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10 Money Rules to Break in 2018

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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When it comes to personal finance, you’ve probably heard all types of “rules of thumb” to follow. Yet the painful truth is that there is no one-size-fits-all rulebook for financial success.

These rules are good places to start. However, blindly following them won’t lead to satisfying results. The future is unknown and every individual's goals and circumstances are unique.

What you can do is use the rules as general guidance. Assess your goals and needs regularly, and adjust your strategies for saving, investing, spending and debt payment accordingly.

We’ve summarized 10 common personal finance rules that you can refer to but can feel free to pick and choose based on your own situation:

1. “Save 10% for retirement.”

If you are comfortable enough to start saving, a common rule of thumb is to save 10% of each paycheck for retirement.

Catherine Hawley, a San Francisco-based financial planner, told MagnifyMoney that 10% may too low a bar for many workers, especially those whose incomes may fluctuate.

“[This rule] might be better thought of as a starting place one builds on,” Hawley said. “If you have a high income but anticipate switching careers or if that income is not stable, such as some sales jobs, your long-term savings rate may need to be closer to 50% to keep you on track for retirement.”

By saving more now, you’re allowing yourself a cushion of protection if you were to see a major reduction income.

Another reason the 10% rule isn’t so great is that some people simply can’t afford to go there just yet. In that case, it’s much better to start with 4% or 5% and work your way up than let this rule dissuade you from saving at all.

Instead: If you are earning a lot, don’t let the rule stop you from saving more. If you are early in your career, you don’t have to get up to 10% all at once. At the very least, contribute enough to your company-sponsored retirement plan to capture the full company match, if you are offered one. From there, consider increasing your contribution based on your other financial goals.

2. “Whatever you do, max out your 401(k).”

Financial planners can’t emphasize enough the importance of saving for retirement: The earlier you start saving and the more you contribute, the better. But maxing out your 401(k) isn’t necessarily a good idea for everyone.

The legal maximum amount you can save in your 401(k) is $18,500 in 2018 ($24,500 if you are 50 or over). If you were starting from scratch, you would have to tuck away more than $1,500 a month to max it out by the year’s end.

If you are a high-wage earner, it’s great if you can max it out without much effort. But if you make $50,000 a year, you would have to stash nearly 40% of your salary for retirement. Remember, this is money that, if contributed to a traditional 401(k), can’t be withdrawn until age 59 1/2 without incurring penalties (with some exceptions).

Planning for retirement from an early age is wonderful, but there may be other goals you want to achieve when you are young and need money in the near future. For example, you might want to prioritize paying off high-interest debts like credit cards or auto debt before throwing a good chunk of your paycheck into your retirement fund. And you should definitely save up at least a few months’ worth of income in your savings account so you have money set aside in case of emergencies.

It’s not wise to sacrifice your current life goals if maxing out your 401(k) is a tough task.

Instead: Although there are multiple benefits to saving for retirement, you may want to take a holistic view of your financial situation and review your near-term financial goals before deciding whether or not to max out your 401(k). Read our guidelines on things you should consider before hitting that maximum.

3. “Save at least three to six months’ worth of expenses.”

One common financial planner mantra is that you should have an emergency fund to cover three to six months of expenses.

Clearly, not many people can achieve that goal. The Federal Reserve reported that in 2016, 44% of Americans could not come up with $400 in cash to cover emergencies.

Depending on circumstances, some people probably can make do with a smaller cash reserve, but others may need a bigger one.

Hawley suggested for those who have consumer debt, they may be better off having a smaller emergency fund while prioritizing paying off one’s deficit.

A person who has an unstable income or several mouths to feed may find that three to six months’ worth of expenses may not be nearly enough. For example, if you’re a freelancer or a seasonal worker, you may want to double your savings goal so you can cover any dry spells.

“If you are very conservative or in a volatile industry where you periodically get laid off you may be more comfortable with more cash on hand,” Hawley added.

Instead: An emergency fund is an account you can use to cover necessary expenses in case you lose a job, your car breaks down or you get hit by an unexpected hospital bill. Your non-routine costs like a vacation or a kitchen renovation should not be part of the calculation. Don’t be afraid to go below or beyond the three-to-six-month rule considering your needs and debt situation. In general, the less steady your job is and the more dependents you have, the larger your emergency fund should be.

4. “Subtract your age from 100 to get your perfect investment allocation.”

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One of the most basic rules for asset allocation is to subtract your age from 100 to calculate the percentage of your portfolio that you should keep in stocks.

Under this rule, at age 25, for instance, you should keep 75% of your portfolio in stocks and the rest in bonds and other relatively safer securities. At age 75, you invest 25% of your assets in stocks. The idea is to gradually reduce investment risk as you age, because older people don’t have as much time to wait for a market bounce-back following a dip.

Much research has been done about asset allocation adjustment for retirement. Experts have different conclusions based on different models. David Blanchett, head of retirement research for Morningstar Investment Management, concluded in an 2015 article that declining shares in equity as people grow older is best for retirement planning in an environment of low bond yields and decent market performance.

This 100-minus-age rule is a good place to get people started in allocating their investments, but it has its flaws.

Americans are living longer and retiring later. The average life expectancy was 79 in 2015, five years longer than 1980, according to the World Bank. Retirement savings strategies should be adjusted as people need a bigger nest egg, can potentially grow the money more and recover from a market downturn.

At the same time, the yield on a 10-year Treasury Bill is roughly 2.5%, down from a peak of nearly 16% in the 1980s. But the stock market keeps soaring — the Dow Jones Industrial Average shot up 24% last year and hit 26,000 for the first time the third week of January. It may not make as much sense today to dump a large portion of money into fixed income when you could potentially reap greater gains.

Instead: Rebalance your investment portfolio each year, considering your target retirement age, plans on using the funds at retirement, your risk tolerance and market performance. If you’re feeling more comfortable with risk, use 110 (or even 120) as a starting point to calculate your stock exposure.

Maria Bruno, senior investment analyst at the Vanguard Investment Group, told MagnifyMoney that stocks should be a significant part of a young worker’s portfolio — 80-100% in equity is very reasonable. For people in retirement, it’s better to be more conservative but still not too afraid to take some risks. A ratio of 60:40 stocks to bonds is considered a balanced allocation for them, Bruno said.

“Equities still do play a role for somebody at retirement because they could be looking at a 30- to 35-year time horizon,” Bruno said. “Individuals may think that they are playing it safe by staying out of the market, but actually what they are doing is they are overexposing themselves to inflation risk, because the portofolio can’t grow in real terms.”

5. “Withdraw 4% of your savings in retirement.”

Here is another retirement savings regimen: You start withdrawing 4% from your portfolio in your first year of retirement, increasing your withdrawal each year enough to cover inflation.

If you have $1 million in your retirement account, for instance, you take out $40,000 for the first year. If the annual inflation rate is 2%, then you withdraw $40,800 the following year ($40,000 plus 2%). And you continue on the path for the next 30 years. This rule was created based on historical data by financial advisor William Bengen in 1994.

But this is not how life works; it hardly goes as planned. Your spending in retirement may vary year by year. This rigid rule doesn’t take into consideration of your investment performance, your retirement time horizon nor the current market and economic conditions. It assumes retirees have a portfolio split between stocks and bonds. Bengen later revised the rule himself to 4.5%, using a more diversified portfolio.

Instead: Be flexible. Revise your spending rate annually based on needs, portfolio performance and taxes. If you have a personal financial advisor, discuss with your planner to determine the withdrawal rates that best suit your personal situation.

For early retirees or someone who’s invested much more conservatively and may have a smaller nest egg, they would probably need to withdraw a little under 4% to make sure their lifestyle remains sustainable, Bruno said. On the other end, she said someone with a shorter horizon — in other words, someone who doesn’t think they’ll have much time to enjoy their savings —  or who’s late in retirement shouldn’t feel tied to that 4% rule; instead, they could stand to spend a little bit more.

6. “Spend no more than 30% of your income on housing.”

The 30% rule is a common budget benchmark for housing costs. The idea is to cap your rent or mortgage at under 30% of your monthly income.

This idea stems from housing regulations from the late ’60s. A U.S. Census Bureau study said the Brooke Amendment (1969) to the 1968 Housing and Urban Development Act established the rent threshold of 25% of family income in response to rising renting costs. The rent standard later rose to 30% in 1981, which has since remained unchanged, according to the study.

But the standard crafted almost four decades ago may not be realistic for many today. A Harvard University study shows that in 2015, nearly 21 million renters — that’s nearly half of the country’s renters — spent more than 30% of their income on housing across the country.

Instead: Think of affordability instead of the 30% rule. Depending on how much you earn, how much debt you bear and where you live, rent could be more or less than 30% of your paycheck. Hawley said she encourages people to work on earning more when rent eats away a huge chunk of income, which may be easier than relocating to reduce rent. If you live in a relatively affordable area compared with California or New York, housing doesn’t have to fill 30% of the budget, she said. In that case, you may have wiggle room to save more.

7. “Buy in bulk.”

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Price per unit may be cheaper at club warehouses like Costco than a local grocery store, and buying in bulk saves money for tens of thousands of American families. But bulk-buying won’t necessarily save money if you buy more than what you can consume. Indeed, many shoppers confessed they have always bought more than they needed just because they couldn’t avoid the temptation of “super deals” at those clubs.

In addition, wholesale markets are not a paradise for every family. If it’s a family of two, the quantities of groceries you stocked up from a major trip to a wholesale market are so large that it may take weeks or even months to consume. You are basically paying upfront a lot more for saving money later. Worse yet, jumbo-sized products may go rotten or expire before you remember that they are even there.

A 2014 University of Arizona study found that families trying to buy all their groceries in one major trip, stocking up on discounted items and purchasing in bulk often buy things that end up unused.

Instead: Buy what you need and how much you need now.

8. “Borrow as much student debt as your expected salary.”

Many college students find themselves saddled with an enormous student loan debt today.

When determining how much students should borrow for higher education, a rule of thumb is that you should cap your total student loan debt below your expected first-year annual salary.

But wait a minute, private schools charge far more than public universities. In some industries, wage growth has been in Stagnantville for decades. Graduates may see big wage increases as their careers advance if they are in finance or law. But if they are government workers, their pay raises may not come as often and substantial.

In a MagnifyMoney survey of the 2017 graduate class, 40% of the 1,000 surveyed recent graduates with student loans anticipated that they’d need more than 10 years to repay their student loans.

Aside from the projected initial annual salary, many other factors, including time expected to repay the loan, the school you attend, the industry you may end up entering, should go into the borrowing calculation.

Instead: Figure out how much you actually need to borrow by evaluating the potential costs, including tuitions, fees and living expenses. Adjust your lifestyle and cut down unnecessary expenses. Remember, you want to borrow as little as possible. Finding a loan that works for your future lifestyle. Refinance student loans to a lower interest rate can help you save money.

[9 Options to Refinance Student Loans]

9. “Pay off your mortgage before saving for retirement.”

You may be advised to pay off your mortgage as early as possible because debt is a liability. It may feel great to be completely debt-free, but slowly paying off your mortgage early isn’t always the best move, especially if you are not living in your home for the long run.

“If you can pay off the house you plan to stay in for five years or more after the debt is retired, great,” said Kristin C. Sullivan, a Denver, Co.-based financial planner. “If not, keep that money for yourself and invest more in your 401(k) or other assets that have the possibility for growth.”

Homeowners who purchased their homes after Dec. 15, 2017 can deduct mortgage interest paid on up to $750,000 in mortgage debt from their taxes under the new tax law. For those living in expensive housing markets who will itemize their taxes, that’s all the more reason to invest that money elsewhere.

Instead: Before adding extra monthly mortgage payment, you should pay off other high-interest debt first, such as credit card balance. Prioritize your financial goals, for example, ask yourself whether paying off the mortgage or investing for retirement is more important for you, or if you want to save for your children’s education. If you can enjoy the tax benefits or plan to move in the next five years, that money can be well used in other ways.

10. “Credit cards are bad.”

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Many people shy away from credit cards, being fearful that they will spend money they don't have and later be trapped in debt over their heads. Those people are more likely to rely on debit cards or cash.

But credit cards are not that bad at all if they are used wisely. A cardholder will stay out of trouble if he/she can pay off the balance on time and in full to avoid a high-interest charge.

By steering clear of credit cards, consumers not only miss the opportunity to build credit, but lose rewards, which can come in forms of travel points or cash, that credit card companies give to incentivize cardholders to spend.

Instead: Stick to your budget and spend within your means. Focus on your card balance — not your credit limit. Set auto payment to pay off your credit debt in full, not just the minimum balance, every month. Check our latest review of best credit card offers and how to choose a card that suits your needs.

Shen Lu
Shen Lu |

Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at shenlu@magnifymoney.com

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The Best Credit Union CD Rates – January 2018

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

The top credit union CD rates
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Certificates of deposit (CDs) are a great way to safely store your savings at a financial institution, as they offer a guaranteed rate of return, and CD rates tend to be higher than those on traditional savings accounts. Maybe you’ve even heard that credit union CD rates offer higher returns—but is that really the case?

On average, yes. As of September 2017, the average one-year credit union CD had a 0.63% annual percentage yield (APY), compared to the 0.51% APY average among one-year bank CDs. (You may also want to view our picks for the overall best CD rates.)

Using data from DepositAccounts.com, another LendingTree company, we identified the top one-year credit union CD rates, as of Jan. 5, 2018. We then eliminated any credit union with a health rating lower than a B and identified the top three offerings in three categories: restricted, no cost, and best banking app. If there was a tie by APY, we went with the product with the lower minimum deposit. Here are the best one-year credit union CD rates.

Best CD rates for credit unions with no cost to join

The thing about credit unions is that they’re not usually just open to anyone. You usually need to meet some membership criteria in order to get in and get access to all of their really nice products. These credit unions, however, will let you in for free regardless of your personal details. (Note: Only two credit unions met our criteria for this list.)

Unify Financial Credit Union - 1-Year Share Certificate, 1.00% APY, min. deposit $1,000

UNIFY Financial Credit Union
Unify FCU offers the highest interest rates on CDs (which it calls share certificates) of any credit union with no cost to join. The interest rate on their 12-month CD, for example, is 1.00%, compared to the national average of 0.64% in August. You would earn $8.50 on a $1,000 deposit. If you withdraw your money early, however, you’ll face a penalty of 90 days’ worth of interest.

NASA Federal Credit Union - 1-Year Share Certificate, 0.65% APY, min. deposit $1,000

NASA Federal Credit Union
If the rigid inflexibility of CDs makes you leery, NASA FCU might be your best bet. They have a lot of flexible certificates, such as add-on certificates that let you start with as little as $250, and bump-rate certificates that let you opt for a one-time interest rate increase if rates go up. You can even take out a loan from your certificate should you need the cash before it’s matured. You can join NASA FCU with a complimentary membership to the National Space Society.

If you do need to make an early withdrawal, you will face a penalty of 180 days’ worth of interest.

Best credit union CD rates with restricted memberships or membership fees

Each of these credit unions have restricted membership criteria, but don’t let that scare you away. If you don’t meet their membership criteria, it’s possible to make a small donation to their charity of choice in order to become eligible for membership. Furthermore, these credit union CD rates offer some of the highest-returning share certificates out of any category.

USAlliance Financial – 12 Month CD, 1.87% APY, min. deposit $500

USALLIANCE Financial
Membership to USAlliance Financial is open to anyone who lives, works or worships in certain counties of Massachusetts, the city of West Haven, Conn., and a few districts in New York. However, if you don’t qualify by location, you can qualify by giving USAlliance authorization to make you a member of various organizations, including the American Consumer Council, if you aren’t already a member of these organizations. Keep in mind that these organizations may request fees.

Once you’re a member of USAlliance Financial, you can open a 12-month CD with a minimum of $500. Their early withdrawal penalty equals 180 days’ worth of interest earned on the amount you withdraw.

CapEd Credit Union – 12 Month CD, 1.75% APY, min. deposit $250

CapEd Credit Union-Certificate accounts
CapEd Credit Union supports teachers in the state of Idaho, but they don’t just serve teachers. Those who are willing to support education with a one-time $20 donation to the Idaho CapEd Foundation can become members of the credit union. Also, if you live in the state of Idaho and work for, volunteer with, or are retired from the industry of education, you are qualified for membership.

After becoming a member of CapEd Credit Union, you may open a 12 month CD with a minimum deposit of $250. Just make sure that you can afford to keep your money in the CD for one year because the early withdrawal penalty is 90 days’ worth of interest.

PenFed Credit Union – 1-Year Money Market Certificate, 1.61% APY, min. deposit $1,000

PenFed Credit Union
PenFed tops this list with an APY of 1.61%. With a minimum deposit of $1,000, you could earn $16.10 in one year. Interest is compounded daily and posts to accounts monthly. However, be aware of the steep early withdrawal penalty. If you withdraw funds before the year is up, you may forfeit all interest accrued up to that point.

Eligibility for this credit union is mainly based on military status, governmental employment status, affiliation with certain associations and organizations or relation to eligible members. However, if you don’t qualify through those criteria, getting a membership to this credit union is not difficult if you’re willing to pay a one-time fee of $17 to either Voices for America’s Troops or the National Military Family Association.

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NCUA Insured

Alliant Credit Union – 12-17 Month Share CD, 1.60% APY, min. deposit $1,000

Alliant Credit Union
With a minimum deposit of $1,000, you could earn an APY 1.60% on a 12-17 month CD. If you deposit $25,000 or more, you may be able to earn an APY of 1.65% with the same term. An early withdrawal penalty of 90 days’ worth of interest may be imposed if you withdraw funds prior to the CD’s maturity date.

With a $10 donation to Foster Care to Success, you can easily become a member of Alliant Credit Union. You can also become a member if you are an employee or retiree of certain organizations, related to existing Alliant members, or live or work in qualifying communities.

Air Force Federal Credit Union – 1-Year Certificate, 1.56% APY, min. deposit $1,000

Air Force Federal Credit Union
Members and family members of the military, civilian contractors, and certain employees are eligible to join the Air Force FCU, along with anyone willing to join the Airman Heritage Foundation ($25 annual membership fee).

This credit union comes in first place overall for highest interest rates for 12-month CDs. You can earn $15.60 by depositing a minimum of $1,000 in a 12-month CD, with an APY of 1.56%. You can also use your CD as collateral to earn a lower interest rate on a loan, and membership comes with a host of discounts for parks and businesses in the San Antonio, Texas area. Watch out for the early withdrawal penalties, however, worth half of whatever you would have earned between when you withdrew the funds and when it would have matured.

Best CD rates for credit unions with the best mobile apps

By their very nature, CDs aren’t something that require constant attention, poking, and prodding. It’s a set-it-and-forget-it kind of a deal, so you won’t need any spiffy banking apps to use CDs.

But, if you’d like to switch all of your banking to the same institution that holds your CDs, it might be a wise idea to consider one of these credit unions if you’re a digital junkie. Most credit unions lag behind their bank compatriots in terms of mobile banking apps, but these credit unions offer top-notch mobile apps, according to MagnifyMoney’s 2017 mobile banking app analysis.

Wright-Patt Credit Union - 1-Year Certificate, 2.16% APY, min. deposit $500

Wright-Patt Credit Union
Unlike many credit unions, you can’t just make a simple donation to join Wright-Patt CU if you fail to meet their membership criteria. You need to live in certain areas of Ohio, be associated with Wright-Patterson Air Force Base, or be an employee of their select employer group, among other options.

You can earn $10.80 on a 12-month CD with just a relatively small $500 deposit. Early withdrawal penalties vary depending on the original term of your CD, however they’ll be anywhere between 5-12 months’ worth of dividends.

Redstone Federal Credit Union – 12 Month MemberPlus Regular Share Certificate, 1.61% APY, min. deposit $1,000

Redstone Federal Credit Union
Similar to Wright-Patt CU, you can’t just make a simple donation to join to Redstone Federal Credit Union if you fail to meet their membership criteria. You need to be a government employee or contractor, a member of the military, reserve, or National Guard, or affiliated with a number of organizations listed on their website among other options.

However, if you do qualify for membership, you could earn an APY of 1.61% with a minimum deposit of $1,000. This could earn you an additional $16.10 at the end of the 12 month term. Redstone FCU has compounding and non-compounding certificates, which allow you to have the option to withdraw interest earned or not throughout the term of the certificate.

Eastman Credit Union - 1-Year Investment Certificate, 1.40% APY, min. deposit $1,000

Eastman Credit Union
Eastman Credit Union also has pretty restrictive membership requirements. You’ll have to be an employee (or a family member of an employee) of one of their select employers, or live in certain parts of Tennessee, Texas, or Virginia.

Eastman CU is another one of the rare credit unions that allow you to withdraw your dividends penalty-free before the maturity date, although again, doing so will lower your total returns. Currently, you can earn an interest rate of 1.40% on a 12-month CD. With a minimum deposit of $1,000, that translates into earnings of $14.00 after one year. If you withdraw your money before the CD matures, you’ll owe a penalty fee of anywhere between seven days’ worth of dividend earnings or all of your dividend earnings.

Delta Community Credit Union – 1-Year Certificate, 1.00% APY, min. deposit $1,000

Delta Community Credit Union
There are many ways to join Delta Community CU, such as living in certain parts of Georgia, being a member of one of their select employers, or being a member of one of their partner organizations. Interestingly, citizens of many countries like Argentina, France, and Peru are also eligible to join.

Delta Community CU used to be the lowest-earning credit union on our list, but recently increased the APY on this product from 0.75% to 1.50%. The early withdrawal penalty is 90 days’ worth of interest on a 12-month CD.

3 questions to consider before opening a credit union CD

Banks are more likely to call their products certificates of deposit, while credit unions often refer to them as share certificates. Aside from the name, the biggest difference between the two is that credit unions have higher average annual percentage yields (APYs), as of September 2017. That’s good news: It means more money back in your pocket when the CD matures (i.e., reaches the end of its term and is available for withdrawal).

There really is no difference in safety between depositing money in a CD with a credit union versus a bank, as long as they participate in either the National Credit Union Administration (NCUA) for credit unions, or the Federal Deposit Insurance Corporation (FDIC) for banks.

According to Neal Frankle, a Los Angeles-based Certified Financial Planner with Wealth Pilgrim, deposits of up to $250,000 per financial institution are “backed by the full faith and credit of United States Government, so it's pretty solid.”

For the most part, choosing a CD at a bank or a credit union boils down to your preference as a consumer: Do you want to be a bank customer or a member of a credit union? Here’s a primer on the differences.

The biggest advantage of credit union CDs over bank CDs is that you can likely earn more interest. But with both products, the longer the CD term, the more interest you will earn. And with a CD laddering strategy, you can have the best of both worlds: frequent access to your money, yet you can still keep it locked away in high-interest, long-term CDs.

Beyond that, the disadvantages of opening a credit union CD are the same as if you’re opening a CD with a bank. You can’t access that money without paying an early withdrawal penalty until the CD matures. While CDs do offer some of the highest rates for any financial product you’re likely to come across at a bank or credit union, they still don’t really earn great interest. If you’re investing for the long-term (like retirement savings), your money is better invested in the riskier (but higher-earning) stock or bond market.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

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Best Money Market Rates & Accounts – January 2018

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Updated January 2, 2018

Traditional banks are paying very low interest rates on money market accounts. For example, Bank of America pays between 0.03% and 0.06% APY. Fortunately, you do not need to settle for such ridiculously low rates. You can easily find the best money market rates at internet banks paying 1.30% or more. If you put $50,000 into Bank of America's account at 0.03%, you will only earn $15 of interest over one year. That same money in an account paying 1.30% would earn you $675 of interest. And you can typically open and fund an online money market account in less than 10 minutes.

MagnifyMoney has searched for money market accounts paying the highest interest rates - and this list gets updated monthly. Here are the best rates for January 2018:

1. Top Rate: UFB Direct - 1.41% APY, $5,000 minimum balance to avoid a monthly fee

Money Market Savings from UFB Direct
UFB Direct is a division of BofI Federal Bank, a federally chartered, publicly traded and FDIC-insured bank based in San Diego. In recent months, UFB Direct has become increasingly aggressive with high rates targeting big balances. The APY of 1.41% is the highest that we have found. However, there is one catch. You need to keep at least $5,000 in the account in order to avoid a monthly maintenance fee of $10.00. You will get a Visa debit card and have access to limited check writing. We think this is the best option for people with big balances that they want to keep in a money market account.

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Member FDIC

2. Top Choice: Sallie Mae - 1.45% APY, no minimum balance and checks available

Money Market from Sallie Mae Bank
If you have student loan debt, you probably are not very excited to see Sallie Mae at the top of this list. However, many people are unaware that Sallie Mae also operates an internet-only FDIC-insured bank with some of the best interest rates in the country. You can earn 1.45% APY, compounded daily and paid monthly. There is no minimum balance and no monthly maintenance fees. You will have check-writing capabilities (although the standard money market limit of six per month applies to this account). The easiest (and best) way to fund and access your funds is via electronic transfer from your existing checking account. If you want a simple account with no fees and check access - this is a good bet. Sallie Mae has just recently increased the APY (it was previously 1.32%), making this one the best rates in the country.

3. High Rate: Self-Help Credit Union - up to 1.43% APY, $500 minimum deposit and minimum balance

Money Market from Self-Help Credit Union
Self-Help is a credit union that anyone can join. If you don't live, work or worship in one of their eligible counties, you can join by donating $5 to the Center for Community Self-Help. The contribution is tax deductible and will make you eligible for credit union membership. (You can learn more about how to join the credit union here.) At a credit union, your funds are insured up to $250,000 - but it is by the NCUA instead of the FDIC. The money market offers an APY of 1.33% on balances from $500 to $500,000. Even better - you can earn 1.43% APY on balances above $500,000. However, you need to deposit at least $500 and the balance during the month cannot go below $500 - otherwise you will be charged a monthly maintenance fee. You are allowed 6 free withdrawals or transfers from the account each month (including checks).

4. Good Rate: EverBank - 1.31% APY, $5,000 minimum deposit (1-year intro APY)

Yield Pledge Money Market - First Time Client (1st Yr) from EverBank
EverBank, recently acquired by TIAA-Cref, is a rapidly growing bank that conducts most of its business online (even though it is based in Florida). In 2017, EverBank has become very aggressive on interest rates. Its products have regularly made our list of best CD rates, and - not surprisingly - it also appears on the best money market list. This is a great product, but you should be aware of a few pieces of fine print. The APY is only valid for one year. EverBank does promise that the rate, after the first year, will "never stray from the top 5% of competitive accounts." Just be prepared for a lower rate after 12 months. You need at least $5,000 to open the account. You will only earn the 1.31% APY on balances up to $250,000. There is no monthly account fee.

5. Great Rate: Capital One 360 - 1.40% APY on balances above $10,000 (0.85% on balances below)

360 Money Market from Capital One
Capital One is a famous credit card issuer (we are all familiar with the ad that asks us what is in our wallet). But many people don't realize that Capital One also operates a large online bank that pays highly competitive rates. In 2012, Capital One acquired ING Direct and re-branded it Capital One 360. With its money market account, you can earn a good rate for balance below $10,000 and one of the best rates in the country for balances above $10,000. Deposits are FDIC insured, up to the legal limit.

Member FDIC

6. Great Rate for Small Deposits: All America Bank - 1.50% APY on balances up to $35,000

Mega Money Market from All America Bank

All America Bank is a small community bank based in Oklahoma. The bank was established in 1927 and deposits will be FDIC insured, up to the legal limit. Although most of the bank's lending activity is centered around Oklahoma, it has decided (like many other community banks) to raise deposits nationally, online. The "Mega Money Market" account is very attractive for people with smaller deposits. You can earn 1.50% APY for balances up to $35,000. Balances above $35,000 will earn 0.50%. You will get a free debit card (Visa) and there are no monthly maintenance fees. Like all money market accounts, you are limited to 6 deposits per month. At All America, you would be charged $5 for each additional withdrawal. The APY is subject to change. If you have a big deposit, consider one of the accounts higher on the list. But if you are looking for extra yield on a smaller deposit, this could be a good choice.

7. High Rate: ableBanking - 1.70% APY, $250 minimum, but no check-writing

Money Market Savings from ableBanking
ableBanking is a division of Northeast Bancorp, a community bank headquartered in Maine since 1872. The bank has over $1 billion in assets, and your deposit would be FDIC insured up to the legal limit. At 1.70% APY, this is the highest money market rate that we have been able to find (from a bank) in the country. There is now a minimum deposit of $250, no monthly fee and you do not need to be a resident of Maine (any US resident can open an account). Unfortunately, the account does not come with check-writing privileges and there is no ATM access. You can deposit and access your funds via ACH (electronic transfer), which can take a couple of days. Just remember: there is a limit of 6 withdrawals per calendar month. When we called to ask questions about the account, we could reach a customer service representative very quickly. This is a good new option (just added to the list in June) from a small bank with a great high rate.

3 Questions To Ask Before Opening A Money Market Account

1. Should I open a savings account or a money market account?

Many years ago, money market accounts were higher risk and paid higher returns. The financial crisis of 2008 changed all of that. Money market accounts are now FDIC-insured up to the legal maximum ($250,000 per institution per individual). Interest rates are now very similar - and there is no material difference. In other words - choose whichever account you want.

In general, you tend to get slightly lower interest rates on money market accounts because you have check-writing capabilities. The best savings accounts pay at least 1.15% APY - very similar to the rates on this page. But at Ally, for example, you can get 1.00 APY on a savings account (no check-writing) and 0.85% on the money market account (with check writing).   

We have written a full explanation of the difference between money market and savings accounts here.

2. Am I willing to make a longer term commitment? 

Savings accounts and money market accounts pay much lower interest rates than CDs. Right now you can easily get a 1-year CD paying 1.35% APY (with only a $2,000 minimum). You can find the best CD rates here. If you build a CD ladder, you can take advantage of 5-year rates that are now as high as 2.30%.

Money market accounts are great places to keep money that you might need immediately. But the interest rate on a money market account can change right away, at the bank's discretion. To lock in a higher interest rate, you should consider a CD. If you need to get access to your CD early, would forfeit interest (typically from 3-6 months). In most circumstances, putting more of your money into CDs can really help boost your returns.

3. Is a money market account the same as a money market fund? 

No, money market accounts (offered by FDIC-insured banks) are not the same as money market funds (most likely sold by your broker). In fact, we really don't know why people even buy money market funds in the current environment.

For example, Vanguard offers the Prime Money Market Fund. Like other money market funds, this one "invests in short-term, high-quality securities." Its objective is to keep the fund trading at $1 and generate a decent return. Right now that return is 0.89% - a bit lower than the returns you see from the money market accounts listed in this article. However, money market funds do not have FDIC insurance.

Most people compare the return of a money market fund (sold by their broker) to the interest rate paid by a traditional bank (0.03%, sold by their local bank teller). As a result, they are willing to take the risk of a money market fund. However, as you can see from the best money market accounts in this article, you can get FDIC insurance and beat the return of most funds. Why earn 0.89% with no FDIC-insurance when you can easily earn 1.05% and have FDIC insurance.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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7 Research-Driven Ways to Save More Money in 2018

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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We all know we should save money for retirement and unexpected mishaps like that broken heater in middle of winter. But, like many tasks in our lives, saving for the future is easier said than done.  

Despite historically low unemployment rates and increasing household income, Americans still aren’t the greatest savers. The average American saved just a little over 3 percent of their disposable personal income in October, according to the U.S. Bureau of Economic Analysis. That’s compared with savings rates of 19.3 percent in Japan and 5.5 percent in the United Kingdom, according to Trading Economics, a global economic data provider. 

Of course, many workers struggle to save simply because their day-to-day expenses eclipse their earnings. But sometimes, a lack of savings could be more of a psychological phenomenon than a monetary one. Research regularly shows that saving money demands a great deal of forethought, self-control and willpower — capabilities that are in direct conflict with our innate desires for pleasure and satisfaction in the here and now. 

Nobel Prize laureate and renowned behavioral economist Richard Thaler said in an interview with The Wall Street Journal that saving for retirement is “cognitively hard” and that it’s   “obviously preposterous” to assume that everybody will figure out how much they have to save and actually carry out the plan. 

The key to saving more is understanding your weaknesses and using tools and strategies that can help you do the right thing without having to think too hard about it.  

We’ve done the hard part for you and found research-backed methods that may help you save more. Follow the tips below to start saving more — and saving smarter — in  2018. 

1. Think present. Act now.  

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The first step to solving your debt problem may be to understand your personality — more specifically, how you think and feel about time. That’s because time orientation, or the way we think about time in relation to our goals, plays a major role in people’s ability to save. 

In a 2014 paper published in “Psychological Science,” scholars Leona Tam and Utpal Dholakia concluded that individuals who think about savings cyclically — seeing life events as a series of repeating experiments — are estimated to save 74 percent more than those who think linearly. People with linear time -orientation view life in past, present and future terms.  

Tam and Dholakia found that those with a cyclical mentality will likely save over time because they tend to believe that their future situation will be similar to what it is now.  Rather than being overly optimistic about their savings potential in the future, which might cause them to put off saving money until later in life, these people will go ahead and start saving now. And by focusing on saving in the present, they are more likely to make it a routine. 

On the other hand, those who think about life in past and future terms may be more likely to put off savings longer because they feel they’ll be better prepared to save later in life.  

“The belief is that if you perform an action in the current cycle now, you will be more likely to perform this particular action in the next cycle,” Tam and Dholakia wrote. “But if you do not perform now, you will be less likely to perform it in the next cycle.” 

The importance of time perspective is also underlined in a 2014 study performed by renowned psychologist Philip Zimbardo in partnership with MagnifyMoney. The study looked at how people’s perception of time impacted their financial health.   

After surveying 3,049 participants in six countries, Zimbardo, co-author of “The Time Paradox,” found that individuals who make decisions based on negative past memories tend to be in good financial health. They are more conservative and likely to save for their future to avoid a repeat of previous negative experiences.  

In contrast, those future-oriented optimists are more likely to make bad financial choices and be less financially healthy.  

But out of the three time orientations — past, present, or future — the group that was in the worst financial shape was the present-minded one. These people are more likely to focus on the here and now, leading them to make impulsive decisions without considering their future. 

2. Automate your savings 

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Yes, it’s just that simple. Behavioral economists have concluded that in order to save more money, you have to make saving as easy as possible and spending as difficult as possible.  

“If people have to actively think about saving, then they probably won’t do it,” Shlomo Benartzi, a behavioral economist at the University of California, Los Angeles, wrote in the “Harvard Business Review” earlier this year. Automated deposits are the most effective way to save for retirement, he argued. 

U.S. companies are increasingly changing their 401(k) enrollment policies from requiring employees to “opt-in” to participate into new ones where workers are automatically enrolled upon employment and are required to “opt-out” if they would like to avoid enrollment. Because that dropout action requires extra time and effort, fewer people would withdraw from their 401(k) plans. 

A 2005 study by William G. Gale, J. Mark Iwry, and Peter Orszag found that workers are more likely to save for retirement if they are automatically enrolled in a company 401(k) plan than if they were given the choice to opt in. 

Besides participating in your company’s retirement plan, you can also auto-save a portion of your salary to your savings account. Many employers set up automatic deposits from your paycheck into multiple checking or savings accounts. You can have a portion of your paycheck automatically transferred into a savings account so that you will be less inclined to touch that money. This might make it easier for you to resist the temptation to spend. 

3. Automate periodic savings increases 

This is auto-saving 2.0.  

Thaler and Benartzi carried out their well-known “Save More Tomorrow” study from the late 1990s to early 2000s, following more than 21,000 workers at three different companies.  

In one portion of the three-part study, the researchers followed 315 workers at an unnamed manufacturing company. About 160 workers elected to increase their 401(k) contributions each year for four years and 32 of them opted out over the years.  

In the end, they found the majority of the people who agreed to the annual contribution increases nearly quadrupled their saving rates. 

The success of the program shows the power of inertia — the tendency for objects or people to continue moving in a certain direction unless they take action to change it. Once their savings strategy was set —  increasing annually with their raises — very few people ever got around to changing their savings allocations again once they enrolled.  

You can mimic these results on your own as well. If you are comfortable enough to start saving more, try adding 1 percent more to your retirement fund every six months. Some retirement plans even offer automatic step-up contributions, where your contributions are automatically increased by 1 or 2 percent each year.  

Larry Heller, a New York-based certified financial planner and president of Heller Wealth Management, suggested that you increase your contribution amount for the next three pay periods and repeat until you hit your maximum.   

“You will be surprised that many people can adjust with a little extra taken out of their paycheck,” Heller told MagnifyMoney.    

4. Set an actionable plan with negative consequences  

One of the big reasons why people fail to save more is a lack of motivation. Dean Karlan, an economics professor at Yale University, created the “commitment contract” theory,   arguing that establishing the economic penalty for failure of saving helps people hit their savings goal. 

Here is how the commitment contract works: It allows people to set a positive goal, for instance, to save more money or to set a New Year’s resolution. If they fail to accomplish the goal, they may be subjected to some form of penalty per the terms of their contract. 

The idea is that your motivation to save money is enhanced by a contract where negative consequences are imposed if conditions are not met. 

For example, a die-hard animal rights activist might develop a commitment contract to save $2,000 in five months for an international trip, with the stipulation that if this person violates the contract, he or she must buy a $70 ticket to a SeaWorld theme park. 

There doesn’t appear to be a savings app that will implement economic punishments if you didn’t hit your savings goal. But you can: join a like-minded accountability group on social media, or ask a friend or family member to be your accountability partner. They could play the “bad cop” for you while you are saving toward a goal. The hope is that you will feel the pressure to carry out your plan under supervision, in addition to the contract you have committed to. And if you miss the target, this partner would ruthlessly urge you to pay your penalty. 

5. Focus on smaller goals first

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Now you know you need to establish a savings goal, but it might be daunting to even think about achieving that goal.  

Experts found that breaking down the goal into manageable pieces spurs confidence, even though the ultimate amount of money that would be saved is exactly the same.  

Benartzi and his colleagues at UCLA asked a group of participants if they would like to save $5 every day, and another group if they wanted to save $35 a week, and the third group whether they thought they could save $150 a month. The results were astonishing: Nearly 30 percent of the participants said they could save $5 a day, while just 7 percent elected to save $150 a month.  

Bloggers have popularized the $5 savings challenge as well, where people were encouraged to save every $5 bill they come across in their wallet instead of spending it. One woman claimed she saved $40,000 over 13 years just by socking away her $5 bills.  

Let’s say you want to make it easier to save for an iPhone X (about $1,000) in seven months. Instead of telling yourself you’ll save $150 per month, break it down even further by committing to save $5 per day. You might achieve that by cutting back on your daily dining-out budget. Just take it one baby step at a time. 

And you don’t have to literally take the money out of your wallet. You could use an app that helps you save in small amounts over time as well.  

Digit connects to your checking account and tries to find spare money in your account to transfer to your Digit savings account. You can command the app via text messaging to save more, deposit money into savings, or transfer money back to your checking account. Note: the app is free to use for the first 100 days. After that, it charges $2.99 per month. 

There is also Acorns, a microsavings app that automatically invests a small amount of money daily, weekly or monthly for you. One of Acorn’s interesting features is it rounds up your purchases to the nearest full dollar amount and makes the change available for you to invest. Let’s say you used a credit card to buy a cup of coffee for $2.75. You can choose to invest the 25 cents on the app, or Acorn will invest the change for you if you elected automatic roundups investment. It’s free to open an Acorns account. The app charges $1 per month if your balance is under $5,000, or 0.25 percent per year if your balance is $5,000 or more. 

We’ve reviewed microsavings apps, including Acorns. Read more about their features here. 

6. Save that big windfall 

Scholars Peter Tufano and Daniel Schneider wrote in a 2008 paper that it’s relatively easier for people to save lump-sum distributions because they perceive those funds differently from their regular income. An annual tax refund, inheritance, performance bonus, or graduation or wedding gifts are seen more like an unexpected surplus of money. 

When you get that big year-end bonus or your tax check in the 2018 tax season, you may want to save the large portion of the refund while putting a smaller amount in your checkings account. You will feel good saving for durable items, such as household appliances, a car, or a down payment but leaving a little room for the occasional self-indulgence. 

7. Track your spending

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You thought you knew how much you spent in Starbucks each month, but you might be surprised by the actual dollar amount going into coffee once you start tracking your expenses. 

Benartzi and fellow researcher Yaron Levi reported that those who used a mobile app that tracked spending and investment performance cut back on their spending by 15.7 percent. 

Their findings align with results from a 2016 Federal Reserve study: About 62 percent of consumers with access to mobile banking checked their account balance on their phone before making a big purchase, and half of them decided not to buy that item because they were informed of their real-time account balance and credit limit. 

It’s time to download a budgeting app that aggregates all your financial accounts — debit and credit cards, retirement accounts, brokerage accounts, and so on. Once you get an accurate sense of your finances, you may think twice before buying that $1,000 Canada Goose parka. 

We’ve ranked popular budgeting apps. Check out the reviews here. 

Shen Lu
Shen Lu |

Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at shenlu@magnifymoney.com

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Car Prices Hit an All-Time High — Here’s How to Save When Buying New

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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The first Model-T cost as little as $825 in 1908, which is about $18,000 adjusted for inflation. Today, the average car buyer can expect to leave a dealership with a new car for around $35,428. That was the average transaction price for a new vehicle in October — an all-time high — according to auto comparison website Edmunds.com.

The average new-vehicle transaction rose 2 percent from October 2016 and 12 percent over the past five years. The average down payment on a new car also hit a new record: $3,966, which is up $374 from last year and $454 from five years ago.

Why are prices up?

The increase is due in part to a rise in the number of features that come standard with a new car these days, like automatic emergency braking and backup cameras, says Ronald Montoya, senior consumer advice editor for Edmunds. In addition, consumers are moving away from lower-cost, smaller sedans, climbing into higher-priced, larger SUVs and trucks.

Montoya says the general decline in overall gas prices since 2008 is partly responsible for the shift in consumer preferences. Plus, many shoppers favor a higher driving position and having more storage space.

Before we get to how you can find savings on a new car despite the higher price tags, let’s talk about a savings strategy that can backfire.

Looking beyond your monthly payment

Many are opting for longer auto loans to cope with rising car prices, says Matt DeLorenzo, managing editor for kbb.com, the website for vehicle research publisher Kelley Blue Book. Recently, the Consumer Financial Protection Bureau (CFPB) found that 42 percent of auto loans made in the last year were for six-year terms or longer, up from 26 percent in 2009.

Taking out a longer auto loan to pay a lower monthly price isn't an ideal hack, DeLorenzo tells MagnifyMoney. While a longer term keeps your monthly payments lower, you end up paying more in interest over the life of the loan than you would with a shorter-term product. That makes your new car even pricier, so avoid taking out a longer loan to squeeze an expensive vehicle into your budget..

The CFPB found that six-year auto loans cost more in interest over time, are used by consumers with lower credit scores to finance larger amounts, and have higher rates of default. Here's a good rule of thumb to keep in mind when you're reviewing financing options: If you are unable to afford financing an auto purchase over four years, perhaps it's out of your price range.

DeLorenzo says going with a longer loan is one of two actions people are taking in response to higher prices. The other: leasing.

It is true that leasing a vehicle saves you money on monthly payments in the short run, but there's more to this financial story. Indeed, if you drive a lot of miles, leasing may be a bad idea. You may be hit with extra mileage and wear-and-tear charges at the end of your lease.

How to save on a new car

So prices are at record highs. The experts we talked to say there are still ways you can save when buying a new vehicle in this market.

Try a compact vehicle

If you’re shopping for a car in 2017, you’re likely looking at a crossover, midsize vehicle or truck. Those larger vehicles are in demand right now, and, according to Edmunds, the shift to the larger vehicles has driven interest rates and prices up. However, automakers are struggling to move less-popular 2017 models like compact sedans off dealership lots.

DeLorenzo, the KBB editor, recommends purchasing a less-in-demand sedan or crossover vehicle to find savings.

Many new compact cars may be sold for up to $10,000 less than a larger SUV or truck by the same manufacturer, he says. By choosing a sedan or other compact vehicle, you trade size for better fuel economy and a more affordable car.

And because dealers are having a hard time selling these models, you might see better discounts, more incentives and improved lease deals on more traditional sedans and family cars, according to DeLorenzo.

Pair a lower down payment with GAP insurance

Common savings advice for car shoppers includes making a down payment of at least 20 percent of the vehicle’s transaction price. This tactic is intended to save you money right away, as a new car loses about 20 percent of its value in its first year of ownership, according to Montoya.

People are putting down closer to 12 percent of the vehicle’s value at signing because it’s tough to save up 20 percent since vehicle prices have gotten more expensive, Montoya tells MagnifyMoney. He says most people tend to go with making a down payment that results in a monthly payment they are comfortable with.

But, since a new vehicle loses about a fifth of its value in its first year of ownership, “if you put down payment of 12 percent, you are already in the red,” Montoya adds. He says you may want to look at GAP insurance if you put down less than 20 percent.

Services like GAP — Guaranteed Auto Protection — insurance and new car replacement insurance will cover the difference between what the vehicle is worth and what is owed on the loan in the event of total loss or accident.

Ask your insurance company if it offers new car replacement insurance or GAP insurance. If your insurance doesn't offer new car replacement or the monthly cost of the insurance is outside of your budget, Montoya says to consider getting GAP insurance from the dealership.

Adding GAP insurance may tack on another monthly transportation cost, but it can save you from possibly owing thousands on an upside down auto loan in the event you have an accident and lose your vehicle.

On the downside, GAP insurance coverage may vary from insurer to insurer, so be sure to ask what the insurance can apply to. Some policies, for example, may cover collisions but not flooding or theft.

Look out for incentives

A little research can go a long way when you’re car shopping. Keep an eye out for extra savings in the form of incentives from both the dealer and the manufacturer.

Both Montoya and DeLorenzo recommend checking the manufacturer's website or comparison websites like KelleyBlueBook.com or Edmunds.com for savings before you set foot on a dealer’s lot.

There may be special incentives you qualify for based on your status as a veteran, student or ride-share driver. You may also find a loyalty incentive, reserved for those who already own a car by the same manufacturer, or a conquest incentive, offered to customers willing to trade in a competing brand.

Be sure to enter your ZIP code to find incentives most relevant to you at local dealerships, and to search based on the exact model you're looking for.

Even if you think you’ve found all you could dig up, you may discover additional savings if you ask the salesperson about any deals or promotional offers the dealer may be running when you come in. Wait until you’re at the negotiating table to bring the deal up, advises DeLorenzo.

“Keep that in your back pocket,” he says. “If they don't offer them to you. then bring them up.”

Get preapproved for financing

You don’t have to leave the financing to the dealer, and you shouldn’t if you want to ensure you're getting a good deal. Get preapproved for financing before you show up at a dealership. That way, if the dealership offers you financing at a higher interest rate, you can counter the offer or, at the very least, have a benchmark for offer comparisons. Naturally, you should aim to finance your new vehicle at the lowest interest rate possible.

Compare prices

The first step to saving money on anything is shopping around. Compare prices of the vehicle you want across multiple dealers.

“A lot of people tend to go to the dealership that's closest to them and they don't shop around,” says Montoya. He recommends going to at least three different dealerships. “You'll see three different offers and you'll get a better idea as far as price,” he says.

Websites like Kelley Blue Book, TrueCar and Edmunds make it fast and simple to compare prices of new and used vehicles online. Use the sites to compare sticker prices before you head out to the dealership. Beyond the physical vehicle, take the time to compare what you can expect to pay for must-haves like auto insurance and vehicle maintenance, as they can fluctuate depending on the vehicle you choose.

Time your purchase just right

Simply walking onto the a dealer's lot at the right time of the year can save you a chunk of cash. Montoya says the holiday season is a good time to shop for a new vehicle; dealers are looking to clear out their inventory of the outgoing year’s models to make room for new vehicles.

“Look at vehicles on the outgoing year,” says Montoya. “They will have more discounts and there is more incentive for dealers to sell those models.”

You also want to pay attention to when the vehicle came out. The longer a car is out, the more likely it is to have more discounts than newer models, adds Montoya. He recommends going back a model year to save money if you don’t mind getting a used car instead of a new one.

Brittney Laryea
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Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Back to Our Pre-Recession Ways, Americans Are Spending More and Saving Less

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Americans appear to be back to their pre-recession savings habits. The personal savings rate in the U.S. dropped to 3.1 percent in September 2017, according to the Commerce Department — the lowest level since the Great Recession took hold.

Meanwhile, Americans are spending more (household debt is at a 10-year high) and consumer confidence has risen to its highest level in almost 17 years, according to data released Tuesday through The Conference Board, a global, independent business membership and research association.

3 reasons we’re saving less:

Household debt is on the rise again. Total household debt increased to $12.84 trillion in the second quarter of 2017, up $114 billion, or 0.9 percent, from the same quarter last year, the Federal Reserve Bank of New York reported in August. This was a new high since the third quarter of 2008, the peak of the mortgage crisis. People may feel they can get access to funds by borrowing when it is needed, rather than holding money in savings, said Andrew Opdyke, economist at the First Trust Advisors.

But incomes are up and we’re spending more. While personal income rose 0.4 percent in September, consumer spending surged 1 percent, the fastest pace since 2009, Commerce reported.

Hurricanes don’t come cheap. The Commerce Department Bureau of Economic Analysis (BEA) said August and September estimates of personal income and spending reflected the effects of Hurricanes Harvey and Irma. Millions were displaced by the hurricanes, and experts say the spending jump was driven by a hurricane-induced uptick in auto sales and increases in gas and household utility prices.

Year

Personal Savings Rate

Total Household Debt

Consumer Confidence

2007

3.0%

$11.85 trillion

99.6

2008

4.9%

$12.60 trillion

97.3

2009

6.1%

$12.41 trillion

98.1

2010

5.6%

$11.94 trillion

97.9

2011

6.0%

$11.73 trillion

96.8

2012

7.6%

$11.38 trillion

99.0

2013

5.0%

$11.15 trillion

99.0

2014

5.7%

$11.63 trillion

99.8

2015

6.1%

$11.85 trillion

100.4

2016

4.9%

$12.29 trillion

100.4

2017

3.7%*

$12.84 trillion

101.1

Sources:

U.S. Bureau of Economic Analysis


*as of Q3

Federal Reserve Bank of New York

Organisation for Economic
Co-operation and Development

It’s not exactly news that Americans aren’t the greatest savers. The Federal Reserve reported that in 2016, 44 percent of Americans could not come up with $400 in cash to cover emergencies.

But should we worried that we’re saving less and spending more than we have in a decade?

Economists say that as the economy is humming along, consumers are feeling more confident that they can spend and borrow more without putting themselves in financial distress. It’s no coincidence that Americans saved the most in the same year (2012) that consumer confidence was comparatively low.

Brian Wesbury, chief economist at First Trust Advisors, writes that rising debt levels aren’t so alarming when you factor in overall income growth. Household incomes grew by 3.2 percent between 2015 and 2016, according to the Census Bureau.

“Yes, consumer debts are at a record high in raw dollar terms, but so are consumer assets,” wrote Brian Wesbury, chief economist at First Trust Advisors. “Comparing the two, debts are the lowest relative to assets since 2000 (and that's back during the internet bubble when asset values were artificially high.”

How to calculate your personal savings rate

Take your total monthly income from all sources (salary, retirement account, etc.), less taxes and money spent on everyday expenses, including debt payments.

Next, divide your monthly savings amount by your total income. Then multiply by 100 to get your personal saving rate.

There’s no magic savings rate to aim for. A good rule of thumb is to save 10 percent of each paycheck for retirement, and establish an emergency fund covering at least three to six months’ worth of basic living expenses.

Evidence suggests that many Americans are just getting by, shouldering record levels of student loan debt while grappling with rising fixed costs. The Consumer Financial Protection Bureau in September reported that 43 percent of American adults struggled to make ends meet in 2016.

But savings is key to achieving financial security. The CFPB study found that adults with savings and financial cushions had a higher level of financial well-being than those who didn’t have a safety net to fall back on.

7 strategies to boost your savings:

  1. Automate. Many employers can set up automatic deposits of your income into multiple checking or savings accounts. You can have a portion of your paycheck automatically transferred into a savings account so that you will be less inclined to touch that money. It makes easier for you to resist the temptations to spend.
  2. Make retirement a priority. If you are not able to set aside 10 percent of your income, you should try to contribute enough to capture the full company match for your 401(k), if your employer offers one.
  3. Track your spending. You will be surprised by the amount of money you spend on groceries or Starbucks once you actually track the money coming in and out. The more you know about your finances, the better off you’ll be. A simple app to track spending patterns is a good place to start engaging in day-to-day money management and establish a habit of saving and budgeting.
  4. Get rid of high-interest debts. Debts are anti-assets. It makes more sense to pay off high-interest debt, such as credit card debt, than to save. Here are four tips to help you pay down debts.
  5. Avoid lifestyle inflation. Lifestyle inflation means people spend more as their incomes increase. It is one of the ultimate budget-killers.
  6. Don’t keep up with the Joneses. Forget them. The key to being satisfied with the state of your finances and your life is focusing on your needs and goals rather than comparing with your friends and co-workers
  7. Find ways to help break your negative spending habits. Here is a simple $20 rule that can help break your credit card addiction. We’ve also written about other strategies to break bad money habits here.
Shen Lu
Shen Lu |

Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at shenlu@magnifymoney.com

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Strategies to Save

How My Emergency Fund Saved My Finances

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In 2012, Heather Vernillo, then 33, learned she had kidney cancer. The Tampa-area nurse had emergency surgery days later. While her health insurance covered 100 percent of her care, the experience left her unable to work for 15 weeks. This translated to more than four months of missed income, plus a $1,100 monthly bill for COBRA, which kept her health coverage intact during her involuntary hiatus.

Vernillo's emergency fund turned out to be her saving grace through an ordeal that cost her roughly $7,000.

"The situation pretty much wiped out my savings, but it was worth every penny," she told MagnifyMoney.

Vernillo's experience underscores the vital importance of keeping a cash reserve on hand. Still, two-thirds of Americans would struggle to cover a $1,000 emergency, according to a 2016 poll conducted by The Associated Press-NORC Center for Public Affairs Research.

Vernillo is no millionaire. As a nurse, her annual income fluctuated between $95,000 and $50,000 before her diagnosis. (She took a pay cut when she moved from New Jersey to Florida in 2012.) Nonetheless, she says her approach to building her rainy day fund was simple: She set up automatic monthly withdrawals from her checking account to her emergency fund, treating it like any other line item on her budget. It took about two years to build up a fund sufficient enough to cover the expenses she incurred during her medical crisis.

Now, she is focused on rebuilding her fund. This wasn't always financially easy, she admits, but after her health scare, it was a top priority.

“I've been able to partially replenish [my savings] and currently have about two months' worth of expenses tucked away, just in case," she says.

Choosing your best worst option

When people don’t have cash on hand for emergencies, they’re more likely to turn to alternative borrowing methods that could wind up costing them much more down the road. (Hello, payday loans.) Sometimes, it can feel like a painful choice from an array of bad options.

If you’ve exhausted all your best options for cash — you’ve emptied your bank account and asked friends and family for loans — then it’s time to look at your next best alternative. And at this point, it’s about choosing the option that will cost you less in the long run.

If you’re overwhelmed with medical bills, for example, ask the doctor or hospital to put you on a payment plan. Or consider a personal loan or a low-interest credit card — whichever option carries the lowest APR. Check out our ranking of the 10 best options for cash when you need it fast.

"If you don't have any other options, then using a credit card or personal loan to pay for an emergency is better than defaulting on a bill, which can negatively impact your credit score,” Natalie Colley, a financial analyst with Francis Financial, tells MagnifyMoney.  "You'll pay more in the long run with interest, and ultimately you're setting yourself up for financial instability and getting caught in a debt cycle."

The key is to use these methods as a last resort and create a plan to pay down the debt as soon as possible.

Thanks to consistent monthly contributions, Marvin Fontanilla, a 35-year-old marketing professional in San Jose, had $8,000 tucked away in his emergency fund. It was enough to cover three months' worth of expenses, and it came in handy back in August, when the battery on his hybrid car called it quits. A replacement cost $2,200, and an additional $622 for a rental car to use during the repair.

"It didn’t make a huge dent in our savings because my fiancee and I live way below our means," Fontanilla says. "We've actually already replenished it by taking money we normally use to make aggressive student loan payments and redirecting it back into our savings account."

While we certainly can't anticipate every financial emergency that lies ahead, he adds that the death of his car battery didn't come completely out of the blue; he knew when he bought a hybrid that the battery would likely have to be replaced once he hit 200,000 miles, so the expense was already in the back of his mind.

How much should you save?

Just as there's no way Vernillo could have predicted her cancer, it's impossible for any of us to really know what financial twists and turns are in our future.

"We can plan until we're blue in the face for what lies ahead financially, but no matter how great our planning is, emergencies happen," says Colley.

She tells her clients to live by a basic rule of thumb for savings: Save for at least three to six months' worth of expenses.

"That's a large number, and it's going to take years to get there, but the important thing is to establish the habit of putting money aside every month and having it automatically transferred from your checking account to your savings account,” she says.

How much you contribute each month depends on a number of factors, not the least of which are income and expenses. After accounting for fixed bills and variable expenses like food and entertainment, what's left should be divvied up between your financial goals. If your emergency fund is at zero, Colley suggests starting small and focusing solely on the first $1,000; a safe cushion in case of a minor setback.

Once you hit that milestone, you can begin redirecting some money toward other financial goals (like paying off  high-interest debt, dialing up your retirement contributions or saving for a down payment on a home) while continuing to build your emergency fund. Everyone's goals are different, but the main takeaway here is that it isn't an either/or situation. Rather, it's all about saving for multiple goals at once.

Where to stash your savings

Where you keep your emergency fund matters. Colley likes the idea of keeping it at a bank that's separate from a regular checking account. (Out of sight, out of mind.) She recommends going with an online, high-yield account, like Capital One 360, Ally or Synchrony. While a traditional savings account at your local bank will likely only pay 0.01 percent, these online accounts dole out 1.20 percent with no minimum balance requirement.

Another plus is that it typically takes three days to transfer money into your checking account, which reduces the likelihood of impulsive withdrawals. The idea is to build an emergency fund that's liquid, but not so liquid that you'll be tempted to dip into it when the mood strikes.

For smaller pop-up expenses that leave you needing cash on the spot — a flat tire or overdraft protection, for example — Colley says it's not a bad idea to keep a few hundred dollars in a traditional savings account that can be tapped immediately.

"Having a fully funded emergency savings doesn't happen overnight, and it also shouldn't be your one and only focus," Colley says. "If you do that, all your other goals will come to a grinding halt while you build your savings account."

Marianne Hayes
Marianne Hayes |

Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here

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7 Ways to Save Money That Could End Up Backfiring

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Saving money is a noble goal. It can even become addictive, like a game. But if you’re not careful, your savings strategies might lead you to spend more money in the long run.

These seven stories will help remind you to always keep your long-term savings goal in mind. That way you aren’t blindsided by short-term “savings.”

Couponing

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Who hasn’t been enamored with the “Extreme Couponing” TV show, where people get carloads of groceries for free? They make coupons seem like the equivalent of cash dollars — but the only way you can use those dollars is to spend money first. This sets up a snag where overzealous consumers can easily be tricked into spending more money than they otherwise would have in the quest of using the Holy Coupon and their “savings.”

Kendal Perez, a savings expert with Coupon Sherpa, has some tips: “Coupons, Groupons, and vouchers of any kind that save you money on products, services, or experiences you wouldn't otherwise be interested in are ones you should stay away from. Instead of clipping ‘interesting’ coupons from the Sunday circular or browsing Groupon when you're bored, look for coupons on items you already intend to buy.”

Trying to save too much money

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Joseph Hogue, a chartered financial analyst and personal finance blogger, was in a familiar trap in his first professional job: He hated it and wanted to leave. So he tried saving up all of his cash so he could retire early.

“I fell into the financial equivalent of yo-yo dieting,” he says. He would take on as much work as possible before becoming burned out and blowing all of his hard-earned money in a spending spree.

He learned the hard way that it’s not enough just to make and save a ton of money. You also need to pace yourself, set realistic goals, and reward yourself along the way. Hogue’s advice? “Find something outside of work you enjoy doing to make all the effort and saving worthwhile.”

Growing your own vegetables

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Growing your own vegetables doesn’t seem like it would cost much money. Just throw some seeds in the ground and add water, right? Wrong.

Once you factor in everything you need to grow a garden — tools, soil amendments, fences, plants, hoses, etc. — costs can quickly spiral out of control. Still, you have to be careful about cutting corners. Joshua Crum, a personal finance blogger, found this out firsthand when he forgot to include wild-animal-proof fencing in his calculations. “I spent around $100 and tons of work on a garden. Wild animals came and ate everything I planted.”

If gardening is your thing, see if you can reduce your expenses by buying used equipment instead of new. Also consider planting cost-effective vegetables for the maximum return for your buck.

Not reading the fine print on a purchase

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There are a ton of ways to save money if you keep your eyes open. Receipt-scanning apps, rebates, sales, coupons, store loyalty cards — it’s a long list. The catch is that you have to carefully read the fine print so you can meet the requirements. Before you make a purchase with the intent of getting a rebate or some other discount, make sure you understand the terms and will actually benefit from the deal.

Mindy Jensen, community manager at BiggerPockets, recently found this out. She bought a ream of paper, expecting to use a rebate to have another free ream of paper shipped to her house. “I didn't read the fine print, and the return was in the form of a store credit. I almost never shop there, so it was kind of a waste.”

In another incident she bought a bottle of alcohol specifically for a $5 rebate. “I have gotten in the habit of saying ‘No, thank you’ to receipts at the store, to save paper and the environment.” When she got home, she was stunned: “Guess what you need in order to get the rebate? A receipt. Of course, I felt like an idiot for not getting the receipt; having a proof that you purchased the product is a basic tenet to getting a rebate.”

Skimping on insurance

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No one likes paying their monthly insurance premium — until it comes time to make a claim.

According to Neil Richardson from the auto insurance comparison site The Zebra, getting just the minimum liability protection for your state “is simply too little financial protection to cover a number of common car insurance claims scenarios. People end up with huge bills because they wanted to save a few dollars off their premium.”

MagnifyMoney recommends checking what insurance options are available with your insurance broker. Ask yourself: Would you be able to fully cover the cost of any unfortunate events outside of the minimum coverage? If not, you might need to reconsider your insurance coverage.

Skipping doctor visits

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Going to the doctor is about as fun as stubbing your toe, not to mention being expensive. It’s pretty tempting to save some money by diagnosing yourself over the internet. Sometimes this works out, but it can have costly consequences if it doesn’t.

Abigail Perry, a personal finance blogger, once felt a urinary tract infection coming on but decided to treat it herself. It quickly turned into lower back pain, which was her signal that it was becoming more serious. She eventually ended up spending $75 to go to the emergency room, when a visit to her regular doctor would have had a $0 copay.

Perry’s advice is to “just go to the doctor. And if you can't get an appointment there, find an urgent care clinic [rather than going to the emergency room, if possible]. Just be sure to bring a good book and a charge cord.”

Buying in bulk

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Smart shoppers know that the best way to save money is by looking at the per-unit price of each food item. This often means buying food in bulk. Even smarter shoppers know to take into account an item’s shelf life, so they can plan to use it before it goes bad.

But there’s more to it than that, like making sure you actually need what you’re buying. For example, Lisa Torres, a retired high school teacher, buys several boxes of Popsicles at a time when they go on sale during the hot New Hampshire summers. Buying Popsicles in bulk seems like a logical choice, because she’s going through a lot of them and they’ll keep for months. But Torres also likes buying fresh fruit in the summer, when some of her favorites are in season. When her family has both options as a snack, they tend to choose the Popsicles.

“The healthy fruit in the fridge goes bad because we are eating Popsicles instead of fruit," she says. "And next week I have to buy more Popsicles.” Torres says she’s still working on making better buying decisions so she doesn’t waste food or money.

When buying in bulk, it’s always best to stop and think about whether you’ll be able to use all of the product, as well as if you have any alternatives at home. By keeping tabs on what you have at home and taking a minute to think before every purchase, you can successfully navigate these common savings pitfalls.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

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What Your Teen Should Do With Their Summer Earnings

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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According to a 2017 survey released by the National Financial Educators Council, 54% of respondents (all 18 years and older) said a course in money management in high school would benefit their lives. Another survey — the most recent from the Program for International Student Assessment — reports that only about 10% of U.S. 15-year-olds are proficient in personal finance matters, falling in the middle among the 15 countries studied. The message is clear: Young Americans need to learn more about money and managing it wisely. One way to start them off is giving them hands-on experience with their own money. Enter the summer job.

Having a summer job can be a good introduction to adulthood for many reasons: The discipline, submission to management, team work, and a regular paycheck are just a few of the things a teenager will get used to with their first summer job.

It’s also a good way to introduce kids to the real world of money. Though the money your teen earns is technically theirs, as a parent, you should use summer job earnings as an opportunity to help your kids form good habits with money. There's no better time to show them the value of money than in the crucial years before they’ll be saddled with obligations like student loans, car notes, and mortgages.

Here are a few ways to make sure your teen will get the most out of their money-making experience that will keep them money savvy for years to come.

Pay their fair share

Once your teen begins making money, you'll to want consider how they can begin to cover certain expenses. You'll be tempted, no doubt, to let your teen keep their hard-earned money for themselves. Trust this process. If the goal is to raise money-smart kids who become even savvier adults, there will have to be simulations of the real world that include actually paying for things

If your teen uses the car, consider having them cover a portion or all of their car insurance bill. Another option is to have them contribute to their cellphone bill or even some of the Wi-Fi they use.

Having expenses is a real part of life, so it’s better to help them understand that now rather than later when ignorance isn’t so blissful.

If the thought of making your child pay for expenses bothers you, consider a different approach: Teach them about the costs of everyday life by asking them to cover their portion of a bill, but take that money and put it away for them. You can save up all that money and, as a nice gesture, give it to them when they need it most, like when they go away to college or finally leave the nest to launch out into the real world.

Open bank accounts

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While many families do not have access to or elect not to participate in the traditional banking system — it's estimated that 27% of U.S. households are unbanked or underbanked — you'd ideally want to get your teen familiar with banks and how they work. Though check use has been on the decline since the mid-1990s, it's still important for teens to learn how to write a check, along with keeping a checkbook register. Sure, this practice probably won't last long, as electronic payments and money management apps continue to grow, but this approach gives your kids the gist of how to keep track of their cash flow.

While your teen has a bank account, you'll also get them used to understanding how a debit card works. They'll get familiar with how easy it is to swipe for things they want, yet how difficult it can be to replenish their account with the money they're making at their job.

Finally, you'll want to make sure that your teen opens a savings account. In most states, a person can open a bank account when they become 18. For younger teens, many banks have special teen or kid accounts that a child can share with their parents. Co-owned checking accounts can be opened as young as 13, while custodial savings accounts can be opened at any age.

Developing good habits around saving and managing money takes time and some getting used to. So using their summer earnings would be a perfect opportunity to get into the groove of budgeting for expenses and managing money through a bank account.

Set money goals

Once money starts to flow into your kid’s hands, seize the moment and get them to see the bigger picture. Summer money is great, but paying for life will take much more than what your teen earns from a few hours of work in a bike shop. Begin to show them the cost of things like college, cars, homes, and luxuries like vacations or hobbies.

Once you compare the costs with their summer job earnings, it should help them come to conclusions about how money works: The more you have, the more you can do. The idea is to inspire them to increase their earning potential with tools like education or savings to invest in income-producing assets.

Another result of these conversations could be your teen realizing they’ll want to start saving up for life sooner than later. They may decide to put away money for the purpose of paying for school or their first condo.

Ron Lieber, New York Times financial columnist and author of the book The Opposite of Spoiled, says parents should prompt their kids with an immediate goal like having a college fund. “The best thing to do is to use any earnings to begin a conversation with parents about college, if your teen plans on going,” Lieber says.

Lieber suggests questions to guide the conversation:

  • How much of your college expenses will be covered by parents versus the child?
  • How much have the parents saved for the child’s college expenses?
  • How much are kids/parents willing to borrow or spend out of their current income?

According to Lieber, “The answers to these questions may cause a teen to save everything, if they think it will help them avoid debt in their effort to attend their dream college.”

No matter how temporary their summer job is, you’d do well to use it as a springboard for more conversations about money. Whatever their long-term money goals are, it's never a bad idea to start working toward them early on.

Learn compound interest

While your teen is making all of those big money goals, you could drive the point home with a lesson in compound interest. Using a compound interest calculator, you can show your teenager many scenarios where interest can either work for or against them.

Run scenarios around savings for big-ticket items versus financing them. The math will speak volumes:

Item

Amount Financed

Annual Percentage Rate (APR)

Financing
Term

Monthly
Payment

Interest Paid

Car

$30,000

3.75%

72 months

$466

$3,548

College Tuition

$100,000

4.65%

120 months

$1,044

$25,236

Home

$250,000

4.35%

360 months

$1,245

$198,031

In the above scenario, you’d end up paying a total of $226,815 in interest. That same amount ($226,815) invested for 30 years with a moderate 3.5% return yields over $636,000!

Seeing these numbers in action should motivate your teen to start a savings habit that they will maintain throughout adulthood.

If they are really excited about the prospects of compound interest working on their behalf, encourage them to open their own IRA to begin investing themselves. This way, they’ll not only understand the theory of investing but also get hands-on experience with it. After all, the time value of money works even better when you’ve got more time. Investing as a teen could set the stage for copious returns later on in life.

Create a budget

Making money can be the fun, somewhat easy part of a summer job. Figuring out how to spend it can be difficult. Make your teen prioritize needs and wants by learning to create a budget. A good practice would be to have your teen make a list of things they’ll spend money on versus how much money they will bring in. You could also introduce them to a money-management app — here are some of the best ones.

This will help them understand the finite nature of money and how their current cash flow stacks up against their current earnings.

Have fun

According to Brian Hanks, a certified financial planner in Salt Lake City, “Don’t be concerned if your teen ‘blows’ a portion of their earnings on things you consider to be worthless.” Hanks goes on to say that it’s better to make money mistakes as a youngster: “Everyone needs to learn tough money lessons in life, and learning them as a teen when the consequences are relatively small can save bigger heartache down the road.”

A summer job should be fun and low-stress, but it can also be used as a learning experience that prepares your teen for the real world. If your teen turns out to be a terrible budgeter or extreme spendthrift, give them more than a summer to learn better ways. Remember, they’ll have the rest of their lives to continue grasping and mastering money concepts.

Aja McClanahan
Aja McClanahan |

Aja McClanahan is a writer at MagnifyMoney. You can email Aja here

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15+ Apps That Help You Make Money

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Need extra money? Your mobile device could actually unlock a world of additional income for you. There are many ways to earn money online, and they are now conveniently available on smartphones and tablet devices. Add an internet connection, and you’re set. Pursuing a side hustle can be time consuming, but if you’ve got a financial goal like getting out of debt or saving up for a down payment on a home, these apps could be a good start to boosting to your income. All the apps here are free to use via web browser and/or mobile device.

Surveys

Swagbucks

Devices: Android, iOS

The Swagbucks iOS app. Source: iTunes.

Swagbucks is a popular survey website with a couple of app counterparts (discussed below), including Swagbucks Local and SB Answers. By taking surveys, you accumulate points called Swagbucks, not actual money. These surveys usually ask about your demographics, preferences, and behaviors on topics like cereal you eat, places you shop, TV shows you watch, and other lifestyle choices. Plan to spend 15-30 minutes on each survey, though there are occasionally seven- to 10-minute surveys.

In terms of how the conversions work, one Swagbuck is about 1 cent, and you can redeem them for gift cards to places like Amazon, Starbucks, and popular retailers like Walmart and Target. You even have the option to donate your Swagbucks to more than 10 charities featured on the site.

So, how good are the payouts? A three-minute survey could offer you five Swagbucks or approximately 5 cents. A 20-minute survey pays out 80 cents on average. However, many people earn much more with the Swagbucks referral program: 500 Swagbucks (worth $5) per person once the referral is active. Plus, you’ll get 10% of your referrals’ point earnings over the lifetime of their account.

You have a few options to earn Swagbucks on your mobile device:

Surveys On The Go

Devices: Android, iOS

The Surveys On The Go iOS app. Source: iTunes

Surveys On The Go allows users to take various surveys with pretty decent payouts: You’ll get surveys for between 25 cents and $1. However, be prepared to spend time on these surveys. You can spend 15-20 minutes completing them (or more).

There also aren’t always a lot of surveys available. I’ve logged in a few times and found there were no surveys for me. The survey availability will depend on your demographic and even location. Sometimes, there are high-paying surveys ($15-$20), but it’s hard to tell when and where that will happen.

There’s no way to know how often there will be surveys available, but you can choose to receive app notifications when there is a new survey you qualify for.

Unlike Swagbucks, these surveys offer you actual money. You’ll need to earn $10 before you get a payment via PayPal. A nice thing about this app is that you get a consolation compensation of 10 cents if you start a survey and are not qualified to complete it.

InboxDollars

Devices: Android, iOS

InboxDollars iOS app. Source: iTunes

Much like Surveys On The Go, InboxDollars offers cash rewards. The app also offers “sweep” points, which allow you enter sweepstakes for more sweeps, money, or other prizes.

This app usually has plenty of surveys to take, though they are not all optimized for mobile viewing. At times, the interface can be a little wonky and a tad clunky to navigate.

You should also know that you can get deep into a survey (say, 5-15 minutes) only to be disqualified because of your answers. Your hourly “wage” comes out to be pretty low considering you make anywhere from 20-25 cents per 20-30 minutes spent answering questions. You cannot request a payout from the app until you’ve reached the $30 minimum. A $3 processing fee applies to every payment request. Your payment options include a check, gift card from Target or Kohl’s, or a prepaid Visa card (the latter two options available to Gold members only.)

Other survey apps to explore include Panel App, QuickThoughts, and SurveyMini. Overall, if you are looking to make a living wage from taking surveys, you likely won’t come close. With payouts that amount to just a few cents an hour, you’re better off with other ways to produce extra income (unless there’s absolutely nothing else you can do to earn).

Fitness

What’s better than losing unwanted inches? Getting paid for it. There are a few apps that allow you to convert your fitness activity into financial benefits. As always, you’ll want to consult your physician before starting any fitness program.

DietBet

Devices: Android, iOS

DietBet iOS app. Source: iTunes

DietBet allows you to turn your fitness goals into money. In order to enter a bet, you have to put money up front in a game that pools the money of other people with weight-loss goals. Those who make their goals win the bet and split up the pot (minus DietBet’s 10%-25% fee) that is paid out by those who don’t make their goals. WayBetter, the company behind DietBet, also has a StepBet app that offers similar games where you put down money when you set activity goals and win the bet if you meet them.

On DietBet, you can participate in a short, four-week challenge called a Kickstarter or a six-month game called a Transformer. You can be in multiple bets at a time to maximize your earnings. The company says Kickstarter winners get back an average of 1.5-two times their bet, while the average Transformer winner takes home $325 for winning all six rounds, or $175 for winning just the final round.

DietBet and StepBet have a No Lose Guarantee, which states that if you win, you will not lose money. They’ll forfeit their cut of the pot to make this happen. Of course, if you don’t win, you don’t get anything, so there’s potential to lose money here. The average Kickstarter bet size is $30, and Transformer costs $25 a month (or $125 up front).

Sweatcoin

Devices: Android, iOS

Sweatcoin iOS app. Source: iTunes

The Sweatcoin app converts your outdoor steps into currency called Sweatcoins (SWCs), which you can redeem for products like watches, fitness apparel, and gift cards. Currently, you’ll earn .95 SWCs for every 1,000 steps you complete. The exact conversion of these coins seems to change depending on the reward: Past promotions include a $12 smoothie gift card for 150 SWCs, a $120 Actofit watch for 1,600 SWCs, and a $88 VICI Life gift card for 250 SWCs.

The items available for purchase with Sweatcoins are limited and change often based on availability and the company’s promotional schedule. This app requires access to your GPS data and location in order to verify that your steps are taken outside.

Shopping

There are many apps that reward you for doing something you’d do anyway — shop. Here’s how most of these apps work: If you purchase a product, the app developer usually gets commissions on purchases you make at their suggestion, which they split with you. In this way, they can provide you with rewards that literally pay you for shopping.

Ibotta

Devices: Android, iOS

Ibotta iOS app. Source: iTunes

Ibotta offers rebates for buying certain products in nearby stores. Once you let it access your geodata, you’ll find deals on items at retailers like Walmart, Whole Foods, Costco, and more.

Sometimes the deals are super product-specific, and other times you can see generic items like milk or eggs offered with a chance to get 25 cents back. In order to get your rewards, you’ll have to scan the item’s barcode with your phone’s camera and snap a picture of the receipt. You’ll then submit these through the app.

This can be somewhat time consuming. For example, the receipt can be long, requiring a few pictures, or you could accidentally throw away the packaging (which I’ve done on a few occasions).

This is another app with a generous referral bonus: You get $5, while your referral gets $10. You accrue referral bonuses and rebates in your Ibotta account and can request payouts via PayPal, Venmo, or a featured gift card once you meet the $20 threshold.

Ebates

Devices: Android, iOS

Ebates iOS app. Source: iTunes

Similar to Ibotta, Ebates gives you rewards for shopping through their portal and purchasing featured items, but Ebates also offers discounts. There are popular stores like Loft, Tom’s, JCPenney, Macy’s, and more. You’ll get your earnings via PayPal every three months (unless you’ve accrued less than $5.01.)

Ebates also has a great referral program. The payouts change from time to time, so you’ll need to check their referral program page for current payouts. At the moment, when you refer one friend who makes a minimum $25 purchase, you’ll get a $5 bonus, while your friend gets $10 added to their account balance after their first purchase.

Shopkick

Devices: Android, iOS

Shopkick iOS app. Source: iTunes

Shopkick pays its users points called Kicks for a variety of shopping activities.

When you open the app, it detects your location and shows you a list of nearby retailers and products that can help you earn Kicks. If you allow the app to access your GPS data, you’ll hear a cha-ching sound when you get close to a participating retailer.

Shopkick is set up to show you the best deals and popular products from retailers like Best Buy, American Eagle, Yankee Candle, and many more.

Kicks can be redeemed for gift cards to places like Best Buy, Starbucks, and Target. The referral program offers 250 Kicks for each friend who signs up and completes their first in-store action.

In terms of the conversion rate, 250 Kicks equals $1 for most rewards. You’ll need to check the rewards section of the app for conversions on specific items.

Gig economy

If you’ve got time and a certain skill set, you can make money helping someone nearby. The apps below are variations of the Uber-like work arrangement we are all getting more familiar with. Given the higher earning potential these opportunities offer, they also require more commitment: Before you can start earning money through these kinds of apps, you may have to submit an application and agree to a background check.

TaskRabbit

Devices: Android, iOS

TaskRabbit iOS app. Source: iTunes

TaskRabbit allows you to complete small tasks like errands, cleaning, or handyman work for people nearby. As a “tasker” you can choose the types of tasks you’ll complete, your rates, and your own schedule. There’s no minimum to the amount of work you can do; however, the site explains that you cannot invoice for jobs that are under one hour. TaskRabbit takes 30% of your earnings and is available in 39 U.S. metro areas.

The application process is straightforward but stringent. In addition to your general demographics, you’ll need to verify your account with official identification like a driver’s license. You will also need to complete a background check. The TaskRabbit website explains that the company receives a large amount of registrations and cannot give you a timeline on when you’ll be approved.

Fortunately, once you get going, it’s pretty easy to see tasks available, accept them, and even invoice your clients. Although earnings for individual taskers vary due to a number of factors, a report by Priceonomics puts the average monthly earnings are around $380.

GoShare

Devices: Android, iOS

GoShare iOS app. Source: iTunes

GoShare is an app for people who need moving and delivery help. You can earn money with this app if you have a vehicle for large deliveries and can lift heavy items. However, GoShare is only available in nine cities among three states: California, Georgia, and New Jersey.

GoShare users can also work with large retailers to help unload shipments and deliver items to customers. For example, someone who ordered a refrigerator from Home Depot could request a GoShare driver to deliver it.

If you live in one of the areas GoShare serves, you can apply to be a driver. Potential earnings vary by vehicle type: The website says someone who drives a small pickup truck could earn up to $47.52 an hour, while someone with a cargo van can earn up to $61.92 an hour.

Uber/Lyft

Devices: Android, iOS

Left: Uber iOS app. Right: Lyft iOs app. Source: iTunes

Probably the most popular of the bunch, Uber and Lyft offer people the opportunity to use their own car to drive people around and get paid for it. Rates are typically set by the company and depend on your location, time of day, type of car you have, whether or not a passenger will share a ride with other passengers, and a few other factors. Uber is in more than 630 cities around the world, and Lyft is in more than 550 U.S. cities.

Chime

Devices: iOS

Chime iOS app. Source: iTunes

Chime is a division of the popular child care site, Sittercity. Chime is a mobile app designed for people who need quick connections for child care. Again, the premise is: I’m available, you need help, let’s connect with this app. Chime is available in Boston, Chicago, New York City, New Jersey, and Washington, D.C.

According to Chime, all sitters are thoroughly vetted and have completed a background check as well as undergone ID verification. The hourly rate is set according to your local market starting from around $15-$18 per hour.

Rover

Devices: Android, iOS

Rover iOS app. Source: iTunes

The Rover app is like Chime but allows users to look for and offer house-sitting and pet care services. Once you apply to be a sitter, your profile, if accepted, takes about five days to be approve. (Note: You can opt to complete a background check through a third party, but it’s not necessary.) You should also know that you get to set your own rates for services.

Once you agree upon a price with your client and complete a job, your client pays through the Rover app. Those funds are released to you within 48 hours, less the 15% transaction fee Rover deducts. Your payments stay in your Rover account until you withdraw them.

A community forum thread on the Rover website puts part-time earnings at $500-$1,000 per month.

GreenPal

Devices: Android, iOS

GreenPal iOS app. Source: iTunes

There are a few Uber-like apps for lawn care, and GreenPal is just one of them. The only issue is that some of these apps don’t have enough users to make it worthwhile for either service seekers or gig workers (GreenPal currently serves 12 U.S. cities).

As a vendor, you’ll apply through the company’s website. Part of the vetting process is passing a criminal background check, providing client references, and confirming that you have proper lawn care equipment.

Once you are approved as a lawn care provider, you’ll get notifications of nearby jobs. You are able to upload photos of your finished work (kind of like a lawn care portfolio), and then your client will rate you.

Depending on your location and market, expect to bid anywhere from $25-$45 per job. GreenPal takes a 3% transaction fee when your client pays you.

If you have a financial goal in mind and need more earning options, apps like these can certainly help. Just remember to weigh the value of your time against the potential of earning more money before you commit to chasing income this way.

Aja McClanahan
Aja McClanahan |

Aja McClanahan is a writer at MagnifyMoney. You can email Aja here

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