Personal Finance 101

  • How to Use Credit Cards Responsibly: 6 Tips You Need to Know

    Let me guess: You’ve heard personal finance experts and influencers say that credit cards are bad and that you should cut yours up immediately.

    Yep, we’ve all read those warnings. And many of us have probably wondered if they were right and maybe even felt guilty for swiping our credit cards on the regular.

    If this is the only type of personal finance expert you’ve been following, then you’ll probably be surprised to see me say that I love credit cards

    While it’s true that credit cards have high interest rates and have caused many Americans to go into debt, when used correctly, they’re an incredible tool. In fact, not only do most credit cards not have to cost you a dime, but you can even make money by using credit cards.

    If you’re going to add credit cards to your personal finance toolbox, then it’s important to understand how to use them responsibly and in a way that really benefits you (and not the credit card issuers).



    The problem with credit cards

    Before we talk about how to use credit cards responsibly, we should first acknowledge some of the problems with credit cards and why some people seem to have such strong feelings about them.

    One of the biggest problems with credit cards is the amount of money they cost consumers in interest each year. When you carry a balance on your credit card (meaning you don’t pay off the full balance each month), you’ll pay interest on that amount.

    Unfortunately, the average credit card interest rate at the beginning of 2022 was 16.13%. That number is only going to rise as interest rates do. And because the average credit card balance is $5,525, many Americans end up paying an awful lot of interest each year.

    Credit card interest, more than any other kind, can hold you back from reaching your financial goals. Not only are the interest rates notoriously high, but that interest compounds daily, meaning the interest that accrued is added to your credit card principal and also begins to accrue interest.

    So why have so many people managed to accrue large amounts of credit card debt? There are three primary reasons I can pinpoint:

    1. People spend money they don’t have. Rather than spending money that’s already in their bank account, they spend money they haven’t earned yet. Then they pay those purchases off in the future when they get paid.
    2. People lose control of their spending. Swiping a credit card is painfully easy sometimes, especially if you’re struggling with emotional spending. 
    3. People use credit cards as an emergency fund. When financial emergencies pop up and you don’t have an emergency fund in place, a credit card may be the only option.

    Unfortunately, all of these factors result in people getting into financial trouble with credit cards, which is why some financial experts advise so strongly against them. The good news is that if you learn to use them correctly, you can avoid these problems for yourself.

    Read More: How to Pay Off Credit Card Debt Fast


    The benefit of credit cards

    Before I dive into tips for using credit cards responsibly, let’s talk about a few benefits of using credit cards. 



    One of the biggest advantages to using credit cards is how they can help you build your credit history and credit score. Now, some personal finance experts (*cough* Dave Ramsey *cough*) will tell you that a credit score is unnecessary because it only encourages the use of more debt.

    This couldn’t be further from the truth.

    First, there are some situations where debt is simply unaffordable. For example, most people I know can’t afford to buy a home in cash. In that case, a good credit score is vital.

    But even if you’re not taking on more debt, a credit score is important. Landlords can run your credit to decide whether to rent you an apartment. Insurance companies use your credit score to set your insurance premiums. Even employers can use your credit score when deciding whether to offer you a job.

    So yes, a credit score is important.

    The best way to build your credit using credit cards is to use your cards each month but use less than 30% of your balance. If you use more than 30% throughout the month, then you can pay your balance weekly instead of monthly to keep your running balance lower.

    The other step to building credit with credit cards is to pay your balance off in full each month. Doing so will show lenders and credit bureaus that you can use debt responsibly. Plus, it will help you avoid those costly interest charges we talked about earlier.

    Read More: 7 Hacks to Boost Your Credit Score Quickly



    My personal favorite perk of using credit cards is the rewards you can earn. Depending on how much you spend on your card and the credit cards you use, you could earn thousands of dollars of rewards and perks each year.

    There are a few different ways you can earn rewards on credit cards.

    First, many credit cards offer a welcome bonus, where you’ll get a large number of points if you spend a certain amount of money (usually around $3,000) in the first few months of having the card. One of these bonuses alone helped Brandon and me take an almost free trip to an all-inclusive resort in the Dominican Republic.

    Another way to earn rewards with a credit card is through your regular spending. Many credit cards offer a certain percentage of either points or cash back on each dollar you spend. You can use those points for statement credits, gift cards, money in your bank account, free travel, and many more.

    In addition to these rewards, many premium credit cards offer perks that include hotel and airline statement credits, travel insurance, extended warranties, and many more.



    Carrying a credit card is far safer than carrying either cash or a debit card, thanks to the fraud protection they all come with. Basically, you aren’t on the hook for fraudulent purchases made with your credit card.

    Technically debit cards also offer this fraud protection, but here’s the problem: When someone fraudulently uses your debit card, the money leaves your bank account. And while you’ll probably eventually get that money back if the purchase was really fraudulent, it could take a while. In the meantime, you’re simply out that money.

    But in the case of fraudulent transactions on a credit card, you never have to worry about the money leaving your bank account, and the credit card issuer won’t require you to pay for those charges.


    How to use credit cards responsibly

    Now that we’ve talked about some of the advantages and disadvantages of using credit cards, it’s time to dive into what we’re really here to talk about: using credit cards responsibly.



    First and foremost, it’s important to understand your credit card terms. You can find these by logging into your online account and finding your credit card agreement or another document that shares this information. The details you’ll want to look at include:

    • Purchase interest rate
    • Balance transfer interest rate
    • Annual fee
    • Over-limit fee
    • Late fee
    • Foreign transaction fee
    • Statement date
    • Payment due date

    Once you know your credit card terms, keep them in mind as you use your card. Always pay your bill on time, and proceed with caution anytime you use your card in a way that will require you to pay unwanted interest or fees.



    Here’s how most people use their credit cards: They put expenses on them throughout the month, often for groceries, eating out, and other spending. When they get paid next month, they use a part of that paycheck to pay off their credit card bill.

    The problem with using your card that way is that you’re using money you don’t actually have yet. You’re using February’s income to pay for January’s spending rather than using January’s income.

    The best way to avoid this problem is to spend only money you already have. If you’re going to spend $100 on groceries and put it on your credit card, that $100 should already be in your bank account to pay off that credit card bill.

    The easiest way I’ve found to limit myself to only spending what I have is to get one month ahead on my budget. Click over to the post to learn how!



    It’s critical that you know your credit limit for a few different reasons. First, if you spend over your credit limit, you’ll usually be subject to some sort of fee. It’s an expense that could be easily avoided by paying attention to your card balance and spending.

    The other reason it’s important to know your credit limit is how it affects your credit score. One of the most important factors when it comes to your credit score is your credit utilization, which is the percentage of your available credit that you use at any given time.

    In general, the higher your credit utilization, the worse it is for your credit score. It’s recommended that you keep your utilization below 30%.

    When you know your credit limit, it’s easy to ensure your credit utilization is low. Suppose you have a credit limit of $10,000. You’ll know to keep your balance below $3,000 at all times.

    If you use your credit card for all of your spending as I do, then you can pay off your card more often to ensure your credit utilization doesn’t get too high. I have a recurring note on my to-do list to pay my credits cards off in full every Monday.



    It probably seems like common sense that using your credit card responsibly includes paying your bill on time. But it bears repeating because the average household pays an average of more than $100 per year in late fees.

    The simplest way I’ve found to ensure I never pay a bill late is to set up automatic payments. I have automatic payments set up on every single bill I have, so even if I stopped checking in on my accounts, my bills would get paid.

    Another solution for ensuring your bills are paid on time is to create a bill calendar. You can create a digital calendar or a physical calendar and write down the date that each of your bills is due, including your credit card.

    Paying your credit card bill on time will help you avoid annoying late fees and will help keep your credit score healthy since one late payment can cause a major ding in your credit (and multiple late payments can do even worse).



    Most of us probably don’t get actual credit card statements in the mail each month. Instead, they’re available on your credit card issuer’s website. But whether you get a physical copy or see them online, it’s worth looking them over at least once per month.

    First, looking at your credit card statement at least once per month can help you stay on top of your spending and notice any bad spending habits. It’s easy for overspending to slip through the cracks, but looking at your statements forces you to face it head-on.

    The other reason it’s important to check your monthly statements is to make sure there’s nothing there that shouldn’t be there. If there are any fraudulent charges on your credit card, you’ll want to know right away so you can alert your credit card company.



    We’ve already talked about how many Americans have fallen into credit card debt, and most of us don’t want to be there. The single best tip for using your credit cards responsibly is to pay your balance off in full each month.

    Not only will paying off your full balance help save you money on interest and avoid racking up debt, but it will also help your credit.

    Unfortunately, there is a myth floating around out there that carrying a credit card balance actually helps your credit score. That’s simply not true. Sure, it’s important to show your credit card companies you can use debt responsibly — which requires that you actually use your credits. But you’ll get even more benefits if you pay them off in full.


    What if you have credit card debt?

    You might be reading this post already in credit card debt and wondering how it applies to you. I’ve put together a few more tips specifically for people who already have credit card debt.



    It probably goes without saying, but avoid increasing your credit card debt if you can help it. I understand that sometimes financial emergencies happen, and additional debt is unavoidable. But if possible, don’t let your balance grow anymore.



    If you make only your minimum payment each month, it could take you years to pay off your current credit card debt.

    Let’s say you have $10,000 in credit card debt with an interest rate of 18%. Based on the normal formula to calculate the minimum payment, you’ll pay about $250 per month, and it will take you a little over five years to pay off the debt.

    But over that five years, you’ll pay more than $5,300 in interest. Yep, more than half of the amount you initially borrowed. But if you doubled your monthly payment, you’d pay it off in just two years and pay only about $2,000 in interest.



    Using a credit card that already has a balance on it can make it even more difficult to get out of credit card debt.

    First, when you’re mixing old purchases with new ones, it can be difficult to separate them and know how much you should pay each month.

    It’s also easier to convince yourself that it’s okay to go into just a bit more debt.

    Let’s say you have $5,000 in credit card and want to make a $100 purchase that you can’t quite afford. Instead, you put it on your credit card. What’s another $100 on a $5,000 balance, right?

    The problem is that most of us don’t do this just once (and I know this from personal experience). Instead, you’ll use this argument to justify purchase after purchase as your debt continues to grow.

    For the time being, it’s better just to avoid using any credit cards with balances already on them.


    Are credit cards right for you?

    Listen, I love credit cards. I love how they help my credit score, and I especially love the money I save with credit card rewards. But I can also acknowledge that credit cards aren’t right for everyone.

    If you’re someone who struggles to control their spending, then credit cards may not be right for you. Unfortunately, they’ll likely do more harm than good to your credit score. And the rewards you earn on your credit cards will be outweighed by the interest you end up paying.

    If you really aren’t sure whether using credit cards is the right move for you, try asking yourself this one question: Can I commit to sticking to my budget and paying off my full credit card balance each month?

    If the answer is yes, then you can probably benefit from credit cards. If the answer is no, then it’s probably better to skip them.

    You can see my favorite credit cards by visiting the full list of my favorite money tools and resources.

  • How to Create a Five Year Financial Plan

    Do you know what you’ll be doing with your money five years from now?

    Chances are, no. Five years seems so far away, and it’s hard enough to figure out what you’re going to do with your money next month, let alone years from now. 

    But data consistently shows that those with a written plan are far more likely to reach their goals. And by making a plan for your future money, you can make intentional choices and have the exact future you envision.


    How to Create a Five Year Financial Plan

    There are affiliate links in this post, meaning I may make a small commission at no additional cost to you. For more information, see my full disclosure policy here.


    Why create a five-year financial plan?

    I know what you’re probably wondering: Why five years? It seems like an arbitrary amount of time, but it’s really not.

    Five years is a short enough period of time that you can reasonably set goals for that period. While you don’t have a crystal ball, you may be able to picture what you’d like your life to look like five years from now.

    Five years is also long enough that even for those bigger goals, five years could be long enough to help you save up enough money and accomplish them.

    Saving for the down payment on a home seems daunting when you decide you want to buy next year. But if you know you’ll want to buy several years down the road, you can start saving early.

    Five years seems like a long time, but it goes fast. And if you don’t make a financial plan for those five— years, they’ll pass before you know it.


    How to create a financial plan


    I truly believe that the first step in any goal-setting exercise — whether it’s setting an individual goal or making a full-blown financial plan — should be identifying your values.

    Far too often, we live our lives on autopilot, doing the things we think we’re “supposed to” be doing. But we haven’t taken the time to really decide whether that life actually aligns with our values.

    One of the first exercises I did with my money coaching clients when I offered that service was helping them to identify their most important values. From there, we could make sure their budget prioritized those values. And then we could set financial goals that aligned with them.

    So think about what you value. Maybe you value freedom, and that manifests itself in travel. Or maybe you value security, and a life well-lived would include buying a home and having a large nest egg. 

    If you’re having trouble thinking of values, you can literally just Google “list of values.” You can read through it and see what resonates with you.



    As you sit down to craft your five-year financial plan, consider what your next five years will look like. Envision your life one, and then three, and then five years from now.

    Where do you live — both the location and the actual home? What do you do for work? Are you married? Do you have children? What hobbies do you do in your spare time? What kind of car are you driving? What trips are you taking?

    It might seem like you can’t possibly know what you’ll be doing five years from now. But if you really think about it, I’m guessing you can come up with a vision for what you might like to be doing.

    As you picture your life in the future, write down everything you see.



    Alright, you know that list you just made of what you envision for your life in the next five years? Well, it’s time to take that list and turn it into specific financial goals.

    For each thing you’d like to accomplish, write down the date you’d like to accomplish it by and how much it will cost.

    Some of these will be easy. You might know that a big goal is to become debt-free in the next few years, and you currently have $50,000 in debt. But some might be trickier. Maybe you think you’ll be having a wedding in a few years but have no idea how much you’ll need to save.

    No matter what your goal is, chances are you can do a little research to find out how much you can expect to spend.

    Once you have your list of goals, I want you to do one very difficult thing: prioritize them. I know it’s hard to look at a list of goals and decide which you want to come first. But at the end of the day, it’s easier to save for one big goal than many.

    I recommend putting them in the order you’d like to achieve them and going all-in on the biggest one. That way, instead of making little progress on many things, you can make big progress on one.

    Read More: How to Set Financial Goals



    Once you’ve figured out what goals you plan to save for over the next five years, it’s time to figure out how much you’ll save.

    When you sat down and identified your goals, you hopefully identified when you want to reach each goal and how much it will cost. If so, this part should be pretty easy.

    All it takes is a little math. Divide the amount you need to save for your goals by the number of months you have to save. You’ll know how much you need to save each month to make it happen.

    You might see that number and realize you could be saving even more. That’s great news because it means you can move on to the next goal that much faster.

    On the other hand, you might see the number and realize that your current list of goals isn’t exactly realistic over the next five years. That’s totally fine and pretty normal.

    In that case, you have a few options:

    1. Adjust your expectations so that your goals fit within your current saving capabilities, or
    2. Decide that you’re willing to do what it takes to reach your goals no matter what, even if it means either drastically cutting your spending or increasing your income, or
    3. Do a little of each. Adjust your goals slightly, but also reduce spending and increase your income to make sure you can reach your goals.

    It’s okay for goals to feel a little uncomfortable.

    When Brandon and I first set the goal of buying an RV and traveling full-time, I didn’t actually think we’d be able to do it. I ran the numbers dozens of times, and it just never seemed possible. But lo and behold, we accomplished our goal, and we even did it ahead of schedule.

    So I guess what I’m saying is plan as much as you can and leave room for a little bit of magic.



    Yep, we’re going to talk about the B-word. I’ve talked to so many women over the years who tell me they hate budgeting and they want a way to reach their goals.

    And yes, there are personal finance experts who will tell you they can help you reach your goals without a budget. But then they describe the spending plan they teach, and it sounds an awful lot like a budget, just with a different name.

    At the end of the day, the only way to be intentional about the amount of money leaving your bank account each month is with a budget. And when you budget, it’s easy to create a five-year financial plan because you know how much you’ll be able to save each month for the foreseeable future.

    If you don’t have a monthly budget yet and aren’t sure where to start, you can use my guide: A Step-by-Step Guide to Creating a Monthly Budget.



    Tracking your progress is one of the most important steps to any plan, and your financial plan is no exception. After all, it’s all about follow-through. And how will you know if you’re following through if you don’t actually track your progress?

    I track my progress in a couple of ways:

    1. I sit down each week and update my budget and spending tracker to make sure I’m staying within my monthly budget. If I’m not staying on track, I can cut back as needed.
    2. I sit down each month and plan my budget for the following month and update my net worth. If I went over budget the previous month, I adjust, either by changing how much I budget for or figuring out how I can cut back on certain areas.



    As you make your way through your financial plan, it’s important to check in on your progress.

    And while we’ve already talked about tracking your spending and your progress on a more granular level, it’s important to check in on the bigger picture too. Sit down each year and take an inventory of where you planned to be at that time versus where you actually are.

    By scheduling an annual check-in, you can change course if things aren’t going quite the way you expected them to be.

    It might be that you check in on your financial plan and find that you’re falling behind. In that case, you can either find a way to speed up your progress or adjust your expectations.

    On the other hand, you might check in on your plan and find that you’re ahead of schedule. That’s great news! In that case, you can adjust your goals to accomplish even more in your five-year plan.


    What to include in your financial plan


    A five-year financial plan seems like a huge undertaking, and it definitely is. And if you look at it as one big picture, then it’s going to be hard to make strides.

    Included in your five-year plan should be annual and monthly budgets.

    The concept of a monthly budget is pretty common. You figure out how much money you have coming in each month, and you create a plan for exactly how you’ll spend it.

    The idea of an annual budget isn’t quite as common, but it’s still an important way to make a plan for your money.

    Creating an annual budget can help you identify those less common expenses, such as your annual vehicle registration or holiday spending. I use sinking funds to save for these expenses and my annual budget to plan for them.

    Read More: What Are Sinking Funds and Why Do You Need Them in Your Budget?

    An annual budget can also help you to see what’s going to be happening with your money three, six, nine, and twelve months from now.

    Here’s an example: Let’s say you’ve got a monthly car payment, but you’ll be paying off your loan in just a few months. When you use an annual budget, you’ll know ahead of time where you’ll reallocate that money each month. As a result, you have a better idea of when you’ll reach your next goal after that.

    I love planning, and helping people to craft long-term financial plans is one of my favorite things, but I also know that the foundation of every great financial plan is your budget.



    Building an emergency fund should be the first step in anyone’s financial plan. It helps prevent future financial mishaps from becoming disasters and helps set a solid foundation for the rest of your financial goals.

    There are two reasons you need emergency savings:

    • One-time emergency expenses
    • Income replacement in the event of a job loss

    There’s definitely some debate as to how much you should save in your emergency fund. Certain financial experts recommend saving just $1,000 while you’re paying off debt, but I’d strongly recommend against this.

    As a minimum, I recommend saving three months of expenses in your emergency fund. Once you’re debt-free, I’d go even further and shoot for at least six months of expenses.

    One of the reasons an emergency fund is so important is that it helps you avoid future debt.

    Imagine you didn’t have an emergency fund and had an emergency $1,000 car repair. If you put it on the credit card and it takes a few months to pay it off, you’ll pay interest, meaning your emergency costs even more. But if you had an emergency fund, you could just pay for it and be done with it.

    Read More: How to Build an Emergency Fund & How Much to Save



    If you’re paying off debt, that should absolutely be a part of your five-year financial plan. Now, depending on how much debt you have, you may not plan to pay it all off in the next five years. For those with high student loan debt — which is many people these days — it’s okay to take longer if that fits your plan better.

    The first step to creating your debt payoff plan is to decide which strategy you’ll use to pay down your debt. The two most popular strategies are the debt snowball and debt avalanche.

    The debt snowball is where you prioritize your debt based on balance, paying down the smallest debts first. The debt avalanche is where you prioritize based on interest rate. You pay down the debt with the highest interest rate first.

    The other decision you’ll have to make is how much you’ll put toward debt each month. It can be tempting to pay just the minimum payments and use the money for other goals. But I highly recommend paying at least some extra to pay it down faster.

    Paying your debt off early can help you save hundreds, thousands, or even tens of thousands of dollars on interest. And if you have high-interest debt like credit cards, I think that should be your absolute priority. 

    I recommend using a tool like to help you plan your debt payoff. You can experiment with the order and see how much faster you’ll be debt-free by paying just a little extra each month.



    Your financial plan should also include any other financial goals you might be saving for. In fact, this right here is why a five-year financial plan is so important. When you can anticipate the goals you’ll want to reach several years from now, you can start preparing for them now.

    When crafting your financial plan, map out when you hope to achieve each of your financial goals and how much they’ll cost. From there, you can easily figure out how much you need to save each month.

    Common financial goals include:

    • Buying a home
    • Taking a vacation
    • Going back to school
    • Starting a business

    …and many, many more.



    As you’re mapping out your financial goals, be sure to map out any major life events you think will come up over the next five years. Unfortunately, we often don’t start planning and saving for these until they’re upon us, and then it’s hard to catch up.

    Major life events to consider in your financial plan include getting married, starting a family, or moving to a new city.

    Even if you don’t know for a fact that one of these things will happen, you can still plan and save for them. Plenty of people start saving for a wedding long before they’re engaged or start saving for kids long before they’re pregnant.



    When you’re young, it’s easy to brush off saving for retirement, thinking you have plenty of time. This is how I felt for years, and I was incredibly lucky to have an employer that required us to contribute a certain percentage of our income to our retirement accounts each year.

    No matter your age, retirement savings should be a part of your financial plan. Your age and how much you want to have when you retire will determine how big a part of your financial plan.

    For younger people who don’t plan to retire until they’re 60s, saving for retirement is actually pretty simple.

    The Securities and Exchange Commission reports the stock market produces a return of about 10% per year. Using that number, if you start saving when you’re 25 and invest $250 per month until you’re 65, you’ll retire with more than $1.3 million.

    In some situations, you may need to save more per month to reach your retirement goals. That might be the case if you’re closer to retirement age or if you’re working toward early retirement.

    Not sure how much you need to save? The Personal Capital Retirement Planner is one of my favorite tools to help figure it out.



    I’ve found increasing my income to be the best way to speed up my financial plan and reach my big financial goals. And the good news is that there are many ways to do this.

    Many people hope to start their own businesses someday. If this is you, make sure it’s a part of your financial plan. Online businesses today often quire little start-up costs, but it’s worth setting aside money either way. Luckily, you’ll ideally then see a return on that investment.

    If you aren’t interested in starting a business and simply want a way to increase your income temporarily, that’s even easier to do. 

    There are plenty of side hustles — either online or in-person — where you can earn extra money in your spare time. Once you know how much you can make each month, you can work that into your financial plan to help you reach your goals even faster.

    If you’re interested in finding additional income streams, check out my guide on how to earn more money this year.


    Final Thoughts

    Having a financial plan is essential to making sure you are where you want to be in the future. Five years is the perfect amount of time — it’s just short enough that you have an idea of what goals to save for and just long enough that you have plenty of time to save.

    Financial planning sounds a lot more complicated than it is. While you might picture sitting down with a financial planner and paying them a pretty penny to put together a plan for you, this is something you can do on your own — and for free!

  • How to Pay Yourself First and Finally Start Saving Money

    Here’s how most people approach saving money:

    They tell themselves that they’ll save whatever is left at the end of the month. But someone there never seems to be anything left when the end of the month rolls around.

    I was stuck in this pattern for years, and I know how frustrating it can be.

    I finally learned the “pay yourself first” strategy, which has completely changed the way I budget and has helped me to save money consistently each month.

    In this article, I’m sharing how you can pay yourself first to pay off debt, build your emergency fund, and save for your biggest financial goals.


    How to Pay Yourself First and Finally Start Saving Money


    What does it mean to pay yourself first? 

    The concept of paying yourself first means that you set aside money in your budget for savings and financial goals before budgeting for anything else. You treat your savings just as you would any other bill, meaning its non-negotiable.

    The entire purpose of the “pay yourself first” strategy is to avoid the problem I talked about earlier, where you run out of money each month before you have a chance to save any. 

    When you pay yourself first, you transfer money out of your checking account as soon as you get paid each month before spending any. Then, you can only spend what’s left.

    Paying yourself first is an effective way to build your emergency fund or save for a financial goal. You can also use it to pay off debt by making extra debt payments as soon as you get paid.


    How to pay yourself first

    Follow these steps to implement pay yourself first in your own budget.



    First things first, write down your monthly income and expenses.

    If you’re a salaried employee, calculating your monthly income will be easy. If you have an irregular income because you’re self-employed or are an hourly or tipped employee, this will take a little more work. I recommend checking what your income has been for the past 3-6 months and taking the average amount.

    It should also be easy to figure out your fixed monthly expenses. These are the non-negotiable expenses you have to pay each month, like rent, insurance, and your student loan payment.

    Once you’ve calculated your fixed expenses, try to determine how much you spend on other expenses throughout the month. Your variable expenses will include things like groceries, dining out, transportation, clothing, etc. Your discretionary spending may change each month, but you can probably look back a few months and find the average.

    Read More: Creating a Monthly Budget: A Step-by-Step Guide



    One of the most important steps in paying yourself first (at least in my opinion) is setting financial goals.

    It’s easy to tell yourself that you’ll save money. But unless you really have a why behind your savings, it can be hard to stick with it. If you set a specific goal, you’ll have something to motivate you to follow through. 

    Savings goals you might save for include:

    • Building your emergency fund
    • Start saving for retirement
    • Saving for a new car
    • Saving for the downpayment on a home
    • Saving for a vacation
    • Renovate your home
    • Start a business
    • Reach financial independence

    You may have some short-term goals that you can reach in just a few months. On the other hand, some of your goals may be long-term goals that you won’t reach for several years. The method of paying yourself first can work for either type of goal.

    Read More: How to Set Financial Goals You Can Achieve



    Once you’ve calculated your income and expenses and figured out what you want to save for, decide how much you’ll save each month. You want to make sure you’re saving enough to make a real difference but not so much that you don’t have enough money for your monthly spending.

    An easy way to figure out how much to save is to divide the amount you want to save by the number of months before you want to have it saved.

    Let’s say you’re planning a vacation next summer, and you expect to spend around $2,000. If the trip is 12 months away, just divide $2,000 by 12. You’ll find that you need to save roughly $167 per month for the next year.

    Of course, the amount you can pay yourself is also limited by your income. While you might love to buy a house next year, if it requires that you save $5,000 per month and you don’t earn that much, that financial goal may simply not be a reality.

    And in the case that you have multiple financial goals you’re saving for, as many of us do, then you’ll have to decide how you can either prioritize one goal or split your savings between the two. For example, I have the goal of financial independence that I’m always saving for, but I simultaneously save for other smaller financial goals at the same time.

    If you’re new to paying yourself first, you might worry about overspending and running out of money. If you’re just getting started, begin with a small automatic transfer.

    When I first started using this strategy, I did an automatic transfer of $50 the first week of the month. As I adjusted to my new spending limitations, I increased my monthly savings.



    A great way to ensure you pay yourself first every month is to automate it. Set up an automatic transfer to go through a day or two after payday each month. That way, you’re saving regularly, and you don’t have to think about it.

    I can almost guarantee that if you don’t automatic it, you’ll often come up with an excuse for why you can’t save as much this month.

    And if you’re using the pay yourself first method to pay off debt, just set up an automatic payment each month for the amount you want to pay.

    The goal you’re working toward will determine where the automatic transfer is going. Depending on the goal, you might have your automatic transfer going to a savings account, a retirement fund, a taxable brokerage account, a debt account, or something else.

    Read More: 6 Easy Ways to Automate Your Finances

    As a quick tip, some employers allow you to set up your direct deposit so you can split your paycheck between multiple accounts. This strategy can be particularly useful in helping direct money to your savings account.


    Benefits of paying yourself first

    Paying yourself first is one of the best strategies to help you build your savings or pay off debt every month.

    Many individuals and families struggle to make progress on their savings. The most recent data shows that only about 39% of Americans would be able to cover a $1,000 emergency.

    Not only can paying yourself first help to prepare you for a financial emergency, but it can also help you make progress on your financial goals.

    The pay-yourself-first method is especially well-suited for people who struggle with spending. Think of it as a reverse budget. Rather than having to stick to your spending plan to save, you’ll be limited to spending what’s left after saving.


    Final Thoughts

    I know how frustrating it can feel to be so determined to save, and yet you somehow never manage to. Paying yourself first is one of the best ways to reach your financial goals, even if you’ve struggled to do so in the past. Trust me – your future self will thank you.

  • 14 Good Financial Habits to Adopt in 2023

    More than 97 million people plan to set financial goals for themselves. But without a solid plan in place and the right habits to back it up, it can be challenging to reach those goals.

    Trust me – I was the queen of setting goals and new year’s resolutions for myself. But then, I would become disappointed that they would never come to fruition.

    That’s because I never took action to make them happen. I thought I could go from zero to 100. But without a solid plan in place and the right habits to back it up, reaching new goals can be challenging.

    In reality, reaching your goals has more to do with the habits you create. Whether your goal is related to your personal finances, your health, your relationships or anything else, your habits will ultimately determine whether you succeed.

    In this article, you’ll learn 14 good financial habits you can adopt in 2023 to help you reach your financial goals this year and beyond.


    14 Financial Habits to Adopt in 2021


    Track your spending

    To change anything in your finances, you need to know where you are now, including where your money is going.

    I never used to track my spending, yet I’d be confused as to how I ran out of money each month. When I finally sat down and tracked my spending, I was shocked.

    I learned I was spending a lot of my income on dining out and food delivery. I also learned that those small Target runs throughout the month were really adding up in my budget.

    Tracking your spending can open your eyes to where your money is going. It shows you where you’re overspending and can help you set a budget for the future.

    For me, tracking my spending helped me see where I was starting from so I could figure out where I wanted to go. It helped me get real about where I could cut back and how much I could start putting toward my goals if I did.


    Set financial goals

    I talk to so many people who tell me that they know they should be spending money, but they don’t know how much to save or how to do it. And even if they did know, they don’t really have the motivation to do so.

    This is what happens when you don’t have specific financial goals. It’s much harder to save when you really don’t know why you’re saving.

    But when you set financial goals, you know exactly why you’re saving and how much you need to save. For example, if I know I want to spend $3,000 on a vacation with my husband next year, I can figure out how much to save each month to make it happen.

    Plus, the thought of meeting your goal will provide all the motivation you need. If I know I have a dream vacation coming up next year, I’m probably going to be a lot more motivated to save than I would be without a goal.


    Schedule a weekly money date

    Checking in on your finances is so important. I sit down once per week and update my budget, record all of my expenses, and adjust anything I need to. I also sit down monthly to close out my budget for the month and plan the following month’s budget.

    Having a regular money date with yourself is a great way to stay on top of your finances. Put it on the calendar, so you never forget. 

    And if you share finances with someone else, you can have a regular money date to talk about your family finances. For my husband and I, money dates usually include us talking about what our spending looked like the previous month, what special occasions might be coming up in the next month, and any changes we’re considering making to our budget or finances.


    Pay yourself first

    For years I would tell myself that I would save all the money I had left at the end of each month. But the end of every month would roll around, and I’d somehow never have anything left.

    I finally learned the solution to this problem: paying myself first.

    When you pay yourself first, you decide ahead of time how much you want to save each month, whether it be in your emergency fund, retirement account, or toward a financial goal.

    Then, you transfer that money over to savings as soon as you get paid, before you have a chance to spend the money.

    I’ve found the best way to do this is to automate my savings so that I never have to remember to do it.

    Read More: How to Pay Yourself First and Finally Start Saving Money


    Budget one month ahead

    One of my favorite budgeting hacks is to be one month ahead with my budget.

    Most people budget with the current month’s income. In other words, they use their January paycheck to pay their January bills.

    But when you’re one month ahead on your budget, you use your January paycheck to pay February’s bills.

    This type of budgeting has tons of benefits. First, this one-month buffer serves as a small emergency fund. It also helps you to avoid timing your bills to your paychecks, as many people have to do.

    If you want to give it a shot, I have an entire guide on how to get one month ahead on your budget.


    Use your credit cards responsibly

    I love credit cards. I put just about everything on a credit card. The problem is that most people are using credit cards incorrectly.

    First, many people put their expenses on a credit card and then pay it off with the next month’s income. This means they’re spending money they haven’t even earned yet.

    Another habit people have is to charge things to their credit card but then not pay off the full balance.

    Here are a few rules of thumb for using credit cards responsibly:

    1. Only spend money you already have in your checking account
    2. Keep your credit card utilization below 30%
    3. Pay your balance off in full every month

    Read More: How to Use Credit Cards Responsibly


    Make more than your minimum debt payments

    When you have debt, it can be tempting to simply pay the minimum monthly payment the lender requires of you. That way, you have more money each month to spend on other things.

    The problem is that you end up spending way more money in the long run. Depending on the amount of debt you have, paying your debt off faster could save you hundreds, thousands, or even tens of thousands of dollars in interest.

    The sooner you pay your debt off, the sooner you have that money available each month to put somewhere else in your budget.

    And remember, there are other downsides to having debt. Suppose you wanted to buy a house. If you have too much debt, a lender is unlikely to approve you for a mortgage.

    Read More: Debt Snowball vs. Debt Avalanche: Which Strategy is Right For You?


    Avoid monthly payments

    Stores try to convince you to spend money by looking at a purchase as a monthly payment rather than as the full purchase price. New financial services allow you to use a monthly payment for just about everything these days, whether it’s a $1,000 computer or a $25 shirt.

    But remember that payment plans force you to spend more money in the long run. And you normalize the habit of having monthly payments.

    It’s better to pay for everything you can in full.

    Certainly, there are exceptions. When it comes to buying a house, you’ll almost certainly borrow money and have a monthly payment. But for smaller purchases, avoid monthly payments as much as possible.


    Continue to learn about money

    Even if you feel like you’ve got your financial shit down, there’s always room to learn more. Even though I have a lot of experience in personal finance and help coach others, I still regularly read personal finance books and listen to personal finance podcasts.

    As you reach certain goals, there’s likely more to learn for the next one. Let’s say you finally paid off all your debt and have learned to stick to your budget. Now it might be time to pick up a book on investing.


    Learn your spending triggers

    Everyone has their own spending triggers. For some people, a sales email in their inbox is a trigger. For others, it’s walking into Target. For others, it might be having a really bad day.

    One of the best ways to save money is to identify your spending triggers and find ways to combat them.

    Let’s say your spending trigger is sales emails from your favorite store. An easy way to combat this would be to unsubscribe from that store’s emails.

    I used to struggle with emotional shopping, especially as my first marriage was ending. When I was particularly upset, I’d spend money. I overcame that by dealing with my emotions head-on rather than looking for a different outlet.


    Maintain an emergency fund

    I think 2020 taught everyone the importance of having an emergency fund. Millions of people lost jobs this year, Congress dragged its feet in getting aid to the people who really needed it, and the pandemic resulted in huge medical bills for many families.

    Even if your finances weren’t affected by the pandemic, chances are you’ve had a financial emergency in the past that you struggled to pay.

    If you’re just getting started and have high-interest debt like credit cards to pay off, I recommend saving at least one month’s worth of expenses in your emergency fund. Eventually, you can work your way up to 3-6 months.

    The important piece is replenishing your emergency fund when you use it. Let’s say you’ve got an emergency fund of $5,000 and end up with $1,000 worth of car repairs. Your emergency fund is down to $4,000. Your next financial priority should be replenishing that $1,000 before you start saving for something else.

    Read More: How to Build an Emergency Fund and How Much to Save


    Meal plan

    Meal planning has been the single most effective way for me to cut down on grocery spending.

    If I go into the grocery store without a list, it’s pretty much a guarantee that I’m going to overspend. But if I make a meal plan and grocery list ahead of time, I’m good about sticking with it.

    Not only does meal planning help me only to buy the things I really need, but it also allows me to price meals out ahead of time so I know roughly how much I’ll spend.


    Give to causes you’re passionate about

    For many people, 2020 really showed the importance of financially supporting causes that are important to you. 

    Charitable giving in 2020 increased from the previous year, despite the financial struggles many faced. And a special provision in the tax law has allowed everyone to deduct up to $300 for donations, even if they don’t itemize their deductions.

    Chances are you already know which causes are most important to you, whether it’s combating climate change, protecting animals, promoting diversity, etc.

    Whatever it is, take a look at your budget and see if you can swing a small monthly donation to your favorite causes.


    Don’t try to keep up with the Joneses

    Everyone has probably heard the phrase “keeping up with the Joneses.” And most people probably brush it off, thinking it doesn’t apply to them.

    But you might be surprised.

    As we earn more money, we tend to subconsciously increase our spending to go with it — aka lifestyle inflation.

    We upgrade apartments or homes. We buy nicer cars. We eat at nicer restaurants than we did when we had our first jobs. We spend more on clothing, home decor, etc.

    There’s nothing inherently wrong with any of these things. In fact, I tell my coaching clients they should identify areas of their lives where they spend guilt-free — for Brandon and I, it’s live music and eating out.

    But it becomes a problem when you spend more in every category.

    A good way to combat this problem is to decide ahead of time how you’ll upgrade your lifestyle. If you get a raise, decide ahead of time which spending categories you’ll increase and which will stay the same. That way they don’t all increase without you noticing.


    Final Thoughts

    2023 can be the year you finally turn your finances around and reach all of your goals. By implementing just a few of the good financial habits on this list (or more than a few), you’ll be amazed at the progress you see.

  • Traditional IRA vs. Roth IRA: Which is Better?

    One of the most common questions I get from people who are ready to get serious about investing is the best tool to use.

    Of course, many of us get our start investing in a workplace retirement plan, such as a 401(k) or 403(b). But there are also options to help you invest for retirement outside of your employer. Those options include a traditional IRA and Roth IRA.

    Both traditional and Roth IRAs come with some advantages and disadvantages, especially as it relates to your taxes. As a result, each may be best suited to a certain type of investor.

    In this article, I’ll explain the differences between the two types of retirement accounts and how to choose the right one for you.


    Traditional IRA vs. Roth IRA: Which is Better?


    What is an IRA?

    An IRA (which stands for individual retirement account) is a tax-advantaged investment account to help you save for retirement. Unlike 401(k) plans, which are offered through an employer, IRAs are for individuals to invest on their own.

    You can open an IRA at just about any brokerage firm. Once you open the account and start contributing money, you can decide how you want to invest the money within the account.


    Why open an IRA

    If you already have a 401(k) through your employer, you might be wondering why an IRA is necessary at all. There are a few reasons why I recommend everyone open an IRA, even if you have an employer-sponsored retirement plan:

    1. An IRA allows you to invest above and beyond the 401(k) contribution limits
    2. An IRA allows you to diversify your tax advantages — If you have a traditional 401(k), you can open a Roth IRA, and vice versa
    3. An IRA gives you more control over your investment decisions


    What is a Traditional IRA?

    A traditional IRA is similar to a 401(k). You can contribute to the account throughout the year and then take a tax deduction for your contributions. Contributing to a traditional IRA reduces the amount of taxes you owe in that year.

    The money grows in the account. Once it comes time to take money out during retirement, you’ll pay income taxes on your withdrawals.


    What is a Roth IRA?

    A Roth IRA is also a tax-advantaged retirement account, but you get the tax advantage at a different time.

    When you contribute to a Roth IRA, you do so with after-tax money. There’s no tax break in the year you contribute the money. The money grows in your IRA, and then you can withdraw it tax-free during retirement.


    Similarities and differences

    Traditional IRAs and Roth IRAs have a lot in common, but there are also some key differences you need to know. Here’s a table to explain all of the similarities and differences:



    Traditional IRA

    Roth IRA

    Contribution Limit



    Eligibility Requirement

    Available to anyone

    Available to individuals with income $144,000 or lower (single filers) or $214,000 (joint filers)

    Tax-Deductible Contributions



    Tax-Free Withdrawals



    Withdrawal Penalties

    Early withdrawals on contributions and earnings taxed at 10%

    Early withdrawals on earnings taxed at 10%; No penalties for early withdrawals of contributions

    Withdrawal Requirements

    No required withdrawals

    Required minimum distributions starting at age 72

    Best For

    People who expect to be in a lower tax bracket when they retire

    People who expect to be in a higher tax bracket when they retire

    *For the traditional IRA, whether you can deduct your contributions depends on your annual income and whether you have a retirement plan through your employer. If you don’t have a workplace retirement plan, you can deduct your contributions no matter what your income. If you have a workplace retirement plan, you can no longer deduct your contributions once your income reaches $78,000 for a single filer and $129,000 for a married filer.

    Should I choose a Traditional IRA or Roth IRA?

    Plenty of people find themselves overwhelmed when choosing between the traditional IRA and the Roth IRA. It ultimately comes down to your personal financial and tax situation.

    Ultimately, it depends on your financial situation today compared to what you expect your financial situation to be in the future. 

    Traditional and Roth IRAs give you a tax advantage at different times. A traditional IRA gives you a tax break in the year you make the contribution. Because you can deduct your contributions, your taxable income – and, therefore, the amount you owe in taxes – is lower.

    As a result, a traditional IRA may be the right option for someone with a high income today who expects to have a lower income during retirement. You take the tax benefit now while your tax rate is high rather than later when your tax rate will be lower.

    On the other hand, a Roth IRA tends to be a great option for people early in their careers who expect their incomes to grow. You can pay the full tax amount in the current year when your tax rate is relatively low. Then, you won’t have to pay taxes when you withdraw the money when your tax rate may be higher.

    If you’re still struggling to choose the right IRA, you can use a Roth vs. traditional IRA calculator where you enter some basic financial information, and it recommends the right retirement savings tool for you.


    As a caveat to the information about, there are certain income limits applied to IRAs.

    We’ve already addressed the income limit on deducting your contributions to a traditional IRA. However, there is also an income limit on contributions to a Roth IRA. If your income is higher than the limit, you can’t contribute directly to a Roth IRA.

    These income limits may impact which IRA you choose. After all, there’s no use contributing to a retirement account if you won’t get the tax benefits. If income limits prevent you from taking advantage of these accounts or fully enjoying the benefits, it may be worth choosing a different option or contributing more to your workplace retirement plan.

    As a final note, self-employed individuals have more options aside from the traditional and Roth IRA. Learn more about how to save for retirement when you’re self-employed.


    Final Thoughts

    Choosing the right type of retirement account can be overwhelming. Hopefully, this explanation of the differences between the traditional IRA and Roth IRA will help you find the right account for you.

    And remember — both of these accounts help you to save for retirement in a tax-advantaged way. As long as you’re setting money aside for the future, you’re on the right track.

  • What is Net Worth (And Why You Should Care About It)

    I didn’t start tracking my net worth until I was in my late twenties. If I’m being honest, I didn’t think it was all that important. I thought my income was the metric that really mattered.

    But here’s the problem with that: your income is just a snapshot of your finances. It doesn’t show the big picture.

    And by not paying attention to my net worth, I was able to conveniently ignore my lingering debt and low savings rate.

    But once I started tracking my net worth each month, I really saw my finances start to transform. I felt more motivated to make extra debt payments and move money into my savings account.

    Not sure what net worth is or why you should care about it? Not sure how net worth is calculated? Stay tuned, because we’re going to cover all of that in this article.


    What is Net Worth (And Why You Should Care About It)


    What is net worth?

    Your net worth is the difference between your assets and your liabilities. It’s one of the most important financial metrics there is. It helps to measure your overall financial picture and track your progress toward meeting your financial goals.


    How do you calculate net worth?

    Your net worth is the difference between what you own and what you owe. And with a little math, it’s easy to figure out on your own. Here’s how to get started.

    1. Add up all of your assets. This includes money in your bank and investment accounts. It also includes the dollar value of any assets you own such as real estate, vehicles, or valuable collectibles.
    2. Add up all of your liabilities. Your liabilities include any money you owe. This could include student loans, credit card debt, car loan, mortgage, medical debt, back taxes, and anything else you owe.
    3. Subtract your liabilities from your assets. The difference between these two numbers is your net worth. The formula looks like this:

    Assets – Liabilities = Net Worth



    Thanks to student loans, most people today (nearly 70%) graduate from college with significant debt. And unfortunately, this means they’re also graduating with a negative net worth.

    Adding up your net worth for the first time and finding that it’s negative can be shocking and, frankly, a punch to the gut. Trust me, I went through that feeling myself.

    As you calculate your own net worth, please separate your net worth from your self-worth. Your net worth is just a number. It says nothing about you as a person or your value as a human. About one in five households have a net worth that’s either zero or negative.

    You can take steps to increase your net worth, but don’t wait until you do to value your self-worth.

    Read More: How to Develop a Positive Money Mindset


    Why is net worth important?

    You might find yourself wondering why your net worth really matters. That was me for years. I thought that my income level was far more important. After all, it had more of an impact on my day-to-day life.

    But your net worth is actually super important! It represents the big picture of your finances and gives you an idea of how you’re using the money you make.



    One of the benefits of tracking your net worth every month is that you can start to notice a trend. Does the number get bigger every month? Then you’re moving in the right direction by paying off debt and increasing your savings. But if the number gets smaller each month, it’s time to make some changes.



    People often use income as the most important metric in their finances. But your income isn’t guaranteed. If you lose your job tomorrow, you’ll be stuck relying on your savings to pay the bills. And considering many Americans are living paycheck to paycheck, the amount of money they were making no longer matters when the job is gone. 

    Your net worth gives you an idea of just how prepared you are to deal with a financial emergency like a job loss, as well as how prepared you’ll be for retirement.



    It’s easy to ignore your total debt and just focus on the monthly payment. This might feel better at the moment, but it doesn’t help you to pay it off any faster. By calculating your net worth, you’re forced to come to terms with the impact your debt has on your overall financial picture.



    When you borrow money, lenders want to know you’re going to be able to pay back what you owe. If you already have significant debts and not many assets, then a lender may see you as a bigger risk. You could end up being denied a loan, or get approved for a loan but have a high interest rate.


    How to grow your net worth

    You might be a little discouraged seeing your net worth for the first time — I know I was! For those of us graduating from college with debt, it can be discouraging to start adulthood with a negative net worth. But there are plenty of ways to boost it!

    • Pay off debt. All of your debt counts as a liability in your net worth. The fewer liabilities you have, the higher your net worth is. As you pay down your debt, you’ll see your net worth increase.
    • Automate your savings. I used to struggle so much with saving. I’d tell myself that I’d save whatever I had left at the end of the month, but then there would never be anything left when that time came. The easy solution? Automation. Set up an automatic transfer from your checking account to your savings account right after payday and you never have to worry about spending that money on something else first.
    • Start investing. Investing is a great way to boost your net worth even faster than just saving. Because rather than just having your money sitting there and adding a bit to it each month, it’s growing without you having to do anything. 
    • Cut your expenses. One of the reasons people don’t see their net worth grow each month is that, even though they make good money, they spend it all each month. By reducing your expenses each month, you can start to see your net worth grow.
    • Increase your income. Cutting expenses is great and all, but you can only do it to a point. You still have bills to pay. Plus, you don’t want to cut everything you enjoy from your budget. Instead, you can increase your income to start saving more.

    Read More: How We’re Planning to Pay Off Six Figures of Debt


    Tools to help you track your net worth

    Tracking your net worth regularly is an excellent way to check in on your progress and make sure you’re moving in the wrong direction. But I’m guessing you don’t want to sit down and do the math each month! Here are a few ways you can easily track it:

    1. You Need a Budget: My favorite budgeting app also happens to have a reports feature where you can track your net worth. I love watching mine change each month as I increase my savings and pay off debt!
    2. Personal Capital: This digital tool is also great for tracking your net worth. You link all of your bank, debt, and investment accounts. Then your financial dashboard reports your net worth. Plus, it’s free, so if you aren’t already using a budgeting app like YNAB, then Personal Capital is a great alternative.


    Final Thoughts

    I spent years thinking my net worth wasn’t really important. I focused solely on my income as a measure of my financial success. It wasn’t until I started tracking my net worth that I was able to look at the big picture and start seeing progress in my finances — progress that’s going to serve me in the future.

  • What is a High-Yield Savings Account (and Why You Need One)

    I haven’t always been good at saving. I’ve always kept a savings account at my regular bank, but admittedly, I didn’t put much money into it.

    I always said I’d transfer whatever money I had left at the end of each month. But whenever the end of the month rolled around, there was nothing left.

    When I finally decided to turn my finances around, one of the first things I did was build a small emergency fund.

    But then the problem was that I had a large sum of money sitting in the bank, earning next to nothing in interest. So I finally got around to opening a high-yield savings account, meaning my money is making even more money.

    Are you going to get rich using a high-yield savings account? Definitely not. But they’re an excellent first step for anyone who wants to maximize their savings and earn a bit of extra money each month without any additional work.


    What is a High Yield Savings Account (And Why You Need One)


    What is a high-yield savings account?

    A high-yield savings account (HYSA) is just like any other type of savings account, except it pays a much higher return.

    The savings account at your regular bank pays you interest each month. But in most cases, it’s a few cents per month. Not really anything to get excited about. But the rates on high-yield savings accounts can be significantly larger.

    Consider this: the rate on a typical savings account is about 0.05%. The rate on a high-yield savings account is usually at least 0.50%. And when interest rates are higher, it can be 2.0% or higher. So the rate on a high-yield savings account is 20x to 40x the rate on a traditional savings account.


    How do high-yield savings accounts work?

    High-yield savings accounts use compound interest, meaning you earn interest each month, and then that money gets added to your principal. 

    Your interest rate is known as your APY (annual percentage yield). But most of these accounts pay monthly.

    Imagine that you have your $10,000 emergency fund in your savings account with an interest rate of 1.0%. 

    In the first month, you’d earn $8.30 in interest. The next month, you’d earn interest on the full $10,008.30. It doesn’t sound like it makes a big difference, and it’s definitely not enough to get rich. But after one year, you’d earn about $100.46 in interest. 

    And when interest rates are higher and your savings account has a return of 2.0% or more, you would have earned $201.84 in your first year.


    What should you use a high-yield savings account for?

    A high-yield savings account is not an investment. If you’re looking for an investment opportunity to grow your wealth, a savings account isn’t a replacement for a brokerage account.

    It’s also not the best place for money that you expect to need soon. It can take a few days to transfer money from your high-yield savings account to your checking account. For money you use regularly, it might be better kept in a savings account at your normal bank or in your checking account.

    Here are some good uses for your high-yield savings account:

    • Your emergency fund. This is my favorite. It’s just a big chunk of money sitting in the bank not getting touched. By putting it in a high-yield savings account, I can earn a little money on it each month. And here’s a tip for you: Every month when my emergency fund earns interest, I put that money toward one of my other financial goals. 
    • Financial goals less than 3-5 years out. The stock market can be a great way to save for financial goals, but not short-term financial goals. The market can be volatile, and the last thing you want is to have your brokerage account take a nosedive right before you plan to use that house downpayment fund. As a result, use a savings account for goals less than 3-5 years out. Brandon and I want to buy a house in the next couple of years, so we’re using our Ally savings account to save.


    Is my money safe in a high-yield savings account?

    As I mentioned earlier, a high-yield savings account is not an investment account. And it doesn’t come with the same risks as investing. In other words, there’s no chance of your account balance decreasing unless you actually take money out.

    As long as the bank you choose is federally insured (it should say if it is on the website), your money is insured by the FDIC up to $250,000 per person across all of your accounts.


    What to look for in a high-yield savings account


    The interest rate should be one of the biggest factors you consider when choosing the right savings account. After all, that’s the whole point, right?

    The interest rate you can get is going to vary by bank. Right now (November 2020), the good ones are anywhere from 0.50% to 1.0%.

    Keep in mind that they can change. When I signed up for my Ally account, the interest rate was 2.0%. Right now, it’s 0.60%.

    When the Fed lowers interest rates, rates go down across the board — including in high-yield savings accounts. When interest rates increase again, you can bet that the rates on these savings accounts will also increase.

    And if you sign up for an account and the rate suddenly goes down, don’t panic. If one bank is lowering its rate, chances are the rest are too.

    Edit: This post was originally written in 2020 when interest rates were at historically low amounts. At the end of 2022, when interest rates are higher, the rates in HYSAs are nearing 3%.



    Before signing up for a high-yield savings account, read up on what special features the bank offers. For example, Ally Bank offers a bucket feature. You can create individual buckets within your savings account for different things you’re saving for. I have one bucket for my emergency fund and one for my future house downpayment. 



    Obviously, you want to be able to get ahold of your money when you need it. And I’ve seen many people who prefer to keep their money in a savings account at the same bank as their checking account so they can do instant transfers.

    While I agree that you should make sure you can easily transfer money from your savings account, I actually like the idea of having it at a different bank.

    I use my high-yield savings account for my emergency fund. If I need to transfer money, it takes 2-4 days to hit my checking account. This means that I can’t impulsively spend that money. But 2-4 days is still short enough that if I lose my income and need to live off my emergency fund, I’ll have it in my checking account in time.



    Anytime you’re going to sign up for a financial product, you should find out what fees come attached to it. None of the best high-yield savings accounts I’ve seen have fees. So if the one you’re looking at does, run the other way.


    Which is the best high-yield savings account?

    There are so many high-yield savings accounts to choose from, and there really isn’t one that’s better than all the rest. It’s all about finding one that feels good to you.

    My favorite savings account is Ally (<< that’s not an affiliate link, I just really love their product). I really love the buckets features. I can visually break up my financial goals without having to open multiple savings accounts.

    I also use a Capital One high-yield savings account for my business — it’s where I keep my tax money until it’s time to send it to the IRS.

    A few other popular options are:

    • Marcus by Goldman Sachs
    • Citibank
    • SoFi


    Final Thoughts

    A high-yield savings account is a great way to earn a little extra cash on the money you’d be putting into savings anyway. It’s the perfect place to store your emergency fund or the money you’re saving for a big financial goal.

  • 8 Hacks to Boost Your Credit Score Quickly

    In the summer of 2020, Brandon and I bought an RV, sold most of our belongings, and hit the road to travel full-time. It’s been amazing, but we hit a few bumps in the road.

    Most notably, our car started on fire. Yes, you read that right. It literally started on fire.

    As you can imagine, there wasn’t much that could be done to salvage it, and we had to replace it quickly.

    When this happened, I started to panic a little. You see, my husband and I have both had our fair share of financial hiccups along the way, and we’ve both had times when our credit scores weren’t very good. I immediately started to worry about whether we’d be able to get a car loan.

    This worry came out of habit after years of worrying about money. In reality, Brandon and I have worked hard to be in the financial situation we are in today. All of that work not only allowed us to get a loan to replace our car, but our good credit scores also allowed us to get a good interest rate, so we wouldn’t be throwing away a ton of money on interest while we paid off the loan as quickly as possible.

    Like Brandon and I, many people find themselves at points in their lives where their credit score is suffering. And just like we did, you are 100% capable of increasing your credit score and making your financial life a heck of a lot easier.

    In this article, you’ll learn what a credit score is, why it matters, and how to start boosting yours quickly.



    What is a credit score?

    A credit score is a three-digit number that represents your creditworthiness (aka how likely you are to pay your bills on time). It’s based on the information on your credit report, which is compiled by three major credit bureaus: Experian, Equifax, and Transunion.

    You can think of your credit report as your report card and your credit score as the grade you receive. Credit scores range from 300-850 and are considered either poor, fair, good, very good, or excellent. The higher your credit score, the better.


    Why is a credit score important?

    Your credit score tells lenders how risky of a borrower you are. In other words, they use the number to decide how likely you are to pay them back when you borrow money.

    Your credit score has a huge impact on your finances. It can affect things like:

    • Whether you can borrow money. If lenders see you as too much of a risk, you may not be able to get a credit card, car loan, mortgage, etc.
    • Your interest rates. Even if you can get a loan, those with lower credit scores will end up with much higher interest rates. A good score can save you thousands of dollars.
    • Your ability to get an apartment. When you fill out an apartment application, your credit score is one of the factors the landlord considers. A poor credit score can prevent you from getting an apartment. 
    • Your job. Potential employers can access part of your credit report. They might use this information to make a hiring decision, especially if you’re applying for a job where you’ll have access to company or customer money.
    • Your insurance rates. Studies have connected credit scores to driving records. Because someone with a low credit score is a greater risk for insurance companies, your premiums will probably be higher. 


    How do I check my credit score?

    Federal law says that everyone can get a copy of their full credit report from each of the three credit bureaus (Equifax, Experian, and TransUnion) at least once per year by visiting

    That being said, your full credit report doesn’t actually include your credit score.

    Luckily, it’s not that difficult to get your credit score from other sources. First, you can use a free credit scoring site like Credit Karma or Experian. Depending on your credit card company, they may also provide you with a free credit score.

    It’s important to note that there are multiple types of credit scores, including FICO and VantageScore. Experian reports your FICO score, while services like Credit Karma report your VantageScore. The two different major types of credit scores are the reason why the credit score you see may not be the same as what a lender sees.


    What is a good credit score?

    Credit scores range from 300-850 and break down like this:

    • 300-579: Poor
    • 580-669: Fair
    • 670-739: Good
    • 740-799: Very Good
    • 800-850: Excellent

    850 is a perfect credit score. The good news is that you don’t need a perfect score to get the perks that come with good credit. Those with a score of 800 or above will have access to the best rates on the market. 

    If you have a very good score, meaning 740-799, you still have plenty of advantages going for you. You probably won’t struggle to get a loan, and you’ll have access to better-than-average rates.


    How can I raise my credit score quickly?

    If your credit score isn’t quite where you’d like it to be, you don’t need to panic. Your credit score is an ever-evolving number. And by making a few changes to your finances, you can start to see your score consistently increase.



    Paying your bills on time is one of the easiest things you can do to consistently improve your credit score. 

    When you fail to pay a bill on time, the company you owe money to reports it to the credit bureaus. It then shows up on your credit report and damages your credit score. 

    Be sure you’re paying your bills on time, and catch up as quickly as possible on any bills you’re currently behind on. 



    Your credit utilization, meaning the percentage of your available credit that you’re using, is one of the biggest factors going into calculating your credit score. 

    The lower your utilization, the better. And anything above 30% can damage your credit score. If you’re using more than 30% of your available credit, try to pay some off to get that number below 30%.



    Paying off debt isn’t the only way to improve your credit utilization. You can also try to increase your credit limits.

    Most credit card companies have a form on their website you can use to request a credit limit increase. I find that calling their customer service line is more effective. There’s something about talking to an actual person that seems to get the job done better.



    Your credit score tells lenders whether or not you use credit responsibly. So the best way to show them that you do is to — you guessed it — use your current credit responsibly.

    A few rules of thumb for credit cards include paying off your full balance each month (not just making the minimum payment), and keeping your total usage below 30% at any given time.



    We know that your credit utilization is important for your credit score. So is your age of credit, meaning the average number of years you’ve had each credit account. The longer your average age of credit, the better. 

    I have lots of people ask me if they should close old credit cards. But keeping them open actually helps improve both your credit utilization and your average age of credit!



    Opening a new credit card can be great and all, but it doesn’t check all the boxes to increase your credit score. It increases your credit utilization but shortens your average age of credit and goes on your credit report as a hard inquiry.

    But becoming an authorized user on someone else’s credit card can check all the boxes.

    • It reduces your credit utilization, assuming the credit card is under 30% of the limit
    • It increases your age of credit, because you get credit for the full life of the credit card
    • It doesn’t appear as a hard inquiry on your credit report

    I can tell you from personal experience that this one does the trick. My husband had a far lower credit limit than I did, meaning his credit utilization was higher when he used his credit cards. 

    We added him as an authorized user on my cards, and his credit score immediately shot up!



    Applying for new credit can hurt your credit in a few ways. First, it shows up on your credit report as a new hard inquiry, which can slightly decrease your score. This will stay on your credit report for two years.

    Opening new credit also decreases your average age of credit, which can drop your credit score.



    Data from the Federal Trade Commission shows that about one in five people has errors on their credit reports. This could look like a debt showing up as delinquent when it isn’t or a debt that isn’t yours at all showing up on your credit report. 

    Sometimes it’s simply a mistake on the part of a lender, but it could also be something more sinister like identity theft.

    Unfortunately, you have to be proactive about removing these errors from your credit report. No one else is going to do it for you. 

    This is why it’s important to check your credit report at least once per year. You can spot any errors right away, and dispute them with the credit bureaus.


    How long does it take to increase your credit score?

    Turning your credit around isn’t an instant process. You can’t start paying your bills on time or pay off some debt and expect your score to shoot up instantly.

    The good news is, however, that you can start boosting that number fairly quickly. Some things work faster than others.

    If you have a low credit utilization or short credit history, having someone add you as an authorized user to their credit card can boost your credit score a lot in just a few months. Similarly, paying off a bunch of credit card debt can make a big difference quickly.

    Other things will take longer to recover from. Delinquencies — aka missed payments — stay on your credit report for seven years. Bankruptcies stick around for ten years. If you have either of these, it’s just a matter of waiting for them to fall off, while making other positive changes in the process.


    Final Thoughts

    Your credit score is one of the most important numbers when it comes to your finances. It can be the determining factor when it comes to the loans, interest rates, and apartments you can get.

    While many people struggle with a low credit score at one point or another, there are plenty of changes you can make to start improving your score.

  • How to Stop Procrastinating on Getting Your Finances In Order

    I’ve always been a bit of a procrastinator. I was that kid in college staying up late the night before a big paper was due. 

    I was no different when it came to money. I spend years procrastinating on getting my finances in order. I didn’t budget, I didn’t have financial goals, and I didn’t make anything more than the minimum monthly payments on all of my debts. 

    When I finally stopped making excuses and started taking action, my situation changed dramatically. Not only did I finally take the time to learn what I didn’t already know about money, but I saw my savings grow and my debt shrink

    In this post, I’m sharing seven tips to help to stop procrastinating on your finances and finally start making money moves. 



    Start before you’re ready

    One of the most important rules I have for my biggest goals is to take messy action.

    Listen, you’re never going to feel ready to start getting your finances in order. And if you decide to wait until you make more money to start budgeting, you won’t know how to budget when you eventually make more money. 

    If you say you’ll start setting financial goals when you have money in savings, you may never have more money in savings. 

    It’s in those early days that you don’t feel ready that you can make the biggest difference in your finances. 

    So next time you find yourself putting off financial tasks because you don’t feel quite ready, just remember: Take messy action.


    Choose one thing to focus on at a time

    If you’ve never taken steps to get your finances in order, it can feel overwhelming to think about all the things you’ll have to tackle. Budgeting, saving, paying off debt, investing, etc. It’s definitely enough to make your head spin when you’re brand new.

    If you keep putting off getting started because you’re overwhelmed with everything there is to do, choose just one thing to focus on at a time.

    It might seem counterproductive, and you’ll probably feel like you should be doing more. But making moves in just one area of your finances is far better than taking no action at all. 

    If you’re just getting started on your finances, begin by tracking your income and spending. Once you know how much you’re making and where your money is going, you can look for overspending.

    And when you start identifying that wiggle room in your budget, you can start diving into saving and increasing your debt payments. 


    Set specific financial goals

    It’s hard to get motivated about anything when you’re not really sure why you’re doing it. Money is no different. How are you supposed to stick to your new financial plan when you have no idea what your end result is?

    When you have a specific financial goal, and you know exactly why you want it, it’s so much easier to stay motivated and stick to your financial plan, regardless of how lofty of a goal it is. 


    Put it on your calendar

    Sometimes our procrastination is simply a result of the fact that we keep telling ourselves that we’ll sit down and come up with a financial plan…and then we forget. 

    Don’t be too hard on yourself — it happens to the best of us!

    I’ve found that once I put something on my calendar, I’m almost certain to get to it. Even if I can’t get to it on the exact day I scheduled it for, I’m going to get it done within a day or so. I just can’t stand to have incomplete items on my to-do list!

    I recommend setting time aside on your calendar each week to check in on your finances. If you’re just getting started and aren’t paying any attention to your money, schedule yourself a money date on an evening when you’ve got no other plans. 

    This will allow you to really get a headstart on your finances, and having it on your calendar will make sure you get it done!

    The important thing is to treat this calendar event just like any other. You wouldn’t cancel on plans with your best friend, so don’t cancel on plans with yourself. 


    Automate as much as possible

    Have you ever told yourself that you’d start putting money aside to build an emergency fund, but then you never seem to have any money left at the end of the money?

    What about telling yourself you’re going to start investing but never getting around to making those transfers?

    The good news is that these financial tasks, and many others, are pretty easy to stop procrastinating on. You can stop procrastinating by automating. There are plenty of tasks that you can automate, rather than giving yourself the opportunity to procrastinate. 

    For example, you can automatically have money transferred from your checking account to your savings account the day after you get paid. That way, you don’t give yourself a chance to spend it first. 

    You can also automate things like retirement contributions and bill payments. 

    Read More: 6 Easy Ways to Automate Your Finances


    Leave room in your budget for fun

    I’ve found that one of the biggest reasons people procrastinate on getting their finances in order is that they fear that a financial plan will be too restrictive. They assume they’ll have to stop shopping or eating out once they get on a budget, so they put it off. 

    Well, I’ve got amazing news for you. Budgets don’t have to be restrictive at all. In fact, I actually find budgeting to be even more freeing. It allows me to spend money freely on things that I love. And I never have to feel guilty about it, because I’ve budgeted for it. 

    If you’re procrastinating on getting your finances in order because you’re worried about how restrictive it will be, remember to leave room in your budget for things that bring you joy. 

    For me, those things are eating out and seeing live music. It’s probably going to look different for you, but your budget should reflect the things you love!


    Final Thoughts

    Taking control of your finances feels like an uphill battle when you first get started, and it’s easy to come up with reasons to procrastinate. But the sooner you start taking action, the sooner you start seeing results. I hope these tips will help you to push your procrastination aside and starting taking real action.

  • The 14 Best Personal Finance Podcasts for Women

    When I decided to get serious about my finances, podcasts were one of the first places I turned to for information. I love learning from podcasts since I can listen as I’m driving, cleaning, or out walking the dog. 

    Over the years, I’ve found myself drawn to financial podcasts specifically created for women. It’s no secret that women have very different financial goals and financial needs.

    Luckily there’s no shortage today of amazing personal finance podcasts created by and for women. Here are a few of my favorites!

    If podcasts aren’t your style, you can check out these lists too:


    The 10 Best Personal Finance Podcasts for Women


    1. So Money

    So Money is one of the OG female money podcasts and was founded by Farnoosh Torabi. Farnoosh got her start as a financial reporter and wrote her first personal finance book in 2008. 

    Farnoosh talks about issues that are important to women, such as in her book, When She Makes More, where she talks about female breadwinners.

    Farnoosh started So Money in 2014 and, since then, has published over 1,000 episodes. Farnoosh does solo episodes where she answers your biggest money questions. She also interviews top authors and business owners about their financial journey and best money advice. She’s interviewed amazing women like Ariana Huffington, Gretchen Rubin, and Jen Sincero.

    Listen to So Money here


    2. Money Confidential

    Money Confidential is a podcast from Real Simple that’s hosted by the well-known personal finance writer Stefanie O’Connell Rodriquez.

    Stefanie herself is known for her work discussing the unique issues women face in the workplace and personal finances. This follows the same trend and explores some of the aspects of personal finance that people struggle with the most, including saving, spending, earning, investing, and more.

    In each episode, Stefanie starts by sharing an interview with a listener looking for advice on a particular topic. In the second part of the episode, Stefanie speaks with a financial expert who offers advice on that same topic.

    Each episode of Money Confidential has tangible advice you can implement right away, while also acknowledging the role that emotions play in money decisions.

    Listen to Money Confidential here.


    3. Money With Katie

    Katie Gattie Tassin has long been one of my favorite women talking about money on the internet, so you can imagine how excited I was when she started her podcast.

    Katie’s podcast, Money With Katie, is created for – as she refers to her audience – #RichGirls. In her podcast, she addresses topics that are important to women, including spending habits, smart investing, tax strategy, and more.

    One of the things I love about Katie’s work is her transition from solely tactical advice to a broader look at the challenges facing certain demographics and some of the societal issues holding us back. Don’t worry, though – she still shares plenty of the tactical tips.

    Listen to Money with Katie here.


    4. Financial Feminist

    The Financial Femenist podcast is created by Tori Dunlap, the founder of the Her First $100K community. She went viral in the personal finance community for saving her first $100K in her early twenties and has made it her mission to help women do the same. On her podcast and other social platforms, she educates women on the subject of personal finance to help them smash the patriarchy.

    On her podcast, Tori shares tactical advice on saving, investing, negotiating, and more. She also interviews experts about financial issues important to women and some of the societal difficulties women face in the workface (along with how to navigate them).

    Tori also has a new book out with the same name as her podcast.

    Listen to Financial Feminist here.


    5. Clever Girls Know

    The Clever Girls was one of the first finance blogs I really dove into when I decided to get serious about my finances. The Clever Girls founder Bola started the website after successfully saving $100,000 in just a few years and knowing that she had to teach other women how they could save money too. 

    The Clever Girls Know podcast covers all of the financial education and empowerment that women need to help them pay off debt, save money, start growing real wealth, and meet their big financial goals.

    Listen to Clever Girls Know here


    6. The Financial Confessions

    Though you might not be familiar with the Financial Confessions podcast, you’re almost certainly familiar with the company that runs it — The Financial Diet. 

    Founder Chelsea Fagan started The Financial Diet as a personal blog back in 2014. Since then, it has grown into a finance website that publishes great content every day aimed at helping women talk more openly and honestly about money. 

    So it comes as no surprise that Chelsea’s podcast, The Financial Confessions, is all about getting honest about money. On the show, Chelsea sits down to talk to influencers, celebrities, and financial experts in various industries to talk about all things money. They talk about the financial secrets of different industries, how your background influences the way you approach money, and the financial habits they recommend.

    Listen to The Financial Confessions here


    7. Inspired Budget Podcast

    I don’t remember when I first discussed Allison at Inspired Budget, but I’ve been following her for several years now. What first got my excited about her Instagram account was the real people’s budgets she shared. She literally shares a real person’s budget, as well as changes she recommends to help that person meet her goals.

    In 2021 Allision started her own podcast, The Inspired Budget Podcast, which helps women live their best life and reach their financial goals. Allison shares short but meaningful episodes on a particular financial topic. What I love about her content is that every podcast episode has a takeaway. In other words, every episode allows you to walk away with at least one improvement you can make to your finances right away.

    Listen to the Inspired Budget Podcast here.


    8. The Fairer Cents

    Founders Kara and Tanja started The Fairer Cents podcast to talk about all things money as it relates to women. Kara and Tanja are both successful in their own right. Kara is the founder of Bravely, a community that provides financial empowerment for women. Tanja wrote the book Work Optional, where she talks about her and her husband’s journey to early retirement. 

    On the podcast, Kara and Tanja dive into some of the stickier issues around money. They aim to serve those that have been underserved by financial media in the past, and cover issues like the wage gap and exploring how money affects relationships (and vice versa). 

    Listen to The Fairer Cents here.


    9. Journey to Launch

    Journey to Launch is a podcast hosted by Jamila, a Certified Financial Education Instructor who, along with her husband, is on her way to financial independence by the age of 40. 

    On her blog, Jamila shares the steps that she’s taken to save and invest well over $100K in just a couple of years. On the Journey to Launch podcast, Jamila teaches her audience how to set and create and create an actionable plan to go after their own goals.

    Listen to Journey to Launch here.


    10. Afford Anything

    Afford Anything founder Paula Pant started getting serious about money in a desperate attempt to avoid spending the rest of her life working 9-5 behind a desk. She built successful side hustles and saved enough money to quit her job and travel. 

    Since then, Paula has built a successful real estate business and shares her business and financial expertise on her podcast. Paula talks about being intentional in the way you spend your money. After all, you can afford anything, but not everything. 

    Listen to Afford Anything here.


    11. Money Girl Podcast

    The Money Girl podcast was started by Laura Adams in 2008. Like so many other finance bloggers and podcasters, Laura gained her expertise through her own personal finance journey of learning to pay off debt and get on a budget. 

    Since then, the show has gotten more than 40 million downloads and provides short and sweet personal finance tips to women. Laura’s podcast episodes are easily digestible, as many of them are just 15 minutes. Laura covers topics such as paying off debt, saving for retirement, and developing positive money habits.

    Listen to Money Girl here


    12. She Makes Money Moves

    The She Makes Money Moves podcast is put on by Glamour and iHeartRadio and hosted by Samantha Barry, Glamour’s editor-in-chief. In this podcast series, Barry talks about money as it relates to women. 

    She talks about topics such as student debt, divorce, and combining finances with your significant other with financial experts such as Farnoosh Torabi and Stefanie O’Connell, who also have podcast on this list.

    Listen to She Makes Money Moves here.


    13. HerMoney

    HerMoney was founded by Jean Chatzky, a personal finance reporter. Like so many women, she came to the realization that the traditional money media just wasn’t addressing the unique needs of women, so she started a website and podcast to address those needs herself. 

    HerMoney is all about improving the relationships that women have with money and leveling the playing field for financial security. 

    Listen to HerMoney here


    14. Mo’ Money Podcast

    Like so many other personal finance bloggers, Jessica Moorhouse started her blog in an effort to document her own personal finance journey and keep herself accountable. Seven years later, she’s an accredited financial counselor and provides coaching services to clients.

    On her Mo’ Money Podcast, Jessica talks to finance experts, celebrities, and authors to teach listeners about how to manage their money, make smarter money choices, earn more money, become debt-free, and live a more fulfilled and balanced life.

    Listen to the Mo’ Money Podcast here.


    Final Thoughts

    Podcasts have been one of my favorite ways to consume content, especially when I was just getting started with my own personal finance journey. 

    We know that the money needs of women are so unique. And luckily, there are plenty of podcasts out there specifically designed to help women take control of their money and meet their financial goals.