Get your money questions answered by a leading financial expert.
No one is born with financial literacy — nor has the time to hit all the books needed to get there. Yet it’s never too late to learn what you need to manage, save, spend and invest your money.
Now, you’ve got access to a personal finance expert that can help you improve your relationship to money: our own Laura Adams.
Laura is a personal finance and small business expert, award-winning author, media spokesperson, PR and marketing consultant, content creator and host of the top-rated Money Girl podcast since 2008.
She’s on a mission to empower everyday Americans to improve their lives by helping them plan for the future and make smart financial decisions every day.
Submit your questions on budgeting, saving and investing, and let Laura help you navigate the sometimes confusing world of personal finance.
January 25, 2023 | JJ: How much of my paycheck should I save?
A good rule of thumb is to save at least 10% for retirement. For instance, if you make $100,000 and get paid biweekly, contributing $385 per paycheck to a 401(k) would total about $10,000 annually (the max for 2023 is $22,500 or $30,000 if you’re over 50).
Regularly investing that much for three decades, with an average 7% return, would give you over $1 million to spend in retirement! And that doesn’t even take future salary raises into account.
Don’t have a workplace retirement plan? Not a problem! You can put up to $6,500 or $7,500 if you’re over 50 in a traditional or Roth IRA (up to certain income limits). Max monthly contributions of $540 over three decades earning 7%, would give you over $662,000!
Those with self-employment income from a small business, side gig, or freelance work can have a SEP-IRA or a solo 401(k). They come with much higher contribution limits, up to $66,000, when you have as much business income. In addition, the IRS will likely boost contribution limits in future years, helping you grow an even bigger retirement nest egg.
“I finally started saving for emergencies but want to earn more interest than my bank savings. Is there an investment that pays more but would still keep my money safe?”
Since investing means exposing money to some risk, it’s not a good choice for emergency savings. The money you might need in the short-term, such as within a few years, should be kept in a high-yield savings account where it earns more than a typical bank account and will be there when you need it!
As usual, Finder did the work for you by creating a handy guide showing the features and APY of the best savings accounts.
You can break down kids banking products into three general categories:
Kids banking apps such as Greenlight offer features like chores tracking, automated allowances, spending limits for prepaid cards, restricted spending at specific merchants, and ways to teach kids how to spend, save, give and invest wisely.
Kids checking accounts are joint accounts a parent or legal guardian owns with a child. Capital One Money is a top recommendation offering loads of benefits, such as goal setting to encourage kids to save, parental controls, spending trackers and auto-pay for allowances.
Kids savings accounts are free to open and have no minimum balance requirements. The best kids savings accounts provide rewards, customizable tools and grow with your child.
Thanks for sending in your question, Faith! Roth accounts are terrific because they allow you to take tax-free withdrawals in retirement.
Here are five main differences between Roth IRAs and workplace Roths you should know.
Limits on annual income apply to a Roth IRA — but not to a Roth at work, such as a Roth 401(k) or 403(b). You can’t make Roth IRA contributions when your income exceeds an annual limit. However, you can contribute to a workplace Roth no matter how much you earn.
Annual contribution limits for a Roth IRA are lower.
For a traditional or Roth IRA, you can contribute up to $6,500 in 2023 — or up to $7,500, if you’re over 50. For a workplace Roth, you can contribute up to $22,500 — or $30,000, if you’re over 50.
Required minimum distributions don’t apply to a Roth IRA. However, starting at age 72 (unless you’re still employed), you’re required to take minimum distributions from a Roth.
Early withdrawals of Roth IRA contributions (but not earnings) can be made anytime without triggering taxes or a penalty. However, withdrawing from a Roth at work is allowed for hardships only, such as unpaid medical bills or funeral expenses.
Loans are typically allowed for a Roth at work when you repay them with interest over five years, but you can never borrow from a Roth IRA.
Laura Adams, MBA, is a nationally recognized personal finance and business expert. She’s an award-winning author with more than 3,000 features in the national broadcast media. Her weekly Money Girl podcast has been downloaded over 40 million times. Now, she’s here to answer your burning money questions.
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