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Yahoo
08-05-2025
- Business
- Yahoo
Here's how to use an extra paycheck this month
For workers who are used to receiving their paycheck every other week, the calendar is aligned in May to give some biweekly wage earners 'bonus' third paychecks during the year. For 2025, the bonus months are either January and August (if the first paycheck is paid on Jan. 3), or May and October (if the first paycheck is paid on Jan. 10). Having an extra paycheck in a month can really help if you're living paycheck to paycheck. It can provide the financial means to help you establish, or add to: an emergency fund pay down high-interest debt afford daily expenses And in some instances, you'll want to apply this extra paycheck towards multiple financial goals. Say, for example, you earn $5,000 of income after taxes and withholding each month — paid bi-weekly — and after you've paid all of your monthly expenses, you have $100 remaining. But in a month when you receive a third paycheck, you'd have an extra $2,600. What you can do with that bonus paycheck is ultimately up to you and your financial needs. But if you're looking for ideas to bolster your financial bottom line, here are Bankrate's five wise ways to put that extra paycheck to good use. An emergency fund can help you pay for unexpected costs that come your way, such as car repairs or medical bills. However, only 41 percent of Americans would use their savings to pay for an unplanned expense of $1,000, according to Bankrate's latest Emergency Savings Report, for which a survey was conducted in December 2024. If you're low on emergency savings, it can pay to deposit the money from an extra paycheck into a high-yield savings account. In addition to providing a financial cushion, money in a savings account also earns interest. For example, $1,000 in a high-yield savings account with an annual percentage yield (APY) of 4.30 percent would earn around $43 in interest over a year. In the months you don't receive an extra check, you can also try to save a little at a time, perhaps through a split direct deposit whereby your employer deposits a portion of your paycheck into a savings account via direct deposit. Bankrate's take: It's advisable to have upwards of six months' worth of expenses saved in an emergency fund. But the more money saved, the better. For those who are starting an emergency fund, let Bankrate's emergency fund primer guide you to building your rainy-day fund. Almost half of credit cardholders in the U.S. report carrying a balance, according to Bankrate's recent Credit Card Debt Survey. While the average credit card interest rate has been decreasing, annual percentage rates (APRs) are expected to remain pricey in 2025. For example, in one year, it would cost you $111 in interest to pay off a $1,000 balance on a credit card at a 20 percent APR. Extra money from a third monthly paycheck could be used to pay down high-interest credit card debt more quickly. In turn, this can help free up money for other purposes such as adding to savings, paying down a mortgage or decreasing student loan debt. Generally, you're able to adjust the amount you contribute to a retirement account. Some people might want to increase their contribution percentage to a 401(k) during a month with an extra paycheck. This could be a temporary increase, if your employer allows this. It could be even better for your retirement savings if you're able to use this extra money to permanently increase your 401(k) contribution for the year, using the extra paycheck to help pay for expenses throughout the year. If, for example, your annual salary is $100,000, and you're paid every other week, a six percent contribution to your 401(k) would be around $231 per paycheck. Increasing your contribution to eight percent would be around $308. So, the extra paycheck could cover that $154 monthly increase in your monthly 401(k) contribution, during a regular two-paycheck month, if you're paid every other week. You could also contribute money to an IRA or an IRA CD, though the latter option might not be appropriate for people many years away from retirement age. You might decide to devote some or all of a third monthly paycheck to it, if you know you'll be faced with a significant expense in upcoming weeks or months. Examples include a new appliance, repairs to your home's roof or an upcoming medical expense not covered by insurance. Devoting the extra paycheck to such purposes can be a relatively easy way to have some money on hand when it's needed in the future. Other examples of upcoming large expenses can include property taxes and car insurance, which are commonly due quarterly or biannually. While it's important to set aside money regularly for such expenses, an extra paycheck can provide a lifeline if you've fallen behind on saving for them. Let's say you're not in credit card debt, and you have money set aside for emergencies and other planned expenses. In this case, you might consider saving a third monthly paycheck toward other goals you have in mind. Perhaps it could fund your upcoming holiday shopping, or you could set it aside for a vacation you've been planning. When saving extra paychecks or other such windfalls for specific purposes, it can be challenging to keep the windfall money separate from funds set aside for other purposes. One solution can be a savings account — such as that from Ally Bank — that allows you to separate your money into different categories or buckets. Similarly, Alliant Credit Union provides the option of using up to 19 'supplemental' savings accounts for different purposes, each of which can be named for its goal. Using accounts that make it easy to categorize your savings can make it easier to stay on track when you're saving for multiple things at once. It can also help keep you from dipping into money for emergencies to fund other purchases. Those paid on a bi-weekly basis will have a three-paycheck month based on their first paycheck of the year. First paycheck First three-paycheck date Second three-paycheck date Jan. 3, 2025 Jan. 31, 2025 Aug. 29, 2025 Jan. 10, 2025 May 30, 2025 Oct. 31, 2025 People paid weekly have five-paycheck months in January, May, August and October in 2025. Budgeting can help you prepare for an irregular payment, be it a tax bill or an insurance payment. You can project when you'll be billed for such expenses, and the approximate amount, though sometimes increases can be unpredictable. Your extra paycheck could be larger if your employer has a benefit that's deducted from your paycheck only twice a month, says Chris Snyder, director of eastern SMB operations at Paychex, a provider of payroll services. 'It really depends on how the employer wants to set up that deduction for that particular benefit that they're offering their employee,' Snyder says. Savings accounts offered at big, traditional banks generally don't offer competitive yields. The national average yield for savings accounts is currently around eight times lower than what you can earn from top-yielding savings accounts. That's why it's worth considering allocating a portion of an extra paycheck to a high-yield savings account. Compare banks to find the right one for you. Opening a high-yield savings account can work together with several of the strategies above. And make sure to go with an account that won't have you paying fees, which could eat into your interest earnings. It's easy to find an account with a high yield and without monthly service fees at some top FDIC-insured online-only banks. Money tip: Now that you've decided to put that extra paycheck to good use, let Bankrate's savings goal calculator help you crunch the numbers to meet your savings objectives. A month with an extra paycheck can be a game-changer for your finances. Generally, there are only a couple of times a year when you'll earn more money than usual in a month — so consider making the most of this financial opportunity, be it by building an emergency fund, paying off high-interest debt, contributing to a retirement account, divvying up the extra money to last you throughout the year, or saving it to pay for large, irregularly-timed payments.
Yahoo
28-04-2025
- Business
- Yahoo
How to save $10,000 in a year
To save $10,000 in one year, divide the total into manageable amounts (e.g., $833 monthly, $385 bi-weekly or $28 daily) to make the goal less overwhelming and more achievable. Establish a savings plan that includes budgeting, cutting unnecessary expenses, setting up automatic transfers and tracking your progress. Consider using high-yield savings accounts or low-risk investments to grow your savings. Stay focused on your goal by avoiding pitfalls like neglecting variable expenses, giving in to impulse purchases or becoming overly cautious about spending. Regularly revisit and adjust your budget to stay on track. Even though most people understand the value of saving, many of them struggle to meet their savings goals. Only 59 percent of U.S. adults feel comfortable with their level of savings — a 2 percentage-point increase from last year — according to Bankrate's annual Emergency Savings Report, highlighting a need for improved financial security. If you're looking to boost your savings — and give yourself a challenge — saving $10,000 in one year is feasible with careful planning and dedication, even if you aren't a high-income earner. Here's a guide to saving $10,000 in one year and making yourself more financially secure in the long run. A savings goal of $10,000 a year might initially seem overwhelming. To make this goal more manageable and less intimidating, it can be helpful to break it down into smaller chunks. That approach lets you measure your progress along the way and helps create more tangible goals. You might choose to break down this goal differently depending on your circumstances and income. For example, someone who gets paid weekly may find it beneficial to contribute a set amount to their savings every week, subtracting it from each paycheck. Here's (roughly) the amount you'd need to save at different intervals to reach the $10,000 savings target: Monthly: $833 Bi-weekly: $385 Weekly: $192 Daily: $28 You can use one of these smaller numbers when establishing your budget or making a savings plan. To make room for saving, you'll need a meticulous budget that outlines all your sources of income and all your expenditures. You can use various digital tools, such as a budget calculator or budgeting apps, to help track expenses, organize your budget categories and even get personalized recommendations on where to cut back on spending. Once you have a clear picture of how you spend money, you can begin to pinpoint areas for saving. Salary or waves (after tax) Freelance or side gig earnings Bonuses or commissions Rental income Dividends and interest Government benefits (e.g., Social Security) Alimony or child support received Rent or mortgage payments Utilities (e.g., electricity, water, internet, phone) Groceries and dining out Transportation (e.g., gas, public transit, car payments, insurance) Subscriptions and streaming services Health insurance and medical expenses Credit card payments and other debts Childcare or tuition Entertainment and leisure Personal care (e.g., gym membership, salon, clothing) Savings and investments (e.g., retirement, emergency fund) A savings plan is a personalized roadmap that outlines how much money you will save regularly, where this money will be stored and how it will grow over time. The goal of having a structured savings plan is to make saving money an integrated part of your daily finances, guiding your financial decisions. You'll want to determine how frequently you'll be adding savings to an account. It's also important to have a savings account where your money can grow at a high interest rate while being safely stashed away. Once you've established how often and where you'll be making savings contributions, consider setting up automatic transfers, so that you can stick to your savings plan without the added legwork of making manual transfers. Most banks offer the option of automating your savings, either by selecting a specified amount to be transferred at regular intervals or a certain percentage to be transferred into savings from your paychecks. To save more, you'll have to be more strict about your spending. As you regularly revisit your budget, determine how much more you need to save each month than you already are. These extra savings will have to come from cutting expenses and boosting earnings. Ask some of the following questions to see where your spending could be reduced: Are there meals you could prepare at home rather than eating out? Are there any recurring subscriptions, like a streaming service you no longer use, that you could forego? Could you opt for public transportation instead of ride-hailing services occasionally? Are there any bills you can negotiate to get them lower? If reducing expenses isn't producing the savings you need, it might be time to explore avenues for increasing your income. Options include: Taking on freelance work and side gigs Selling unused items on an online marketplace Negotiating a salary raise Switching to a higher-paying role As you work toward the $10,000 savings goal, it's critically important to avoid accruing new debt. Any debt, especially high-interest ones like a credit card, can turn into longer-term financial burdens, with an additional expense to factor in for meeting monthly payments, and can impede your savings progress. Taking on new credit card debt Financing big-ticket items you can't afford upfront 'Buy now, pay later' options for nonessential purchases Payday or high-interest personal loans Co-signing loans you're not prepared to pay Focus on high-interest debt first (avalanche method) Make more than the minimum payment when possible Consider consolidating debt to lower interest rates Set up automatic payments to avoid late fees Use windfalls (such as tax refunds or bonuses) to chip away at balances Staying debt-free while actively paying down what you owe puts you in a stronger position to build savings faster and more sustainably. Investing can be a helpful step in achieving your savings goals. While it does entail risk, you could consider instruments like stocks or mutual funds that can provide high returns. Even if you're not well-acquainted with the world of investing, though, you can boost your earnings through very low-risk investments. High-yield savings accounts and certificates of deposit (CDs) offer attractive rates of return in the current economic climate — you just have to do a bit of research to find the best accounts that offer high yields. Successfully navigating around common obstacles while saving can be the difference between reaching your financial goals and falling short. Here are some frequent mistakes and how you can avoid them: Not accounting for variable expenses: Irregular, but inevitable, expenses are easy to overlook. They can include things like car maintenance, quarterly insurance payments or holiday spending. To avoid this mistake, make a list of these expenses ahead of time and include a monthly portion in your budget to account for them. Not setting financial goals: Even though saving $10,000 in a year might be your overall goal, it's important to have an idea of what you're saving for specifically so you don't lose focus and motivation. Establish what you want that $10,000 to go toward — maybe part of it will help pad your emergency fund, while part goes to retirement and the rest can help pay for an upcoming vacation. Becoming excessively cautious in spending: While frugality can be a good habit for saving, there's a point at which it can become counterproductive, leading to stress and reduced quality of life. You don't need to eliminate all entertainment or self-care expenses. Instead, allocate a reasonable amount for personal enjoyment, with an eye towards making sure it fits within your budget. Giving in to impulse purchases: Impulse buying — making unplanned purchases based on spur-of-the-moment temptation — can seriously derail your savings plan. One way to avoid impulse purchases is to adopt the 24-hour rule. When you see something you're tempted to buy, wait 24 hours before purchasing. Often, you'll find the impulsive desire to buy has passed. Not adjusting your budget over time: As your life changes, so too should your budget. Maybe you've received a raise at work, or your rent has increased. Regularly revisit and revise your budget to account for these changes and ensure you're maximizing your income distribution. How long does it take to save $10,000 if I save $500 a month? Assuming no interest earned and consistent contributions, it will take you 20 months to save $10,000 if you save $500 per month. What is the $27.40 rule? The $27.40 rule is a savings strategy that helps you reach $10,000 in one year by saving $27.40 every day for 365 days. How can you save $10,000 in one year on a fixed income? Saving $10,000 in a year on a fixed income can be challenging but achievable with a strategic approach. Here are a few steps to help you reach your goal: 1. Break it down into manageable amounts. 2. Cut back on non-essential expenses. 3. Increase your income. 4. Automate savings. 5. Take advantage of windfalls. 6. Find high-yield savings accounts. While saving $10,000 in a year may seem daunting, it's achievable with a structured plan, a bit of self-restraint and a goal-focused mindset. More than likely, you'll make some mistakes along the way — but a successful savings strategy should allow for learning from mistakes, rather than shaming yourself over them. Stay diligent, adjust your budget as necessary and keep your eyes on the prize. Sign in to access your portfolio
Yahoo
15-02-2025
- Business
- Yahoo
One-third of Americans have more credit card debt than emergency savings: Survey
A new survey from Bankrate revealed that 33 percent of U.S. adults have more credit card debt than emergency savings. That number is down from 36 percent in 2024 and 2023. Bankrate's 2025 Emergency Savings Report found that this year's percentage is still higher than in 2022 when only 22 percent of Americans had more credit card debt than emergency savings. When you break it down into age groups, millennials were most likely to have more debt than savings, with 42 percent falling into that category. Despite this, nearly three in four Americans (or 73 percent) are saving less money for emergency situations due to rising prices. 'The cost of living continues to rise, prompting more individuals and households to turn to credit cards when in a bind,' Mark Hamrick, Bankrate's senior economic analyst, wrote. In January, the consumer price index increased 3 percent from a year ago, according to data from the Labor Department. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Sign in to access your portfolio
Vox
31-01-2025
- Business
- Vox
The beginner's guide to building an emergency fund
Because life is unpredictable and a major expense is one accident away, popular wisdom maintains that all adults should have an emergency fund. Arbiters of such conventional advice claim these emergency funds should be stocked with three to six months' worth of expenses. But this threshold can be unattainable — and perhaps unrealistic, especially for young people just starting out or for those living on lower incomes. 'It's just an impossible amount for a lot of people,' says Kimberly Palmer, a personal finance expert at NerdWallet, 'and can just feel so overwhelming that you don't take any steps at all, and you just think, I can't make any sort of emergency fund .' Even saving a couple hundred bucks can be a huge burden for many people. Only 41 percent of Americans over 18 say they would pay for an unexpected expense — like $1,000 for an emergency room visit or car repair — from their savings, according to Bankrate's 2025 Emergency Savings Report. (Others said they would borrow money or put the expense on a credit card.) Meanwhile, 27 percent of adults have no emergency savings, as of May 2024. In reality, any amount you're able to save is better than nothing. But what if you've just gotten your first job and are starting from scratch? Or what if you're living paycheck to paycheck? Should you prioritize paying down debt over an emergency fund? Given all the competing demands on our finances, here's how to really kick off your emergency fund, according to the experts. Chances are, an emergency fund isn't your only pressing financial matter. You've got bills to pay, a retirement account to contribute to, perhaps student loans or other debt to chisel away at. Palmer suggests making a list of all your financial priorities and goals (including fun ones, like saving for a vacation or down payment) and organizing them, starting with the most urgent. Because you can't prioritize all of these goals at once, Palmer recommends choosing one to focus on at a time. First, make sure you're making the minimum payments on your credit cards and student loans. Then, if you don't have any money in an emergency fund, you might want to put focus there, she says. 'Generally speaking, it can make sense to make your number one priority [to] have at least a minimum amount in your emergency fund, like $500,' she says. Next, pay off debt, especially those with high interest (like credit card debt). After that, try to put some money into your retirement account. Finally, squirrel some cash away for longer-term goals, like that vacation. As for the amount to put into your emergency fund at first (and this goes for all of your other financial priorities too), Palmer suggests starting small but attainable. Again, $500 might be a good place to start. After you hit that threshold, move onto another priority. For longer-term goals like retirement savings, you may want to set smaller benchmarks initially, too, so you can more quickly transition back to stocking your emergency fund, says Lynnette Khalfani-Cox, a personal finance expert and author of Bounce Back: The Ultimate Guide to Financial Resilience . 'That 401(k) is not going to buy your groceries,' she says, 'and the retirement funds are not going to be able to help you to fix the tires if you get a flat or a short term event happens.' The goal isn't to totally ignore these other forms of savings, but to be prudent until you have a solid emergency fund. 'While saving for retirement is important, we want you financially prepared for emergencies before you're financially prepared for the 'big stuff,' because emergencies can come out of the blue,' Tori Dunlap, founder and CEO of the financial platform Her First $100K, said by email. 'That safety net will help you sleep better at night while you work towards saving for retirement.' Rather than squirrel your precious dollars in a checking or savings account, experts have some more strategic suggestions for where to house your emergency fund. High-yield savings account: Your money will earn interest while remaining easily accessible in a high-yield savings account. Choose an institution or bank that won't charge you any fees and make sure you're clear on how to withdraw money, whether from partner ATMs or transfer through an app, Palmer says. NerdWallet ranks UFB Portfolio Savings, Forbright Bank Growth Savings, and Discover Online Savings among its highest-rated high-yield savings accounts. Multiple accounts at different banks: Spreading your emergency savings across several accounts makes it harder to completely wipe out your fund in one go if you're ever tempted, Khalfani-Cox says. Once you've made your way through your priority list, start at the top again. By cycling through each of your goals, you're able to make simultaneous progress throughout the year. If you're wondering where this money is going to come from, you'll need to be intentional. To kick-start your savings, Khalfani-Cox suggests purging your home and closet of items you could sell at a consignment shop or at a yard sale. Then, look at your variable expenses — money you spend on entertainment, subscriptions, food, personal care, and pets; not utilities, rent, or car payments — and see where you can cut back, Palmer says. 'Food is a really helpful category to zero in on,' she says. 'It can be really expensive if you're ordering takeout or going to a restaurant.' Try shopping at a budget grocery store if you can and preparing food at home. You might consider forgoing a few personal grooming appointments, too. Are there any streaming services you're willing to part with? Maybe you limit your concert attendance to one big ticket event a year. You don't need to make these sacrifices forever, but if you can cut back on these kinds of expenses, you'll be able to save quicker. 'It may not be the most glamorous thing ever, but it's going to help get you where you need to go,' Dunlap says. 'Start by tracking your monthly income and expenses, finding areas where you can be more strategic with your spending, and using that extra bit to pour into your emergency fund. Even if that's an extra few dollars here and there, we're getting somewhere.' If you have nothing left to pare back, that's okay, too. Make sure you're focusing on the essentials — basic needs like housing, food, and transportation — and come back to savings when you're able. Whatever you can set aside is a step in the right direction, experts say. Even $10 a week is more than you had yesterday. Just remember to keep it going. 'You're building financial discipline,' Khalfani-Cox says. 'You're building consistency.' You've read 1 article in the last month Here at Vox, we're unwavering in our commitment to covering the issues that matter most to you — threats to democracy, immigration, reproductive rights, the environment, and the rising polarization across this country. Our mission is to provide clear, accessible journalism that empowers you to stay informed and engaged in shaping our world. By becoming a Vox Member, you directly strengthen our ability to deliver in-depth, independent reporting that drives meaningful change. We rely on readers like you — join us. Swati Sharma Vox Editor-in-Chief See More: Advice Even Better Life Money Personal Finance
