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Yahoo
23-05-2025
- Business
- Yahoo
7 Dos and Don'ts for New Grads Getting Their First ‘Adult' Paycheck
Receiving your first adult paycheck as a new college graduate can be exciting, but the excitement could quickly turn to regret if you don't choose the right way to spend (and save) it. Jack Howard, head of money wellness at Ally, said that the new salary figure can tempt spending and new grads may have to acknowledge that their paycheck doesn't stretch as far as they thought due to taxes, benefits and new monthly student loan payments. Read Next: Check Out: Here are some do's and don'ts for graduates getting their first 'adult' paycheck. Net pay is different from gross pay. Gross pay is the amount you earned prior to any taxes or deductions being taken out. Net pay — aka 'take-home' pay — is the amount you receive after taxes and deductions are removed. Howard suggested that when building a monthly budget, new grads should work backward from their net pay, subtracting all fixed and variable expenses to arrive at a disposable income figure. However, she also said not to forget to factor in potential 'hidden costs,' such as afternoon coffee runs or a midday lunch. 'Before you arrive at your remaining disposable income figure to play with for the month, make sure all those sneaky, everyday expenses are already considered,' she recommended. Explore More: Howard said that new grads might miss out on the opportunity to maximize retirement contributions if they don't take advantage of what their employers offer, like a 401(k) match. 'If your company offers it, it's recommended to contribute up to their match and if not, opening a Roth IRA is a good option too,' she said. 'A lot of companies will offer additional benefits like a 529 match to help pay for grad school, tuition reimbursement, Health Savings Accounts which offer a triple tax advantage or access to a free certified financial planner who help create a plan for your financial future.' Howard explained that the amount you 'pay' yourself from each paycheck — money that goes toward savings or investments — will vary depending on salary, but allocating 10% to 20% of your paycheck is generally recommended. She also recommended establishing an emergency fund with three to six months' worth of living expenses. If that amount seems intimidating, Howard suggested focusing less on the total amount needed and more on creating the habit of setting aside the money. Then, she said, as your income increases, the amount of money you can save per month will also. For graduates who took out student loans, it's important to prioritize student loan payments as soon as the paychecks start rolling in. 'You may still be riding the high of graduation, but figuring out your total loan balance and monthly payments as soon as possible is important to set yourself up for financial success,' Howard explained. She also said paying more than the minimum can help you pay off loans faster and cut down on interest. Howard said that one common misconception about saving is that each deposit must be hundreds of dollars, but that's not the case. She explained that it's possible to make meaningful progress by 'microsaving,' which involves saving small amounts of money consistently. She also recommended saving extra income, such as a tax refund, birthday cash or money from a side hustle. Automating payments is a smart move, and one of the most foolproof ways to stay consistent with your financial goals, according to Howard. 'Scheduling payments and deposits not only saves time, but it also helps you avoid late fees or potential harm to your credit score,' she said. Lifestyle creep is when you spend more just because you're earning more. Howard said that it's a common mistake young people entering the workforce make, especially when factoring in FOMO (fear of missing out) or other pressures from social media. 'Ally's recent Minds on Money report found that nearly 40% of Gen Z have gone into debt to maintain appearances on social media, with nearly a third buying items they saw on social media either immediately or the same day,' she said. 'If you find yourself committing to group trips, fancy dinners or overspending on the latest fashion items just to 'keep up,' consider financial wellness resources like Money Roots, a free program based in money psychology that can curb bad money habits while still empowering you to enjoy your money — without outpacing your new salary.' Source Jack Howard, Ally More From GOBankingRates These 10 Used Cars Will Last Longer Than an Average New Vehicle This article originally appeared on 7 Dos and Don'ts for New Grads Getting Their First 'Adult' Paycheck Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-05-2025
- Business
- Yahoo
7 Do's and Don'ts for New Grads Getting Their First ‘Adult' Paycheck
Receiving your first adult paycheck as a new college graduate can be exciting, but the excitement could quickly turn to regret if you don't choose the right way to spend (and save) it. Jack Howard, head of money wellness at Ally, said that the new salary figure can tempt spending and new grads may have to acknowledge that their paycheck doesn't stretch as far as they thought due to taxes, benefits and new monthly student loan payments. Read Next: Check Out: Here are some do's and don'ts for graduates getting their first 'adult' paycheck. Net pay is different from gross pay. Gross pay is the amount you earned prior to any taxes or deductions being taken out. Net pay — aka 'take-home' pay — is the amount you receive after taxes and deductions are removed. Howard suggested that when building a monthly budget, new grads should work backward from their net pay, subtracting all fixed and variable expenses to arrive at a disposable income figure. However, she also said not to forget to factor in potential 'hidden costs,' such as afternoon coffee runs or a midday lunch. 'Before you arrive at your remaining disposable income figure to play with for the month, make sure all those sneaky, everyday expenses are already considered,' she recommended. Explore More: Howard said that new grads might miss out on the opportunity to maximize retirement contributions if they don't take advantage of what their employers offer, like a 401(k) match. 'If your company offers it, it's recommended to contribute up to their match and if not, opening a Roth IRA is a good option too,' she said. 'A lot of companies will offer additional benefits like a 529 match to help pay for grad school, tuition reimbursement, Health Savings Accounts which offer a triple tax advantage or access to a free certified financial planner who help create a plan for your financial future.' Howard explained that the amount you 'pay' yourself from each paycheck — money that goes toward savings or investments — will vary depending on salary, but allocating 10% to 20% of your paycheck is generally recommended. She also recommended establishing an emergency fund with three to six months' worth of living expenses. If that amount seems intimidating, Howard suggested focusing less on the total amount needed and more on creating the habit of setting aside the money. Then, she said, as your income increases, the amount of money you can save per month will also. For graduates who took out student loans, it's important to prioritize student loan payments as soon as the paychecks start rolling in. 'You may still be riding the high of graduation, but figuring out your total loan balance and monthly payments as soon as possible is important to set yourself up for financial success,' Howard explained. She also said paying more than the minimum can help you pay off loans faster and cut down on interest. Howard said that one common misconception about saving is that each deposit must be hundreds of dollars, but that's not the case. She explained that it's possible to make meaningful progress by 'microsaving,' which involves saving small amounts of money consistently. She also recommended saving extra income, such as a tax refund, birthday cash or money from a side hustle. Automating payments is a smart move, and one of the most foolproof ways to stay consistent with your financial goals, according to Howard. 'Scheduling payments and deposits not only saves time, but it also helps you avoid late fees or potential harm to your credit score,' she said. Lifestyle creep is when you spend more just because you're earning more. Howard said that it's a common mistake young people entering the workforce make, especially when factoring in FOMO (fear of missing out) or other pressures from social media. 'Ally's recent Minds on Money report found that nearly 40% of Gen Z have gone into debt to maintain appearances on social media, with nearly a third buying items they saw on social media either immediately or the same day,' she said. 'If you find yourself committing to group trips, fancy dinners or overspending on the latest fashion items just to 'keep up,' consider financial wellness resources like Money Roots, a free program based in money psychology that can curb bad money habits while still empowering you to enjoy your money — without outpacing your new salary.' More From GOBankingRates Surprising Items People Are Stocking Up On Before Tariff Pains Hit: Is It Smart? The Most Expensive Disney Merchandise Ever Sold -- and Who's Buying It 4 Affordable Car Brands You Won't Regret Buying in 2025 Source Jack Howard, Ally This article originally appeared on 7 Do's and Don'ts for New Grads Getting Their First 'Adult' Paycheck
Forbes
06-05-2025
- Business
- Forbes
CD Rates Today: May 6, 2025 - Earn As Much As 5.02%
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations. Today's highest CD rate is 5.02% for a 1-year CD. CD rates from online banks are commonly twice as high as the national average rates. CD ladders let you leverage high rates without locking up all of your money long-term. Today's best interest rates on CDs (certificates of deposit) are as high as 5.02%. Rates vary by term and often fluctuate, and they are expected to fall as the Federal Reserve lowers interest rates. A CD is a specific type of savings account (known as a time deposit account) that comes with a fixed interest rate and a maturity period. CDs, depending on the yield, typically offer better yields than high-yield savings accounts. The tradeoff is that you can't access your cash until the CD matures, otherwise you'll owe a withdrawal fee. The longer the term, the harsher the early withdrawal penalty. It's not unusual to lose one full year's worth of interest or more if you break open a five-year CD too soon. Be absolutely certain you understand the penalty before you make your investment. Three-month CDs are a good option for short-term savings goals. The current average rate on a three-month CD sits at 1.3%, but the highest rate is 4.67%. The average rate is unchanged from a week ago. If you're interested in a short-term CD with high yields, consider a six-month CD . The best rate today is 4.94%. The current average APR for a six-month CD is 1.78%, about the same as last week. The highest interest rate currently available on a one-year CD—one of the most popular CD terms—is 5.02%. If you land a rate in that vicinity, you're getting a good deal. That rate hasn't changed much since last week. The average APY, or annual percentage yield, on a one-year CD is now 1.83%, unchanged from a week ago. If you can hold out for two years, 24-month CDs today are being offered at interest rates as high as 4.52%. That's the same as this time last week. The average APY for the CD is 1.66%, flat to last week's average. Today, the highest rate on a three-year CD stands at 4.27%, so you'll want to shop around for that rate or something near it. The average rate APY is 1.58%. The highest rate available today for a five-year CD is 4.26%. The average APY is 1.59%, similar to last week. The longer the term, the higher the early withdrawal penalty. It's not unusual to lose one full year's worth of interest or more if you break open a five-year CD early. Be absolutely certain you understand the penalty before you make your investment. The best rate today on jumbo CDs is 4.94% for a 6-month term. As with non-jumbo, various term lengths are available. The average APY for the 6-month CD is currently 1.82%. Most jumbo CDs require a minimum deposit of $100,000—and some even require $250,000. However, there's no universally agreed-upon definition regarding what qualifies as a "jumbo" CD. Some banks and credit unions slap the label "jumbo" on CDs you can open with $50,000, $25,000 or even less. Related: CD Interest Rates Forecast: How Good Will They Get? CD rates are rarely the same between any two banks, so you should comparison shop when looking for a new account. You may decide to stick with your current bank because it's convenient or join a new bank to take advantage of higher rates. To find the right CD, look at the specific term you're interested in with a few different banks. Traditional, brick-and-mortar banks tend to offer lower CD rates, in general, than online banks without any branches. For example: Other top CD rates by banks include: You "purchase" a CD from a financial institution by opening an account with a lump-sum deposit, which is your principal. Many CDs and share certificates (accounts similar to bank CDs but offered by credit unions) have minimum deposits you must meet, which typically range from a few hundred to several thousand dollars. Once you deposit your principal, the clock starts on your timed investment, and you begin earning interest. The bank or credit union will provide you with regular statements showing how much you're earning. You may accrue interest daily, monthly or quarterly. Try not to tap your CD before the term ends. Early withdrawal penalties can be so severe that they negate your interest and then start eating into your principal. CDs typically pay higher interest than other savings vehicles, even the best high-yield savings accounts and money market accounts . And while they may not offer the kind of enviable returns that are possible with stocks, CDs beat the more attention-getting investments in one regard: They're one of the safest places to put your money. Investors lost millions in the 2022 crypto crash, and putting your money into the stock market, real estate or gold and other commodities can be risky, too. But when you buy a certificate of deposit or credit union share certificate from a federally insured financial institution, you can sleep easily with the knowledge that your investment is protected. The Federal Deposit Insurance Corp. provides you with up to $250,000 in coverage in the event the bank issuing your CD ever fails. For share certificates purchased from federal credit unions and most state-chartered credit unions, the National Credit Union Administration insures your money up to the same limit. Traditional brick-and-mortar banks have far greater operating expenses than banks that only exist online. That's why online banks are usually able to offer more attractive APYs on CDs – they have lower overhead costs, so they can afford to pay higher interest rates to customers. Related: CD Interest Rates Forecast: How Good Will They Get? Curinos determines the average rates for certificates of deposit (CDs) by focusing on specific CDs and excluding others. Certain types, such as promotional offers, relationship-based rates, private, youth, senior, student/minor, affinity, bump-up, no-penalty, callable, variable, step-up, auto transfer, club, gifts, grandfathered, internet-only and IRA CDs are not considered in the calculation. Frequently Asked Questions (FAQs) You build a CD ladder by saving your money in multiple CDs with cascading term lengths. For instance, you might buy a one-year CD, a two-year CD, a three-year CD, a four-year CD and a five-year CD. As each of the shorter-term CDs matures, you replace it with a new five-year CD. Follow this plan and you'll have one better-yielding five-year CD maturing each year. If you're ever having a bad year, you could take some of the cash from the expiring CD and use it to pay bills instead of pouring it all into a fresh CD. Comparison shop to track down the best CD rates . Banks and credit unions compete by offering alluring yields to land your business, so shopping around is a must before you purchase any bank CD or credit union share certificate. CDs usually come with zero fees, meaning your money won't be nibbled at by the monthly maintenance fees that are typical with many savings, checking and money market accounts. You will likely be charged an early withdrawal penalty if you end your CD term early. Make sure you won't need access to your cash in the meantime.
Yahoo
06-05-2025
- Business
- Yahoo
Best CD rates today, May 6, 2025: Lock in up to 4.40% APY ahead of the next Fed rate decision
The Federal Reserve lowered the federal funds three times in 2024. As a result, deposit account rates are on the decline. The good news: You can lock in a competitive return on a certificate of deposit (CD) today and preserve your earning power. In fact, the best CDs still pay rates above 4%. Read on for a snapshot of CD rates today and where to find the best offers. Where are the best CD rates today? CDs today typically offer rates significantly higher than traditional savings accounts. As of February, the best short-term CDs (six to 12 months) generally offer rates around 4.00% to 4.50% APY. Today, the highest CD rate 4.50% APY, offered by Marcus by Goldman Sachs on its 14-month CD. There is a $500 minimum opening deposit required. The following is a look at some of the best CD rates available today from our verified partners. This embedded content is not available in your region. Historical CD rates The 2000s were marked by the dot-com bubble and later, the global financial crisis of 2008. Though the early 2000s saw relatively higher CD rates, they began to fall as the economy slowed and the Federal Reserve cut its target rate to stimulate growth. By 2009, in the aftermath of the financial crisis, the average one-year CD paid around 1% APY, with five-year CDs at less than 2% APY. The trend of falling CD rates continued into the 2010s, especially after the Great Recession of 2007-2009. The Fed's policies to stimulate the economy (in particular, its decision to keep its benchmark interest rate near zero) led banks to offer very low rates on CDs. By 2013, average rates on 6-month CDs fell to about 0.1% APY, while 5-year CDs returned an average of 0.8% APY. However, things changed between 2015 and 2018, when the Fed started gradually increasing rates again. At this point, there was a slight improvement in CD rates as the economy expanded, marking the end of nearly a decade of ultra-low rates. However, the onset of the COVID-19 pandemic in early 2020 led to emergency rate cuts by the Fed, causing CD rates to fall to new record lows. The situation reversed following the pandemic as inflation began to spiral out of control. This prompted the Fed to hike rates 11 times between March 2022 and July 2023. In turn, this led to higher rates on loans and higher APYs on savings products, including CDs. Fast forward to September 2024 — the Fed finally decided to start cutting the federal funds rate after it determined that inflation was essentially under control. Today, we're beginning to see CD rates come down from their peak. Even so, CD rates remain high by historical standards. Take a look at how CD rates have changed since 2009: Understanding today's CD rates Traditionally, longer-term CDs have offered higher interest rates compared to shorter-term CDs. This is because locking in money for a longer period typically carries more risk (namely, missing out on higher rates in the future), which banks compensate for with higher rates. However, this pattern doesn't necessarily hold today; the highest average CD rate is for a 12-month term. This indicates a flattening or inversion of the yield curve, which can happen in uncertain economic times or when investors expect future interest rates to decline. Read more: Short- or long-term CD: Which is best for you? How to choose the best CD rates When opening a CD , choosing one with a high APY is just one piece of the puzzle. There are other factors that can impact whether a particular CD is best for your needs and your overall return. Consider the following when choosing a CD:
