Author: Laura Adams, MBA

No matter if you call it, an emergency fund or a cash reserve, the idea is that we all need extra money set aside to stay safe from the unexpected. Not having enough cash on hand to pay for an emergency is why many people get into financial trouble. Having a safety net protects your finances and also gives you peace of mind. Life happens, and it usually costs money! But knowing the right amount of emergency cash to keep can be confusing. Today, I’ll answer several questions to help you figure out how much your emergency fund should be,…

A 401(k) retirement plan is one of the most powerful savings vehicles on the planet. If you’re fortunate enough to work for a company that offers one (or its sister for non-profits, a 403(b)), it’s a valuable benefit that you should take advantage of. But many people ignore their retirement plan at work because they don’t understand the rules, which may seem confusing at first. Or they worry about what happens to their account after they leave the company or mistakenly believe you must be an investing expert to use a retirement plan. Let’s talk about seven primary pros and cons of…

Amanda M. says: I contributed to my Roth IRA for 2020, but now I realize that my income will exceed the allowable annual limit. Can I fix this error and use the money to contribute to a traditional IRA instead, or do I have to pay a penalty? Thanks for your question, Amanda. And congrats on earning too much to qualify for a Roth IRA! That’s a significant milestone that I’ll explain here. While overcontributing to various tax-advantaged accounts—such as a retirement account, health savings account (HSA), and 529 college savings account—isn’t allowed, it can be easy to do by…

Have you ever wondered, “How many credit cards should I have? Is it wise to have a wallet full of them? Does having multiple credit cards hurt my credit score?” If you’ve been following this blog or the Money Girl podcast, you know the fantastic benefits of having excellent credit. The higher your credit scores, the more money you save on various products and services such as credit cards, lines of credit, car loans, mortgages, and insurance (in most states). Even if you never borrow money, your credit affects other areas of your financial life. But even if you never…

If you’ve ever shopped for a loan or gotten a credit card, you’ve seen the term APR, or annual percentage rate, all over financial websites and your account statements. But many people aren’t sure exactly what it means or how to get the best APR. Why is APR important? Being aware of the APR you’re paying on debt is crucial so you can prioritize it in the big picture of your financial life. Getting rid of debt in order of highest to lowest interest rate allows you to eliminate the most significant interest expense in your budget. Then you can…

There’s no doubt that raising kids is expensive. According to a 2017 report from the U.S. Department of Agriculture, the average cost for a child through age 17 is about $235,000. That doesn’t even include the cost of college! Fortunately, there are many good financial vehicles that help parents save and invest money for a child’s future. There’s no one account that makes sense for every family, but I’ll review the pros and cons of six of the best savings options so you know which one is right for you. 6 Ways to Save and Invest Money for Kids 529…

No matter how frugal you are, no one is immune from making impulse purchases from time to time. But the more you give in, the more harmful it can be to your financial life. Overspending is a common barrier to achieving key financial goals, such as saving 10% of your gross income for retirement or building a 3-month emergency cash cushion. Spending more than you can afford, or buying things you simply don’t need, can throw your financial stability off kilter. Instead of caving to impulses, develop strategies that stand in the way between the compulsion to buy and buying.…

THE QUICK AND DIRTY When your income exceeds annual thresholds for your tax filing status, you might get fewer or no tax benefits for having a retirement plan at work and a traditional IRA. Find out the income limits and how to choose the best retirement accounts for your situation. A podcast listener named Justin says, “I maxed out my 401(k) for 2022 and still have more money to invest. Can I also max out an IRA—and if so, would the contribution also be tax-deductible?” Justin, thanks for your question, and congratulations on being such a good saver! I’ll answer your question in…