Living Single and Maximizing Money

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Single and not sorry — that’s how you live.

Sure, couples get a dual income, tax breaks and somebody else to blame when household finances take a downturn. But they fight over the remote, too. So, ya know, plusses and minuses.

Being single is not the exception these days. The gap between plus-one and plus-none has narrowed ever since the first time TVs with antennas were a thing (yes, over-the-air TV is making something of a comeback). It’s practically a 50/50 split between Americans who are married (135.9 million) and those who never married, are widowed or are divorced (130.3 million), according to a 2022 U.S. Census Bureau document.

Here are six things you can do to maximize your money when it’s your world and everybody else is just living in it.

Work with a BFF

Your friends and family can impact your financial life in so many ways. It can be a good idea to enlist someone close to you to be your BFF: best financial friend. See if they are also motivated to significantly improve their money situation, then think through ways you can help — and even inspire — each other.

Like anything: shopping, sports or working out, having a friend involved can make it more fun and help you keep each other honest and accountable. Some ideas to try:

  • Share your financial goals. Maybe it’s paying down a credit card or spending less when shopping.
  • Exchange resources, like books, online tools, websites and podcasts.
  • Be honest about your money worries. You’ll likely have many of the same concerns in common.
  • Offer each other support when times are tough.
  • Cheer successes. It’s fun to share good news along the way.

Start living more in the moment

Your social circle can also join in an effort to start living better. During lean financial times, it’s easy to fall into a “one day” outlook on life. “One day, I’ll be happier when I have more money.” Or do “more fun things” or “travel more.”

Live for today but within your financial means. Urge yourself to be happier, healthier and more in the moment, even when money may be tight.

Reduce your tax burden

Married or single, people naturally want to pay less in taxes. The strategies to do so are basically the same.

“One way that you can make sure that you reduce your taxable burden is by contributing to a deductible IRA if you are eligible to do so,” said Rose Niang, the director of financial planning for Edelman Financial Engines, in a recent podcast.

However, a Roth IRA may offer longer-term tax benefits without the upfront deduction, so talk to a tax advisor to help determine which is right for you.

Beyond a regular or Roth IRA, a health savings account is another tax-advantaged option.

“The money going into your HSA account is not taxable. And then, when you pull it out to pay for qualified medical expenses, it’s not taxable, but the earnings in there also aren’t taxable,” Niang said. “So it’s a really good way to reduce your tax burden and have that health care emergency account that you can use if things were to go sideways.”

Your health plan has to have a high deductible in order to use an HSA, so that’s another good topic to address with an advisor.

Keep it simple

Managing money when you’re on your own doesn’t have to be complicated. Don’t force yourself to keep extensive records or track every penny if it’s not in your nature. Establish money habits that are easy to maintain.

That could take several forms:

  • You might decide to simply “pay yourself first” by setting aside a portion of your earnings for savings and debt repayment.
  • You could use an expense tracker app to keep an eye on spending.
  • Consider automatic money transfers for savings and paying bills.

Know the score

A commonly cited management cliche is, “You can’t improve what you don’t measure.” While it brings me clammy flashbacks to corporate culture, it’s relevant to one important personal finance metric: your credit score.

Knowing what it is and learning how to build your credit score is one way to improve your financial situation — not by taking on more debt, but by getting lower interest rates on the debt you already have or will take on in the future.

Find out your credit score. Keep an eye on it.

Aim for debt-zero

Which is a pretty slick transition to the next living-single money tip: reduce your debt. It’s easy to let it swell over time into this giant drain on your net worth. Trim the debt fat little by little. Get some momentum going. Try paying down a credit card twice a month.

When you hit the debt-zero target, resolve to charge only what you can pay off each month. Sure, there will be exceptions, such as putting travel expenses or other major purchases on a card to gain points and a little payback freedom. But your ongoing goal should be to remain mostly debt-free, not counting your mortgage and car loan.

That alone will make your single life even sweeter.

Hal M. Bundrick, CFP® writes for NerdWallet.

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4 Steps to Having a Debt-Free Summer Vacation in 2024

It’s nearly summertime, and you know what that means: time to figure out how to pay for next year’s summer vacation! OK, maybe that’s not top of mind, but according to a new NerdWallet survey on summer travel, 26% of 2023 summer travelers will use a credit card to pay for those travel expenses but won’t pay the balance off with the first statement. Additionally, nearly 3 in 5 Americans (58%) aren’t taking a summer vacation at all, some for financial reasons.

If you want to take a trip next summer without taking on credit card debt, it’s a good idea to start planning how you’ll pay for it and how to make it less expensive. Here are four steps to make your 2024 summer vacation a debt-free reality.

1. Start saving now

Saving for a vacation takes the pressure off to either come up with the money all at once, take on debt or forgo a trip altogether. Sinking funds — or savings accounts dedicated to a specific goal — are a great way to save for an upcoming vacation.

Estimate your trip’s cost, including transportation, lodging, food, entertainment, shopping and other incidentals, and plan to save. That could mean dividing your trip budget by 12 and putting away equal monthly installments or earmarking expected windfalls, like a bonus or tax refund, for your summer trip. You can also focus on ways to lower your summer travel spending so you can save less throughout the year.

2. Consider using points/miles

According to NerdWallet’s travel rewards study, travel rewards credit card holders have 55,300 points/miles, on average. If you have rewards banked, consider spending them on next year’s summer vacation or even sooner. Over time, the value of these rewards tends to decline.

If you don’t have points/miles to spare, you can plan to earn some to cut down on your travel costs. This might mean applying for a new travel rewards credit card with a hefty sign-up bonus or switching your daily spending to a travel rewards card already in your wallet. Assuming a point/mile is worth about 1 cent each and you earn 2 points per dollar spent, monthly credit card spending of $2,000 could net you $480 worth of free travel in one year.

3. Make cuts to other parts of your budget

The summer travel survey found that around 1 in 6 Americans who aren’t traveling this summer (16%) say inflation has made their other expenses too expensive, so they can’t afford to take a summer vacation. So even as inflation cools down, your budget may be feeling the pinch. But if travel is your priority, reviewing your spending and seeing if you can make cuts to save money for future vacations is a good idea.

4. Travel on a budget

Most 2023 summer travelers (92%) are taking action to save on those travel expenses, like driving instead of flying (35%) or staying with friends or family instead of in a hotel/motel (31%), according to the summer travel survey.

Flexibility is critical if you’re looking for ways to make summer travel more affordable. You might find deals by choosing a less popular flight time or traveling at the tail end of the season after the school year begins. Planning your summer trip early may also help you travel on a budget — just another reason to start thinking about 2024 vacations now.

How to Have a Fun Summer When Your Finances Fall Short

With layoffs, bank closures and inflation, financial tensions remain high for many Americans heading into the summer. In a fall 2022 survey conducted by The Harris Poll for the American Psychological Association, 83% of adults said inflation was a source of stress, and 56% said they and/or their family had to make different choices in the last month because they didn’t have enough money.

Making tough money choices is stressful, and sacrificing “wants” to afford the “needs” can be disappointing. But, if you’re questioning the financial impact of your summer plans or they have suddenly become out of reach, there are still ways to have fun, save money and put yourself in a better place for next year.

Pivot to a positive mindset

In the face of canceled summer plans, Rob Bertman, a family budgeting expert and certified financial planner in Missouri, suggests flipping your mindset from disappointment to opportunity. Use the moment to talk about money decisions with your partner or kids.

“I think it’s always good for kids to see that their parents are trying to learn and get better,” he says.

With children, Bertman says to avoid language like “we can’t afford it” or “it’s too expensive” because that can lead to a scarcity mindset. Instead, he suggests reframing the difficult choice as one that benefits the family in the long run.

The key to this attitude shift is not losing sight of your priorities. What you’re looking for, ultimately, is to make memories with people you love. While vacations seem primed for those frame-worthy moments, sometimes the things that matter most happen in your own backyard.

Reduce the cost of activities

Summer is prime time for free events, but you’ll have to put in a little work to find cheap events in your area. Even still, having things to look forward to on your calendar can be a big emotional lift.

A membership to a zoo, park, aquarium or museum could pay off in multiple visits all summer long. In addition, it’s a great way to get out of the house and enjoy the weather — or escape the heat, depending on where you live.

If a membership is too pricey, you might have a workaround in your wallet. For example, Bank of America credit card holders are eligible for the Museums on Us program, which provides free general admission to over 225 cultural centers across the country on the first full weekend of each month.

AAA members can get discounted tickets to concerts, movies, sporting events and amusement parks. And don’t forget your local library. Some offer free “experience passes” to gardens, museums, zoos and parks.

Once you pick an activity, cut costs by bringing your own food. You’ll save money on that last-minute drive-through meal or overpriced snack. When dining out, look for places where you can BYOB because alcoholic drinks can sometimes double the bill.

If you still want to travel, consider someplace close or split the cost with family or friends. “The easiest thing to do is treat your city or town like you’re a tourist,” Bertman says. Drop a pin or draw a circle around your town and find drivable destinations to explore, he suggests.

A vacation rental that was $3,000 might suddenly become affordable if you’re paying only $1,500. Grandparents might be happy to join in to make family memories — and you might even get a date night out of it.

Set yourself up for next summer

  • Automate summer savings. If having a full summer schedule is nonnegotiable, it might be time to prioritize this in your budget. Automatically transferring a fixed amount of money into a separate savings account each paycheck can help you build funds so you’ll have them set aside by next summer. Months with fewer holidays and birthdays are also prime for boosting additional savings, according to Bertman.
  • Be flexible. Life is unpredictable. Protect your plans by booking hotels with free cancellation policies or flights with refundable tickets to avoid fees or lost deposits. Travel insurance is another option, and some plans cover your reservations and medical expenses.
  • Check in on spending weekly. Bertman recommends conducting five-minute weekly spending reviews to see where your money is going. It will eventually become a habit — but set judgment and guilt aside. “Once families kind of get in the rhythm of doing that,” he says, “they figure out how to really cut out their spending without sacrificing their lifestyle.”

Amanda Barroso writes for NerdWallet.

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Is Critical Illness Insurance Worth the Cost?

In the United States, somebody has a heart attack every 40 seconds, according to 2022 data from the American Heart Association.

This statistic is perhaps not as alarming as the cost of a heart attack, which can run tens of thousands of dollars. A 2017 study in Circulation, a medical journal from the American Heart Association, found the median cost of hospital care following a heart attack to be $53,384 for uninsured patients. Add the rising costs of medical care and inflation to the mix, and that number is likely even higher in 2023.

If you had a heart attack tomorrow, how would you pay for it?”

Critical illness insurance is touted as one way to answer that question.

What is critical illness insurance?

Many Americans have been unlucky to discover their medical insurance won’t cover all expenses. Think of critical illness insurance as a way to bridge the gap between your primary health insurance and out-of-pocket costs. It’s designed to make your recovery easier financially and take care of costs you might incur as a side effect of getting sick.

With critical illness insurance, you’ll get a cash payout if you suffer a serious illness. The list of covered illnesses varies, but heart attacks, strokes and cancer are the big ones. The coverage also typically kicks in if you experience organ or kidney failure.

The money can be used however you like. You could funnel it toward day-to-day expenses or deductibles, copays and procedures. Some people spend the money on rehabilitation, in-home care and lifestyle expenses to get healthier, such as programs to quit smoking. You might prioritize child care or cleaning services to allow you to recuperate.

How critical illness insurance fits into a financial plan

Critical illness insurance can prevent you from dipping into your savings to meet your health insurance deductible, says Maxwell Schmitz, a licensed accident and health or sickness agent and CEO of Yetworth Insurance Solutions. For example, if your plan has a $10,000 deductible, you might buy a $10,000 critical illness policy to plug that gap.

One of the main selling points is there’s typically no waiting period. This sets it apart from long-term disability insurance, which generally has a three-month waiting period.

Critical illness insurance has limitations, though. It won’t pay out if your illness isn’t serious and it doesn’t cover pre-existing conditions, which means you’d need to apply for coverage before getting sick.

The cost of critical illness insurance

Premiums for critical illness policies go up as you age. It’s a good idea to apply for coverage as soon as you identify a need for it.

The most popular policies are worth $50,000, according to Schmitz. For a 30-year-old man living in Iowa, a critical illness policy from Assurity would cost around $29 per month. The premiums for a woman are slightly lower, around $25.

To compare, a healthy 30-year-old man could expect to pay around $19 a month for a 20-year, $500,000 term life insurance policy. If he suffers a fatal heart attack or dies from any other cause while the policy is in force, that money would go to his loved ones.

If you’re looking for a way to replace your income and ease the financial burden on your family when you die, a life insurance policy should be a higher priority than critical illness insurance.

The best candidates for critical illness insurance

Critical illness insurance can be an affordable form of income protection for people who aren’t eligible for disability insurance and might struggle to make ends meet if they get sick. This may include stay-at-home parents, freelancers or those working part-time.

“My mind goes towards people who can’t traditionally access disability insurance,” says Schmitz.

Critical illness insurance might also be a good call for those with a family history of certain serious conditions, like heart disease.

For everyone else, the money might be better spent elsewhere — such as boosting a life insurance policy.

Opting for a rider

If you’re in the market for term life insurance, some companies include a critical illness rider for free. For permanent policies, you might have the option to add a life insurance rider for an extra charge. This add-on is likely to be cheaper than buying a separate critical illness policy.

Like standalone policies, a critical illness rider is activated when you’re diagnosed with a qualifying illness, and the money is yours to spend how you wish. The sum of money you’ll receive is spelled out in your policy documents and disbursed tax-free.

The downside? Your insurer will subtract that dollar amount from the final payout to your beneficiaries if you die while your life insurance policy is in force.

Let’s say you have a $500,000 life insurance policy, and a critical illness rider worth $50,000. If you experience a covered illness, you can get a check for $50,000, which leaves $450,000 to your beneficiaries when you die. If you’re never diagnosed with a serious illness, your loved ones will receive the full payout.

Keep in mind you can’t add a critical illness rider to an existing policy — only new ones.

As for whether you need one, that comes down to your health insurance or the situation you’d find yourself in if you were slapped with unexpected medical bills.

“Adding a critical illness rider onto a permanent policy makes sense for some people, such as those with a very high deductible on their health insurance,” says Abby Reddy, co-founder of Quotacy, an online life insurance brokerage.

“This would include people who are self-employed, so they have extra protection in the case of stroke or a major cancer diagnosis,” Reddy says.

Can You Save by Bundling Insurance With a Car Purchase?

You’ve probably seen embedded insurance in the wild. Here’s an example: Let’s say you buy a new refrigerator. During checkout, you’re asked if you’d like to get insurance for the item. That insurance policy, or “protection plan,” gets embedded into your purchase as a single transaction.

Companies can offer insurance policies on everything from buying the latest iPhone to renting a U-Haul. But if getting insurance can be so easy, then why is it such a hassle when you buy or lease a new car?

In order to understand whether embedded car insurance is right for you, it helps to get context on how it all works. More importantly, that should also answer a bigger question: Can this actually save you money?

Rising anxiety about the cost of owning a car

Getting a new car isn’t all that different from any other purchase. If you’ve ever bought a laptop, an espresso machine or even a high-end electric toothbrush, you know the feeling: That sense of excitement that comes with being a new owner, especially after weeks or months of research.

But when it comes to big purchases, the word “ownership” can also cause anxiety. According to a 2023 NerdWallet survey, 53% of Americans plan to buy or lease a vehicle in the next 12 months. However, 23% of Americans who own a personal vehicle consider the cost of vehicle ownership to be a source of stress.

Those numbers might seem contradictory, but the reality is that the total cost of owning a vehicle is hard to calculate. You can budget your car purchase to the dollar, but it can still be hard to predict gas prices and car insurance rates. In fact, the average car insurance price for 2023 is nearly 32% higher than the average rate for 2022, according to NerdWallet’s annual analysis.

The burden of financing, insuring and paying off a vehicle lasts yearafter the initial excitement wears off. So drivers are looking for ways to save wherever they can, including at the dealership.

What is embedded insurance?

One way to reduce the stress of buying a new car is to find ways to simplify the process. This is why bundling auto insurance into a car purchase (not unlike our example of buying a new fridge) appeals to drivers.

“There’s no need to call your agent, spend 20 minutes on the phone digging up and providing details then waiting for your proof of insurance. With embedded insurance, it’s instant and seamless,” said Cassi Conrad, chief insurance officer at Sure, in an email. Sure is a digital insurance seller that specializes in embedded insurance.

Almost every state requires drivers to have liability insurance, so you’ll need proof of coverage before you can purchase a vehicle at a dealership. But having the car dealership bundle an insurance policy into your financing package might save you time and effort, both during the “checkout” process as well as when it’s time to make payments.

Additionally, consumers are more likely to buy insurance at the time of a car purchase. 50% of Gen Z (ages 18-26) and 54% of millennials (ages 27-42) believe the best time to shop for auto insurance is when buying or leasing a vehicle, according to the NerdWallet survey.

The convenience of bundling insurance into a purchase — combined with a rise in digital insurance as a whole — has created a demand for embedding policies into the car buying experience, Conrad said.

But can embedded insurance save you money?

All of this lines up with what drivers actually want when buying a car: 72% of recent car buyers would have liked to purchase insurance directly from the dealership, according to an online 2022 survey of recent car buyers by Polly, a company that sells embedded auto insurance. That same survey states that 42% of car buyers received no support from the dealership about actually getting insurance in their most recent car purchase.

Part of this disconnect is tied to availability. Embedded insurance is sort of an ongoing experiment for both insurers and car dealerships, and there just isn’t enough information available to predict whether it will save you money.

In fact, while embedded car insurance is definitely convenient, you could end up paying more for insurance over time. If you’re offered a single price for financing that includes a car loan and an insurance policy, you may end up paying interest on your insurance, which is unnecessary as well as expensive.

Choosing insurance is subjective. It’s largely dependent on how much coverage you want as well as what you feel comfortable paying, and the factors that determine pricing vary by person. But because there isn’t a standardized embedded auto insurance offering right now, the details could depend on the dealership, insurer and financing terms rather than what you want or need.

Ways to save on new-car insurance right now

If you do get offered embedded insurance at a dealership, it’s probably in your best interests to decline at this time. But that doesn’t mean you can’t find other ways to save money on insurance for a new car.

Remember all those hours you spent selecting the perfect year, make and model? Apply that same process to finding car insurance. Spend one hour getting a few different quotes for the specific vehicle you want, then compare those rates to find the best fit for your situation. If you do this before you get to the dealership, you can compare their offers to the quotes you already have.

Embedded auto insurance is still an evolving thing. Until some sort of standard policy offer exists, we recommend prepping before you get to the dealership to decide if embedded insurance is a good fit. You may still decide to add insurance to your cart at checkout, but at least you’ll know whether its the best deal before you sign the paperwork.

Drew Gula writes for NerdWallet. Email:

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Larger Crowds, Less Chaos: Why Summer Travel May Be Less Bumpy

2022 was the year of revenge travel. Travelers took trips they skipped in 2020 and 2021, catching up on a backlog of weddings and family reunions. Others finally checked off bucket list trips.

Travel came back strong, resulting in high prices and packed airports. But with the surge, chaos often ensued. Hotels cut back on housekeeping, largely driven by a hotel worker shortage. Car rental costs spiked due to high demand and low supply. The flight delay rate hit highs not seen since 2014. All that culminated into major, distressing events shared by many travelers, such as the Southwest Airlines holiday meltdown.

But if 2022 felt crowded, 2023 could be more so. Checkpoint data from the Transportation Security Administration for two out of the first three months of the year show that average airport passenger counts have actually exceeded their 2019 levels — and they’re set to keep growing.

“In January, we experienced our first full month where travel volumes exceeded the same month in 2019,” said TSA Administrator David Pekoske in a prepared statement. “We fully expect to see an upward trend in travel volumes throughout 2023.”

Why big crowds might not be as big a concern

While travel volumes are shaping up to be even bigger than their pre-pandemic numbers, things might not feel as brutal as they were last year.

Staff shortages are less dire

A huge contributor to travel chaos was staffing shortages, which is a problem that’s recently lessened, according to an American Hotel & Lodging Association survey of more than 500 hotel owners in January 2023. While 79% of respondents still report staffing shortages, that’s a steady decrease from the 87% who said they were short-staffed in AHLA’s September 2022 survey.

Costs are leveling off

Sure, inflation is impacting the travel industry, but some travel expenses are actually cheaper than last year.

Average prices for both hotel room rates and airfares hit record highs in May 2022. But February 2023 airfares are down 18% from May 2022 records, according to a NerdWallet analysis of Bureau of Labor Statistics consumer price index data. February hotel prices, while up 15% versus prices in February 2020 (the last month before U.S. lockdowns), have dropped more than 6% from their record highs in May 2022.

Supply is increasing

Especially as the COVID-19 pandemic shifted travel habits (e.g., preference for the privacy of a vacation rental versus the shared hallways of a hotel), the industry struggled to keep up with demand. That’s set to change.

According to vacation rental data platform AirDNA, vacation rental supply increased 25% in the third quarter of 2022 versus the same quarter in 2021. The increased supply means that occupancy rates are actually set to decline. That’s good news for travelers as they’ll have more lodging options.

Air travel supply is also increasing. Domestic seat capacity in January has already beat 2019 levels. In January 2023, U.S. airlines had 6% more seats available for booking compared to January 2019, according to data from travel booking app Hopper.

How to plan for travel crowds

Book now

Beat everyone else to the best reservation availability by booking early. Some travelers hold out for a last-minute deal, but you might be able to get the best of both worlds: Many rental car and hotel companies allow you to make a reservation now, but you don’t pay for it until you arrive at the check-in counter (and sometimes not until you return the car or check out of the hotel).

If you make a reservation and then spot a lower deal, you can rebook at a lower price and cancel the original reservation (sometimes you can call customer service and they’ll honor the lower rate without going through the hassle of rebooking). Always read the fine print for any terms around cancellation, but this typically works at hotels and rental car companies where you pay in person at the counter or hotel desk.

Travel in the offseason

Avoid traveling during busy seasons like summer, long holiday weekends and the winter holidays.

However, if you want to avoid the sluggishness of the offseason, you can book during another time of year instead: shoulder season.

Use credit card points and miles

Inflation is hitting especially hard this year, but points inflation is real — and occurs almost every year as hotels and airlines regularly raise the number of points and miles needed to book travel.

But in 2023, some rewards are more valuable. That’s because while many cash prices have increased, some points redemption rates haven’t caught up yet. Inflation is rough, but the good news is it makes those credit card points and frequent flyer miles that much more valuable.

Sally French writes for NerdWallet.

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Apple’s New 4.15% APY High-Yield Savings Account: What to Know

Apple Card users have a new option for a high-yield savings account, one that pays a 4.15% annual percentage yield. On Monday, Apple announced that the new federally insured account — serviced by Goldman Sachs Bank — is available to customers.

The account has no monthly fee or minimum balance requirement, and, at 4.15%, the APY is notable. That’s much more than the average savings rate for savings accounts, which was 0.37% as of March 2023, according to the Federal Deposit Insurance Corp.

With a 4.15% APY, an account with a $5,000 deposit will earn $211 in interest after one year, per the NerdWallet savings calculator.

There is a catch, though: The account is available only to people who have an Apple Card. This credit card offers a reward called Daily Cash, in which you can get up to 3% cash back on purchases. Daily Cash funds can now be automatically deposited into the new high-yield savings account. (You can also opt for a different destination for Daily Cash, such as your Apple Cash account, instead.)

In addition to depositing money earned through Daily Cash, you can deposit funds into the savings account via ACH transfer from a linked external account.

How Apple Card holders can set up the high-yield savings account

To open the account, you will need to go to your Apple Card in your Apple Wallet app and set up Savings. You’ll need to provide your Social Security number or individual taxpayer identification number to get an account, according to Goldman Sachs. You’ll also need a U.S.-based address (including U.S. territories and U.S. jurisdictions).

Funds in this account are federally insured up to the FDIC’s insurance limits. FDIC insurance generally covers bank account balances up to $250,000, per depositor, per insured bank, per ownership category. (Examples of ownership categories are “single accounts” and “joint accounts.”)

How to access the account

You can access your account, including balance and interest earned information, in the Apple Wallet app. The Apple device must have iOS 16.4 or later.

For transfers, as noted earlier, you can move funds to and from a linked external account. You can also transfer to and from your Apple Cash account.

How to find high-yield alternatives

If you don’t have an Apple Card or don’t want to open one, you can look for other high-yield savings accounts. Many tend to be online only. This means institutions that offer them typically don’t have the costs of paying for bank branches and in-person tellers, so they can pass on the savings in the form of high APYs and no monthly service fees.

Today, some of the best federally insured savings accounts have rates around 4% APY, often with no monthly fees or minimum requirements.

Whether you’re an Apple customer and choose to open its new savings account or you choose a high-yield alternative, putting your money in a high-interest account is a smart way to help your savings grow.

Margarette Burnette writes for NerdWallet.

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Should You Swap Your Bank Account for a Digital Wallet?

Cashless and contactless payment options have been on the rise for years, spurred by the COVID-19 pandemic. Hand-in-hand with these options, digital wallet apps and services have also increased in popularity. An estimated 60% of the global population — 5.2 billion people — will be using digital wallets by 2026, according to a 2022 study from the data analytics group Juniper Research. As digital wallets have become more widespread, are they viable replacements for bank accounts? Here’s what you need to know.

What is a digital wallet?

A digital wallet is an application or service — typically on a smartphone — allowing users to store debit and credit card information and passwords. Some digital wallets can also store electronic tickets, passes, gift cards and personal identification cards, said Francisco Alvarez-Evangelista, advisor at the financial analysis company Aite-Novarica Group, by email. PayPal, Apple Wallet, Google Wallet and Samsung Wallet are some examples. Though you may lean toward using whatever app is associated with your smartphone, you can also download other digital wallet apps.

There is also some crossover between digital wallets and payment apps such as Venmo since many of these apps have begun to offer many of the same features, like peer-to-peer money transfers and special branded credit cards, as well as the ability to store a cash balance in the app. In some cases, such as when paying for an item or service, the terms “digital wallet” and “payment app” could be used interchangeably.

Can I use a digital wallet instead of a bank account?

You can use a digital wallet instead of a bank account, but there are some significant caveats to consider.

A digital wallet is essentially a collection of your payment cards in one place, but it could also be a place to keep cash, such as your Apple Cash or Venmo balances. This tactic has some downsides, namely that you don’t earn interest, and the Federal Deposit Insurance Corp. might not protect your funds. Some exceptions exist; Venmo, for example, takes funds directly deposited or deposited through the “cash a check” feature and sweeps them into partner bank accounts so that customer funds can be FDIC-insured. As far as interest goes, however, you’re more likely to earn a good return on your money by putting it into a high-yield savings account instead, where interest rates have been increasing.

“While it is possible to replace a bank account with certain digital wallets, most consumers have banking needs that exceed what most digital wallets today offer,” Alvarez-Evangelista said. “While not all digital wallets are the same, most consumers look to digital wallets to augment their financial experiences online.”

A mix of digital wallet apps and bank accounts might meet your needs better than using one alone since you might need different apps when sending money to different people. Also, if you have credit cards compatible with specific digital wallet services — such as the Apple Card or the Venmo credit card — then having the companion app can lead to additional benefits, like bonus cash back.

How to use a digital wallet

Open or download the app. If your mobile device has a built-in wallet, e.g., the Apple Wallet on an iPhone, you may want to explore the app to see if it suits your needs before downloading another app. If you’d prefer to use another service, perhaps to pay a merchant at a farmers market that only accepts a specific app, you can download a new one.

Create a profile and add your payment info. Your app should walk you through the setup process, where you’ll create a user profile. After your profile has been set up, you should be able to link different debit cards, credit cards and bank accounts to the app. Your app may also allow you to hold a money balance in the app, similar to a bank account, in that you’ll be able to add to it and withdraw from it.

Use your smartphone to make contactless transactions. If you’re using a smartphone digital wallet, your phone will be able to be “tapped” at a payment terminal, using near-field communication for the transaction to go through as the two electronic devices trade payment information.

Consider whether you want to maintain a balance in your wallet. As mentioned above, a digital wallet might not be the best option for storing liquid cash, especially not large amounts. However, having a small balance available can be helpful when you need to send money to friends or family on the fly, such as to pay for your share of a dinner tab. You can also link payment cards or bank account information if you don’t want to pay from your app balance.

Costs Down, Wages Up: Can You ‘Work Your Way’ Through College?

For the past few years, the out-of-pocket costs for attending a public four-year college have decreased and minimum wages have risen in many states. While you might think these shifts should make it easier for students to work their way through college, it would still take a herculean effort — adding a full-time job (or more) — to a full-time courseload.

Assuming a student earns the average of state minimum wages ($10.40 per hour), they’d need to work 35 hours per week to cover the average costs at a public four-year school in their state. And that wouldn’t account for additional expenses, such as gas and car insurance, recreational activities or any unexpected costs. It also wouldn’t leave much room for the estimated 30-45 hours per week they’d need to dedicate to their full-time courseload.

Wages and inflation affect working student outcomes

The net cost of attendance — which includes tuition and fees, room and board, books and an allowance for personal expenses, minus grant aid — has been declining for the past six years, reaching $19,250 in the 2022-2023 school year for in-state students at public, four-year institutions, according to data from the College Board. Inflation has played a role in this real decline: The cost of higher education hasn’t grown as quickly as the overall inflation rate.

Rising state minimum wages are further improving affordability. Over the past two years, 24 states have increased their minimum wages, and college students are more likely to work in low-wage jobs. As minimum wages increase, workers in low-paying jobs making more than the minimum generally get raises too — employers are likely to increase other wages to keep them roughly proportionate.

But not every locale is benefitting from such increases. Twenty states either don’t have a minimum wage or have it set to match the federal minimum wage: $7.25 per hour. At that rate, a student would need to work 51 hours a week to pay the cost of attendance.

About 40% of undergraduates work while in college, according to the Department of Education, but it’s unlikely they’re paying for their entire education. Most graduate with student loan debt. In order to graduate completely debt-free, working students would overextend themselves. Most full-time students take about 15 credit hours, which accounts for an estimated 30-45 hours of learning in and out of the classroom each week. Add to that 25-50 hours of work and you have an unsustainable schedule that is not conducive to learning, let alone getting good grades.

When loans are needed, borrow strategically

State and institutional grant aid has climbed over the same period that net price of college has come down, according to data from the College Board. The two are directly related: College grants reduce the out-of-pocket costs of higher education. Grants can be based on a student’s financial need or merit. Still, in the 2020-2021 school year, undergraduates borrowed $44.7 billion in federal student loans.

Loans are often a necessary part of going to college, and students would be wise to not jeopardize their chances of earning a degree by running themselves ragged at a job that may not have a dramatic impact on their bottom line.

Here are some tips for working students to manage it all:

1. Set a sustainable schedule. This goes for both your job and school. Taking on too many work hours or credit hours can hurt your chances of success when it comes to earning your degree.

2. Fill out the Free Application for Student Aid (FAFSA). Fill the application out as soon as possible, every year. Some financial aid is first come, first served and waiting until the last minute could mean having fewer available grant funds. And grants don’t have to be repaid — we like grants.

3. Apply for scholarships, every year. Incoming freshmen aren’t the only ones who should be scrambling to apply for scholarships. Keep an eye out for this type of “free money” throughout your college career, and apply every chance you get.

4. Borrow federal first. If you’re borrowing money for school, look to federal student loans first. These will be offered in the financial aid package from your school after your FAFSA has been processed. They typically come with lower interest and more repayment options than private student loans.

5. Ask for help. College can be stressful, and working through college compounds the pressure to measure up. Reach out to an advisor or student counseling if you need help with your schedule or just want to talk through all of the demands on your time. They no doubt want to see you succeed, and you can bet they’re familiar with the challenges you’re facing.

Elizabeth Renter writes for NerdWallet.

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Would an MBA Help You Come Out on Top in a Recession?

During the Great Recession, a record number of graduate management programs reported an increase in applications, according to the Graduate Management Admission Council, an association of graduate business schools.

And now, many economists say the writing is on the wall for another U.S. recession. Those considering a Master of Business Administration degree and its higher earning potential as a hedge against today’s economic uncertainty may be on to something.

Inflation is still putting a strain on the economy. More than 94,000 U.S. tech workers have been laid off so far this year, on top of the more than 140,000 tech workers who lost jobs last year, according to Crunchbase News, a business publication.

To sweeten the deal, top business schools like Kellogg School of Management and Tuck School of Business are waiving GMAT and GRE exams for recently laid-off workers — increasing the incentive to go back to school.

But a looming recession doesn’t make an MBA a no-brainer.

If you’re wondering whether now is the time to head to business school, here are a few things to consider.

Employers are still interested in MBAs

The 2022 Corporate Recruiter survey from GMAC found 97% of recruiters expect demand for MBA hires to remain the same or increase at their organizations.

This reinforces what has been a generally positive trend over the last 15 years, says Maite Salazar, chief marketing officer of GMAC.

Even with the economic uncertainty brought on by the pandemic, hiring trends for MBAs remained stable from 2020 to 2022. Employers leaned into MBA hires for their leadership and problem-solving skills and their ability to scale up and expand globally, Salazar says.

The cost of an MBA is still a deterrent

Roughly 60% of global prospective MBA students say cost could moderately impact their decision to attend graduate business school or prevent them from going altogether, based on a 2021 GMAC survey.

In the U.S., the average cost of an MBA is $225,605, according to a 2022 report from BusinessBecause, a graduate management education website. This is a 3.7% increase from 2021, and the cost of tuition and fees has been trending upward globally.

Though scholarships, fellowships and grants are the best way to pay for an MBA, they likely won’t cover the full cost. MBA student loans can cover any gap in expenses, but the more you borrow, the more interest payments will eat into the return on investment of your MBA degree.

On average, MBA graduates say it’s worth it

Over 85% of graduates believe their investment in a graduate management degree was worth it, according to a 2022 GMAC survey of 3,600 MBA candidates at more than 700 business schools around the globe. Respondents completed their graduate business education between 2010 and 2021. Increased employability, greater earning power and a broader professional network were the biggest returns on investment for survey respondents.

Nearly two-thirds of graduate students advanced one job level after obtaining an MBA. Those who were in more junior roles pre-MBA saw even larger jumps in their careers, the survey found.

And 2022 GMAC data still shows that U.S. MBA starting salaries are $40,000 higher than starting salaries for those with a bachelor’s degree alone — even though salary growth has remained flat over the past three years.

However, MBA outcomes can differ based on race, gender and other factors. For example, the GMAC study shows Black, Hispanic and Native American graduates were less likely to report career advancement than graduates who are white, Asian or of other race/ethnicity.

An MBA is not the only path to economic success

If your goal is to sharpen your business skills, there are alternatives to an MBA, such as business graduate certifications, professional certifications and mini-MBAs.

Business graduate certifications are credit-based programs offered by colleges or universities. They tend to focus on a specialized field and require fewer courses, so they can be a smaller time and financial investment than an MBA.

Professional certifications are offered by companies or national organizations and are typically sought out by those looking to be certified in a specific skill, role or software program. Some certifications can include a number of courses, while others involve passing an exam. Costs will vary by program.

A mini-MBA can come in many forms. Universities may offer a mini-MBA program that functions similarly to a business certificate program — you can earn credits that count toward an MBA degree in the future. Other organizations — like Abilitie, a leadership development company that offers a formal 12-week mini-MBA — have non-accredited programs focused on sharpening specific business skills.

A mini-MBA program can make MBA-level skills accessible to those who otherwise might not have the opportunity, says Luke Owings, vice president of product at Abilitie.

Mini-MBAs and other business certifications are not the same as an MBA degree. How employers value these programs can vary by company.

Trea Branch writes for NerdWallet.

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