Online banks offer perks that are frequently missing from traditional banks. They boast lower fees, higher interest rates, and, most importantly, convenience. The top digital banks merge these benefits and more.

We’ve put together a list of the best online banks on the market to help you find the right digital bank for you.

The Best Online Banks of 2023

The best online bank is the one that meets your unique needs. If you’re looking for a digital bank, we’ve put together a list of the best online banks out there to help you narrow your search.

BEST OVERALL

Discover

With stellar customer reviews, competitive rates, and excellent account offerings, Discover is our pick for the best overall online bank.

Pros: 

• No monthly fees 
• No overdraft or insufficient fund fees
• Competitive APYs
• High customer ratings

Cons:

• Doesn’t accept cash deposits 
• No physical branches

Discover is a digital bank that offers something for everyone. Its products include some of the best credit cards on the market and savings accounts that can earn you 5x the National Savings Average. 

Discover makes banking and managing money easy for its customers. Its highly-rated mobile app has an impressive 4.9 out of 5 stars on the App store and 4.6 out of 5 stars on Google Play. It also offers over-the-phone customer support available 24/7 — a significant benefit when there are no physical branch locations.

The checking and savings accounts have no monthly or maintenance fees and offer competitive rates and rewards. Discover’s Online Savings Account offers a 4.30% APY, while its checking account gets you 1% cash back on up to $3,000 in debit card purchases. 

The online bank also offers convenient, easy access to a large ATM network nationwide. However, cash deposits are not currently accepted, which can be a major downside if you intend to deposit cash frequently.

Fees	None
APY	4.30% APY savings account, 1% cash back checking account
Banking experience	High user ratings and 24/7 customer support
Accessibility (ATM networks)	60,000+ no-fee ATMs nationwide

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BEST FOR CHECKING ACCOUNTS

Quontic

Quontic is a strong choice if you’re looking for an online checking account that earns a very competitive interest rate at no extra cost.

Pros: 

• High interest on checking account
• No monthly maintenance fees 
• Quontic Pay Ring feature 

Cons:

• Minimum POS transactions required to qualify for high APY
• No customer support on weekends 

Quontic’s High-Interest Checking account can earn you up to 1.10% APY without charging any monthly or overdraft fees. To qualify for this high yield, you’ll need to make at least 10 debit card transactions of $10 or more each statement period. If you use your card regularly, this minimum requirement shouldn’t be a problem. However, if you’re an infrequent debit card user, failure to make the minimum number of transactions will result in a mere 0.01% APY. 

A unique feature offered by Quontic is the Quontic Pay Ring — a wearable payment ring that allows you to make contactless purchases by tapping it. For those who value convenience and don’t like to carry their debit card around everywhere, the ring may prove to be a game changer. 

Quontic also offers two other types of checking accounts, including a Cash Rewards Checking that earns 1.0% cash back on eligible purchases and a Bitcoin Rewards Checking that gets you 1.5% bitcoin on purchases. 

The online bank offers an extensive ATM network and 24/7 access to online and mobile banking. Apple users rate the Quontic app 4.4 stars out of 5, while Android customers are not as impressed, giving it only 3.3 stars. If you need assistance, their customer service agents can be reached by phone from 9 am-6 pm on weekdays, but they’re not available on weekends.

Fees	None
APY	1.10%
Banking experience	Monday-Friday customer support
Accessibility (ATM networks)	90,000+ no-fee ATMs nationwide

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BEST FOR SAVINGS ACCOUNTS

CIT Bank

CIT’s savings account pays one of the highest yields in the country. And unlike some online banks, it doesn’t ask you to meet strict criteria or put down a large minimum deposit to qualify for it.

Pros: 

• High APY on savings account 
• No monthly service fees 

Cons:

• Doesn’t accept cash deposits 

CIT Bank has a range of savings accounts that offer competitive rates and don’t charge any service fees. The Savings Connect account pays you a high 2.10% APY and only requires a $100 minimum opening deposit. Its other savings accounts also have competitive yields, but they’re certainly not the best on the market. For instance, the Savings Builder account offers only 0.85% APY and requires a minimum balance of $25,000 or a monthly deposit of $100. 

Like other online banks, CIT is a great fit for people who like the convenience of banking on their phone or computer. The app receives 4.6 out of 5 stars on App Store and 3.0 stars on Google Play. If you have any banking questions, telephone support is also available with extended hours from Monday to Saturday and is closed on Sundays. 

Unlike other digital banks on our list, CIT doesn’t have a network of no-fee ATMs. However, you can use other banks’ ATMs and CIT will reimburse you up to $30 of those fees per month. If you use the ATM regularly to withdraw money, for example, any fees you incur above $30 will be an out-of-pocket expense.

Fees	None
APYs	2.10%
Banking experience	24/7 online access + Monday-Saturday telephone support
Accessibility (ATM networks)	No free ATM networks, but CIT will reimburse you up to $30 in ATM fees each month

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BEST FOR CHECKING AND SAVINGS ACCOUNTS

SoFi

SoFi has a unique product offering — a 2-in-1 checking and savings account that comes with a competitive rate and a generous sign-up bonus.

Pros: 

• High APY
• No account fees
• Up to $250 sign-up bonus
• No overdraft fees
• No minimum deposit required
• 15% cash back at local establishments

Cons:

• Checking and savings accounts are combined
• Cash deposits cost $4.95 at Green Dot retail locations 

If you’re looking for checking and savings accounts that offer a competitive rate, SoFi is a strong candidate, as long as you’re okay with combining your accounts. 

SoFi’s new online banking account is a checking-savings account hybrid that earns a very competitive 4.40% APY. On top of that, you can get up to 15% at local establishments when you pay with your SoFi debit card. As a sign-up bonus, SoFi is also giving customers up to $250 when they set up a direct deposit. However, your direct deposit needs to be $5,000 or more if you want to receive the full $250 bonus. 

Like its competitors, it doesn’t charge any account fees or other hidden fees most traditional banks usually charge. 

SoFi is not an ideal choice for customers who make regular cash deposits to their accounts. Cash deposits are only available at participating retail locations and each deposit will cost you $4.95. 

The customer experience is something SoFi excels at. SoFi has a highly rated mobile app (4.8 and 4.1 stars on the App Store and Google Play respectively), and an exemplary customer support system. There’s a 24/7 virtual chat assistant, a Twitter account dedicated to customer support, and each product offering has a designated customer support line. 

Fees	None
APYs	4.40%
Banking experience	Strong customer support via phone, Twitter, and online chat.
Accessibility (ATM networks)	55,000+ no-fee ATMs nationwide

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BEST FOR CASH DEPOSITS

Alliant Credit Union

Alliant’s cash-deposit ATMs aren’t the only feature that makes it a solid digital banking solution — it also offers competitive rates and excellent customer service support.

Pros: 

• Cash-deposit ATMs available nationwide 
• Competitive APYs
• No fees 
• $20/month in ATM fee rebates 

Cons:

• Cash-deposit ATMs are limited if you live in a rural area 

Online banks are not exactly known for making it easy to deposit cash. Alliant is one of the few digital banks (credit union to be exact) that allow customers to deposit money through one of their many cash-deposit ATMs. 

While Alliant has more than 80,000 ATMs nationwide, not all of them are cash-deposit friendly. 

You can find one near you by searching for deposit-taking ATMs through their website, but you may have trouble finding one if you live in a remote area or far from a big city. 

Alliant is a reputable credit union with a range of products, including online checking and savings accounts that earn above-average rates and don’t charge any fees. It also offers a user-friendly online banking platform, a highly rated mobile app (4.7 out of 5 stars on the App Store and 4.5 out of 5 stars on Google Play), and 24/7 customer support.  

Fees	None
APYs	3.10% APY for savings account, 0.25% for checking account
Banking experience	Highly rated digital experience & 24/7 over-the-phone customer support
Accessibility (ATM networks)	80,000+ no-fee ATMs nationwide

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BEST FOR THE RANGE OF SERVICES PROVIDED

Ally

Ally is a top choice among online banks for a reason: it combines a robust product offering, strong rates, and a customer-centric digital banking experience.

Pros: 

• Robust product offering
• High APYs on checking and savings accounts
• No monthly fees 

Cons:

• No way to deposit cash

Ally offers customers a full range of banking products like checking accounts, Robo portfolios, auto loans, mortgages, and more. It also offers accounts with high interest rates, like its 4.00% APY online savings account. 

The online bank also doesn’t charge any monthly or overdraft fees and offers a chat option or 24/7 telephone banking support. The convenience of a 24/7 customer support line is a significant advantage, considering Ally, like most digital banks, doesn’t have any physical branches. 

Ally’s digital banking platform is very user-friendly and uses simple, jargon-free language to help customers navigate it. The app gets 4.7 out of 5 stars on the App Store and 3.6 stars on Google Play.

Fees	None
APYs	4.0% APY for a savings account, 0.25% APY for checking account
Banking experience	Customer-centric online experience and 24/7 live agent support
Accessibility (ATM networks)	43,000+ no-fee ATMs nationwide

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The Pros and Cons of Online vs. Traditional Banks

Both online banks and traditional banks are safe places to keep your money and handle your finances. Just like “old-school” banks, most digital banks are FDIC-insured, meaning your money is safe and secure. While both types of banks help you manage your money, they differ when it comes to features and capabilities.

Traditional banks have been around for much longer and offer in-person customer support through their nationwide network of branches. They also offer a wider range of financial products like mortgages or auto loans. As of now, many digital banks offer fewer options than big banks provide.

That being said, online banks offer plenty of other features that make them an increasingly popular choice among US consumers.

Pros of Online Banks

Fewer and lower fees compared to traditional banks — As we mentioned before, online banks don’t have the same overhead costs that traditional banks do. This advantage allows them to charge little to no monthly maintenance fees, overdraft fees, ATM fees, or any other pesky hidden fees.

Higher APYs — According to the FDIC, the national average interest rates are 0.13% on savings accounts and 0.03% on checking accounts. Online banks offer up to 5x the national average (sometimes even more), giving customers a chance to earn more on their savings.

A better quality online experience — Because online banks operate entirely online, they typically offer a better, user-oriented digital experience to customers than their brick-and-mortar counterparts.

Not convinced yet? Here are some other benefits of online banks:

• Convenience and flexibility
• Built-in features like automatic savings and budgeting tools
• 24/7 or extended customer support hours
• Easy and speedy account opening process
• Easy to keep track of your finances from anywhere in the world
• Little to no paperwork involved

If you’re comfortable in the digital world, an online bank may be the best choice for you.

Cons of Online Banks

Digital banks come with an array of advantages, but they’re not for everyone. Here are some of the major downsides of digital banking:

• Lack of cash deposit options
• No physical locations or face-to-face service
• Lack of personal relationships
• Limited range of products and services

If you’re someone that deposits cash frequently and values personal interaction, you may opt for the traditional bank route.

Bottom Line

Online-only banks offer a range of significant benefits that make them a great alternative to traditional banks. Before choosing a digital bank, consider what features are most important to you.

Ultimately, the best online bank for you is the one that offers the right combination of features and products that meet your unique needs.

The post 6 Best Online Banks of 2024 for Great Features and Services appeared first on FinMasters.

Let’s look at the basics of creating a spending plan to manage your money wisely.

What Is a Budget?

A budget is your plan for what you will do with your income. Some make a basic budget that simply compares their income to expenses to avoid overspending. Others make detailed budgets that assign a specific purpose to each dollar. Each person budgets differently, but almost everyone finds that a budget is one of the most effective money management tools.

How to Budget Money: The Beginner's Guide

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Further reading: How Much Can You Save in a Year?

How to Start Your Budget

Making your first budget takes a few minutes by following this step-by-step approach. You can create a budget using pen and paper, a spreadsheet or a budgeting app.

Step 1: Calculate Your Monthly Income

List any income you earn from your day job, side hustles and investments.

If you earn a variable monthly income, list your base salary using the average number of hours you work or commissions that you receive.

Step 2. List Your Monthly Expenses

The next step is writing down your regular monthly expenses.

Some of the common monthly expenses include:

• Rent
• Utilities (i.e., electricity, water, gas and trash removal)
• Groceries and restaurants
• Commuting expenses
• Insurance 
• Entertainment
• Phone, internet and cable tv services
• Loan payments
• Charity Donations

The best way to determine your monthly expenses is to write down everything you spend for a month or more before setting up your budget. Many people who try detailed expense tracking for the first time discover spending that they were hardly aware of, and it can be substantial.

110 Budget Categories to Help You Start Your Budget

Step 3: Reduce Expenses and Assign Spending Targets

The primary goal of any budget is to spend less than you earn. First, compare your expenses to your income. If you spend more than you make, look for ways to spend less money to balance your budget.

Once you bring your spending under your income, continue looking for ways to spend less on unessential purchases. The bigger the gap between your spending and your earnings, the more you can set aside.

After reducing your expenses, set a monthly spending limit for each category. You can assign a specific dollar amount or a percentage of your income.

Step 4: Make Savings Goals

Assign a savings goal to any extra income you have each month. You can divide your savings into short-term and long-term goals.

Some common goals include:

• Retirement savings. If your employer offers a 401(k) plan it’s important to contribute, especially if your employer has a matching contribution program. That’s free money!
• Building an emergency fund. Many experts suggest an emergency fund that can support you for three to six months. An emergency fund can help you handle unexpected situations without going into debt.
• Specific savings goals. You may want to save money for a vacation, a desired purchase, a down payment on a house or car, or something else.

Once you’ve set and prioritized your savings goals and budgeted an allocation for each goal, decide where you’ll save the money for each purpose. Our guide on saving money should give you an idea of where to put money allocated to different goals.

Step 5: Have Budget Review Sessions

Set aside 15 minutes each week to compare your actual spending to your planned spending. Make adjustments as necessary to look for ways to spend less in other budget categories to offset the expenses that you cannot reduce.

In the beginning, you will probably find that your budget needs some adjustments. That doesn’t mean you failed at budgeting, so don’t be disappointed. A budget is a living document that evolves to fit your needs, and almost everyone takes some time to find the formula that works best for them. Stay with it!

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Different Budgeting Strategies

There are several different budgeting methods you can use to track your income and expenses. Budgeting isn’t rocket science, but having a complicated budget can cause you to give up in frustration. A budgeting strategy will help you focus on the details and build a budget that works for you.

Here are some of the most popular strategies that you can pursue. No one strategy is right for everyone: you’ll have to choose the one that suits your situation and your goals!

Zero-Based Budget

A zero-based budget assigns each dollar you earn to a specific expense or savings goal. This budgeting strategy lets you know exactly how much you spend on each expense, savings goal and debt payment.

One downside of zero-based budgeting is planning for variable expenses like gas, repairs or electricity bills. Make your best estimate and transfer any money you don’t use into savings for a more expensive month. There will be unplanned purchases each month, so set aside some cash for a miscellaneous purchase category.

The zero-based budget is a good strategy for people with consistent, predictable earnings and expenses. It may not be the best choice if your income and expenses vary widely each month.

50/30/20 Budget

You may prefer to assign a percentage to each expense type. The 50/30/20 budget rule recommends dividing your after-tax income into these expense types:

• Needs, including minimum monthly debt payments (50%)
• Wants (30%)
• Savings, investments and extra debt payments (20%)

Within each category, you assign a spending amount for each need, want and savings goal.

The 50/30/20 rule can give you more spending flexibility than a zero-based budget. However, if your needs consume most of your income, you must sacrifice your wants and savings goals. You might have a 60/20/20 budget until you can reduce your necessary expenses or boost your income.

Envelope System

The envelope budgeting system, also known as cash stuffing, lets you assign a specific dollar amount to each expense or savings goal. If you use cash regularly, you can label a physical envelope for each category and fill it with money. Once you use the envelope funds for that month, you don’t spend any more on that category until the next month.

If you use debit cards or credit cards to pay for purchases, there are several envelope-based budget apps. You can create virtual envelopes and track spending from your phone to avoid overlooking any card purchases or bank withdrawals.   

Assigning a certain amount of cash to each budget category can help you avoid impulse spending.

Values-Based Budget

People who know budgeting is important but don’t want to follow a traditional formula should consider a values-based strategy. This budgeting strategy can help you enjoy life each month.

After paying your essential bills, you dedicate your remaining income to the expenses that are most important to you. If fitness is important to you, you may decide to spend your extra cash on exercise equipment or home workout essentials. Frequent travelers may choose to use their funds to go on trips more often.

One potential downside of values-based budgeting is not saving enough for future expenses. You will need to find a balance between near-term pleasure and planning for the future.

Budgeting Tools

Using a free or premium budgeting tool can make it easier to track expenses and your goals. There are many popular apps designed to assist you with building and following your budget.

You Need a Budget

You Need A Budget (YNAB) is a great choice if you want an in-depth budget. YNAB walks you through the entire process and enters your average costs for many ordinary expenses.

Couples can also benefit from using YNAB as multiple devices can access the app in real-time to track spending and update budget progress.

Tiller

Those who prefer spreadsheets will like Tiller. This app links to your bank accounts and payment cards. Your transactions can auto-categorize and export to Google Sheets and Microsoft Excel. Tiller offers spreadsheets for several different budgeting strategies.

Goodbudget

Consider Goodbudget if you want to use the envelope system. You can create virtual envelopes and sync your budget with multiple devices. Goodbudget also tracks your debt payment progress.

Free Monthly Budget Spreadsheet Template

• This simple monthly budget template makes budgeting fun and exciting.
• Easy-to-follow instructions so you can get started budgeting in no time.
• Access your budget online from anywhere. See all features

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Budgeting as a Couple

Making a successful budget as a couple requires more effort than budgeting alone. These tips will help you succeed.

Discuss Wants and Goals

Sharing a common vision is vital to budgeting as a couple. When making a budget, sit down together and review the essential expenses, wants, and savings goals.

Using a budget app for couples can also be helpful. Many premium apps sync with multiple devices. Apps like Honeydue offer a joint bank account and budget templates and let couples chat in-app to categorize transactions.

Discuss Large Purchases Before Hand

Couples can avoid money stress by discussing expensive purchases above a specific price. Small purchases don’t need mutual approval as the budget should allocate some cash for each person for personal spending.

Schedule a Joint Review Session

In addition to communicating about large purchases, couples should schedule a weekly or monthly review session.

Many premium apps provide reports that can make reviewing transactions easy.

Why Make a Budget?

A budget makes it easier to see how you spend your money each month. Comparing your income and expenses can help you quickly decide if you can afford a purchase. Budgeting also makes it easier to determine how much you need to save each month for specific short-term and long-term money goals.

A budget can help you stop living a paycheck to paycheck lifestyle. Living paycheck to paycheck is risky: if you have unexpected expenses or you’re suddenly out of work, you may not be able to pay the bills. That can mean late fees, high interest rates on credit card balances, and lasting damage to your credit. A budget can help you build reserve funds and break out of the paycheck-to-paycheck lifestyle.

How Much Can You Save With a Budget?

Saving money is possible with almost any budget. You won’t know how much you can save until you analyze your spending patterns and set up your budget. Once you know how much you’re spending, you can set goals and choose ways to reduce your spending or increase your income to meet them.

For example, you might decide that you want to set aside a specific amount, such as $100 a month. Some ways to produce an extra $100 a month can include:

• Cooking your meals instead of ordering takeout
• Canceling unwanted subscriptions
• Reducing entertainment spending
• Adding a roommate to share the rent

Once you’ve decided how much you want to save and how you’re going to save it, you can build a budget that supports those plans.

How to Stick to Your Budget

Making a budget gets you only halfway to your goals. The other half is following your budget, and for many people, it’s the harder part. Choosing the right strategy and using the right tools can make it easy to follow your budget. These practices can also motivate you.

Start With Small Goals

Make small and easy to achieve money goals. Create more challenging goals as your finances and money skills increase.

Use One Bank Account

Only using one bank account to pay your monthly bills makes it easier to track every expense. Having an accurate budget that tracks all of your income and expenses is essential to know if you’re living within your means. If you use a single account, your account statement can serve as a summary of your spending.

Automate Savings and Investments

To avoid accidentally spending your savings, schedule automatic transfers to your savings accounts and investment accounts. If you’re saving for a future purchase, consider making a special fund specifically for that expense.

Use Financial Calculators

Free online financial calculators can help you estimate how much money you need to set aside each month for your various goals. You can find calculators for these purposes:

• Paying off debt early (i.e., credit cards, student loans, home mortgage)
• Refinancing loans
• Saving for retirement
• Estimating investment returns

Calculators can remove the guesswork and keep you focused on your goals.

Make a Shopping List

If you’re prone to making impulsive purchases, make a shopping list before going to a store or website. Only add items to your cart if they are on your list.

Set Daily and Weekly Spending Limits

Spending limits for your unplanned purchases can help you avoid overspending. When you spend too much, you must reduce spending on your other non-essential purchases. You might also decide to wait at least 24 hours before making any purchase over a certain amount. Waiting time can help you avoid impulse purchases and decide if you really need to make that purchase this month.

Pay Cash for Large Purchases

When possible, use cash and avoid borrowing money or using installment plans to make large purchases. Taking on debt adds another monthly payment to your spending. Most loans charge interest that increases the total purchase cost and reduces your disposable income. If you use a credit card you will have to pay that balance off in full or face an extremely high interest rate.

Avoid Hidden Fees

Small hidden fees that banks and other services charge erode your free cash. Look for free bank accounts that don’t charge monthly account fees or ATM withdrawal fees.

Set due date reminders to avoid late fees for your recurring bills and loan payments. Some merchants offer a discount when you link your bank account to send payment on the same day each month.

Building a budget and sticking to it are core elements of any strategy for financial success. Budgeting allows you to control your spending and generate surplus funds every month. That opens the door to saving, investing, and long term prosperity. It all starts with a budget, and if you don’t have one, you need one!

The post How to Budget Money: The Beginner’s Guide appeared first on FinMasters.

TV shows are often dramatized, and what you see there has to be taken with a grain or more of salt. Still, watching TV shows built around the concept of frugal living can give you some ideas on where to start and entertain you at the same time. Check out some shows that can give you unique insights into creating a more manageable budget.

1. So Freakin’ Cheap

We might be starting out on the more extreme side of the spectrum, but So Freakin Cheap is worth a watch if you need a lesson on frugality. It is a TLC show that first aired in 2021 and immediately accumulated quite a fan base.

This reality TV series follows the stories of four unassociated families who are ready to do everything imaginable to save a few pennies. Some measures they take to cut down their expenses – like dumpster diving – might be a bit too much for some. However, these families can still teach you some more realistic frugality tips – how to plan a budget-friendly wedding, DIY things around your home, and more.

Where to watch: So far, only the first season of So Freakin Cheap has been released, and the network is waiting for the greenlight for season two. You can watch the entire first season on Amazon.

2. Going From Broke

If you’re a millennial struggling to get out of student debt, make ends meet, and gain some financial independence, Going from Broke is the reality TV show for you.

The hosts are Tonya Rapley, a financial expert, and Dan Rosensweig, CEO of Chegg, Inc., an educational support services company. They work with young adults, educating them on personal finances and offering tips and tricks that can help them get out of debt and start increasing their savings.

Where to watch: There are four seasons of the show so far, with the fifth on the way. You can watch the show on Crackle and Apple TV.

3. Big Bad Budget Battle

Food Network’s Big Bad Budget Battle isn’t a traditional budgeting reality TV show, but it can be more than helpful when you’re struggling to put food on the table.

Hosted by Ree Drummond, the show came out in 2022 with just one season released so far. You’ll follow along as home cooks compete to create complex, delicious meals on a strict budget. Food is a major item in most household budgets, and eating cheaper is a big step toward living cheaper.

The competitors need to be thrifty, learn how to use only the ingredients they have in their pantries, and make smart shopping choices if they want to win.

While it’s more of an entertaining cooking show, Big Bad Budget Battle has some nuggets of advice that could help you save on groceries and cooking.

Where to watch: You can watch the show on Amazon, Discovery +, and, once the new season comes out, on Food Network as well.

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4. Living Smaller

Living Smaller is a unique addition to this list. It’s less about budgeting than about maximizing the use of the space you have available in your home.

The show gives closer insight into the lives of those who have adopted the “tiny home” movement.

You’ll see how others have creatively improved their tiny homes, built budget-friendly yet exceptionally functional spaces, created renting opportunities, and more.

While the show doesn’t go into detail on “budgeting”, it does offer a glimpse into how you can enjoy your small space better or save money by downsizing your space.

Where to watch: There’s currently just one season with 26 episodes, and you can catch up on the show on A&E.

5. Downsized

Downsized is an oldie but a goodie. It’s a 2010 reality show with only two seasons, and despite it being somewhat outdated, it shows timeless financial struggles and how to overcome them.

The show follows a large blended family as they try to navigate their financial troubles after losing their contracting business and having two of their homes foreclosed.

The 9-member family had to completely change their lifestyle and spending habits, resorting to dumpster diving, couponing, food stamping, and more just to stay afloat. 

Where to watch: Considering it’s been over a decade since the show’s release, you won’t find it on any of your favorite TV channels. However, you can watch the show on Amazon.

6. Til Debt Do Us Part

Going even further back in time, to 2005, we get perhaps one of the best-known finance reality TV shows: Til Debt Do Us Part.

Hosted by Gail Vaz-Oxlade, an expert financial planner, you’ll get to meet couples and families with serious financial issues that are causing serious relationship issues.

Understanding that finances are often one of the main reasons for divorce, Gail is as gentle as she is ruthless with the families seeking her assistance. She offers terrific relationship and financial advice as she works diligently to transform each family’s spending habits.

She goes so far as to put families on a strict budget, taking away their credit cards and giving them only a weekly allowance to push them to realize the financial mistakes they’re making.

Where to watch: While it’s an older show, much of the advice is relevant today. You can catch up on Til Debt Do Us Part on Amazon.

7. Get Smart With Money

Admittedly, Get Smart With Money probably doesn’t belong on this list as it’s not a TV show but rather a short documentary-style movie. However, it’s filled with nuggets of advice you won’t find in many popular reality TV shows that have been running for seasons.

In Get Smart With Money, individuals facing financial difficulties are introduced to economic advisers who try to help them gain some stability over the course of a year.

You’ll follow along with the story of a bartender who’s barely scraping by, a family with a strong desire for early retirement, and more.

Each story is unique yet resonates with the audience, and you’ll want to remember each piece of financial advice offered in the movie.

Where to watch: You can watch Get Smart With Money on Netflix.

8. Life or Debt

Life or Debt is a show from 2016 that takes an exciting approach to personal finances. It’s hosted by Victor Antonio, a motivational speaker who assists families in dire financial strains, teaching them how to approach their personal finances like they would a business.

In a nutshell, Victor stages a 4-day financial takeover where he goes over all the do’s and don’ts of personal finances, offering every family critical advice that should turn their life around. Once his “intervention” is over, he leaves the families to themselves for 90 days, returning later to find out whether the families followed his advice and how it impacted them.

Where to watch: It’s an intriguing show you can now watch on Amazon, Apple TV, Google Play Movies, and Vudu.

9. Money, Explained

Money, Explained is a documentary mini-series released as a spin-off of the popular docu-series Explained.

It’s five episodes long, and each episode goes into detail about a specific financial topic. The first episode discusses common financial scams and why many people fall for them. The second one explains credit cards, how they work, and why you should be careful with them, while the next one talks about the student debt crisis and whether it can be overcome.

The penultimate episode is all about gambling, while the finale talks about what’s necessary for a comfortable retirement in the US.

Where to watch: It’s an insightful mini-series that you can enjoy on Netflix.

10. The Minimalist: Less Is Now

Another Netflix title you should check out is The Minimalist: Less Is Now. Somewhat similar to the famous Tidying Up With Marie Kondo show, it presents all the perks of minimalism and how you can enjoy your life with less.

Not necessarily a financial show, it can be exceptionally helpful if you tend to overshop and buy items you never really use or need, thus wasting a big chunk of your income.

The show will offer great tips on decluttering your home and changing your spending mindset.

If you feel inspired by The Minimalist: Less Is Now but don’t know how to approach decluttering, the best place to start is in your closet. Go through your closet, get rid of the clothes that are worn and torn, sell used clothes in good condition for profit, and limit your shopping budget to avoid getting back into your old habits.

Where to watch: You can watch this show on Netflix.

11. Prince$$

Prince$$ is a reality TV show from 2010 that garnered quite an audience at the time of its release. It’s dramatic, at times ridiculous, and possibly life-changing for compulsive shoppers who need to get a hold of their finances.

Hosted by an expert financial planner Gail Vaz-Oxlade, the show is essentially an intervention for spoiled spenders who need some serious financial discipline.

Throughout the show, Gail takes away the “princesses’” credit cards, takes control of their finances, and teaches them to become financially responsible and independent.

Where to watch: You can watch Prince$$ on Amazon, Apple TV, and Tubi.

12. Eat Well for Less

Eat Well for Less is a popular British reality TV show that started in 2015. Initially hosted by Gregg Wallace, greengrocer Chris Bavin, and dietician Lucy Jones, and now by Chris Bavin and Jordan Banjo, the show addresses the problem of rising food prices and how families on a budget can overcome it.

The team goes around the UK, meeting struggling families and assessing their eating and cooking habits. They first allow the families to do their regular grocery shopping routines and prepare their meals, then offer advice on bringing their weekly grocery costs down.

In the process, they dispel some common food-related myths, teach others how to cut down on food waste, and offer suggestions on eating healthier foods on a budget.

Where to watch: You can watch Eat Well for Less on BBC One, Apple TV, and Binge.

13. Extreme Cheapskates

We can’t talk about the best TV series on frugal living without at least mentioning Extreme Cheapskates! The show is old: it was released in 2012 and only ran for three seasons. It’s still a highly recognizable “budgeting” show that can inspire you to think outside the box when it comes to your finances.

Extreme Cheapskates is just what the title suggests: a show about individuals who will go to all lengths just to save a few bucks. You’ll find episodes about those who heat up their food in a jacuzzi, those who never shower at home, those who dumpster dive, plan unbelievably cheap parties, and more.

Where to watch: While the show focuses on the ridiculous and extreme aspects of frugal living, there’s always something to learn from those stories. If you’re interested, you can watch all three seasons of Extreme Cheapskates on Amazon.

Final Thoughts

Living on a budget and getting ahold of your personal finances isn’t easy. While the best thing you could do is probably seek advice from a professional financial planner, that may not be accessible to everyone. The next best thing is learning from others’ examples and mistakes.

The aforementioned TV shows on frugal living can give you unique insights, inspire you, and help you take your next step toward gaining financial stability. Check them out, have a laugh, and learn important financial lessons!

The post 10+ Best TV Series on Frugal Living in 2024 appeared first on FinMasters.

How Much Can You Save with Couponing?

One study reported that 94% of Americans reported using coupons and that the average savings are $11.60 a year per person^[1]. That doesn’t sound like much, but it includes many people who use coupons only a few times a year.

Other research suggests that effective couponing could save the average household over $1000/year^[2].

The collective worth of coupons is impressive. The total savings from coupons for 2021 was $3.6 billion, and that’s just for the U.S.^[3]

Serious full-time couponers claim they save tons of money by being vigilant and persistent. Some claim to save as much as $100,000 using coupons^[4]. Coupon influencers love to share their “big scores” with readers, and some have even started businesses helping others find coupons.

Hidden Costs of Coupons

There is one thing all coupons share: a deadline. You have a deadline for using the coupon, and after that, it expires. This sense of urgency creates the fear of missing out (FOMO). You must act quickly, which means you may not use good judgment. Do you really need the item? Is the discount a good value?

You can get a new pair of shoes or a pound of liverwurst, along with the pleasant sensation that you have even saved money.

But the question is, are you, in fact, saving money?

Here are some costs to watch for.

1. Overbuying

As many as 38% of people buy more than expected because they have a coupon. At least 83% of frequent coupon buyers say coupons impact their buying behavior.

It is easy to overbuy when using coupons. You may be getting a good deal on quantities you will never use. Estimate how long it will take to use large amounts. A couponer can spend hours searching for the best coupons and the best offers and leave the store with 7 gallons of hot sauce at a deep discount. But do you really need that much hot sauce?

You may have “saved” money at checkout, but you’re just wasting money if you don’t use the goods you store or you buy items you didn’t really need.

Remember that stores offer coupons for a reason. They want to get you into their store and hope you buy other items on impulse. Don’t fall for it.

2. Returns

Keep in mind that there will be a cost for returning the product if it is not what you wanted. Those costs can include packaging, postage, and sometimes a restocking fee. The cost of returning the product will be greater than the discount you receive with the coupon.

3. The Time Cost

You can lose control of your time obsessing over finding deals. At some point, you have to place a value on your time.

This can be a dollar value, such as how much you could earn through a part-time job vs. the amount you save on coupons, or it could be the emotional value of the time you could be spending with your family. Assign a value to your time and compare that to the value you are getting from finding coupons.

How to Make Couponing Worth It

1. Use Bulk Savings Wisely

You most likely have an ongoing need for items such as soaps, shampoos, sugar, and canned goods. Many coupons offer a discount only if you buy in quantity. Only purchase those things in bulk that you know you will use. You don’t need 20 years’ worth of cooking oil. Make a list of bulk purchases you would like to make and watch for coupons for those items.

2. Wait for Discounts on Dream Products

Everyone has favorite products. You may not want to buy an off-brand because you prefer the product you know. Some companies offer coupons on second-class brands to lure you into buying an inferior product. You can find coupons for name brands from time to time. Stock up on these when you find coupons. Until then, buy small quantities of your favorites and watch for discounts. You will save money in the long run and get the products you want.

3. Get Ready for Seasonal Savings

Watch for coupons during holidays like Black Friday, Christmas, and New Year’s. Plan your shopping for those high-coupon periods. You can save a bundle by being aware of these times and setting aside cash to make your purchases.

Also, watch for deep discounts after the holidays. Many companies have leftover inventory that didn’t sell as anticipated, and they issue coupons to help eliminate excess inventory.

4. Set a Budget

To avoid overspending, set a budget. Know what you spend each month. If you buy coupon items, count that toward your monthly budget, and don’t give in to impulse buying. Create a plan for your money at the start of the month, on paper and on purpose.

That said, you should set aside extra money for those times you want to stock up on discounted items. This will put you over your monthly budget, but it will reduce your expenses in the following months because you will have already bought the products you need.

5. Be Aware of Product Quality and Quantities

Online photos of a product can be deceiving. Sometimes the item pictured is different from the one you are buying. For example, the ounces may differ between the picture and what the coupon specifies.

Also, be careful when the store compares their product to another, more popular one. Saying something is “similar to” or “compares to” a brand-name product does not mean it is identical. Check ingredients, sizes, and customer reviews.

6. Avoid Emotional Buying

It can be exciting to find great deals. Some couponers like to tell others how much they saved, and the emotional rush becomes more important than the savings. Make wise decisions about products you want, and don’t buy “good deals” for the thrill of it.

7. Use Coupons to Create Your Shopping List

Collect coupons and review them before going to the store. This will remind you to get the item, and it will help you remember which products you have coupons for.

If you start your couponing efforts with a wise look ahead, you can avoid losing money and increase your savings!

Should You Join the Coupon Craze?

87% of low-income buyers, 86% middle income buyers and 85% of high-income buyers admit to looking for coupon deals.

What if you discover coupons for products that you will undoubtedly use? Congratulations, you’re saving money and winning.

Many millionaires use coupons regularly. It turns out that millionaires are not above saving money.

Several well-to-do celebrities use coupons. People like Kourtney Kardashian, Lady Gaga, and Carrie Underwood are couponers.

Focus on items you need or really want to buy, and you can avoid the hidden cost of unnecessary purchases. Wade into the craze before jumping headlong. Get used to the process and learn how much you can save. Though couponing can be a rewarding pastime, it is not the equivalent of a job. You can save money, but coupons won’t pay the rent.

The post Is Couponing Worth It? How Much Can You Save vs Hidden Costs appeared first on FinMasters.

Remember: If insurance companies can negotiate with healthcare providers to reduce medical bills, then so can you! This guide offers practical steps on how to do it so you can effectively reduce your healthcare expenses.

In this post:

1. Study Your Insurance Policy
2. Negotiate Before Receiving Care
3. Look for Discount and Assistance Programs
4. Get Help From a Third Party Organization
5. Ask for an Itemized Bill and Check Every Line
6. Negotiate a One-time Settlement or Payment Plan
7. Consider a Patient Advocate
8. If All Else Fails, Consider Bankruptcy

1. Study Your Insurance Policy

As the old saying goes, failing to plan is planning to fail. Before you can engage in a negotiation over the cost of your medical care, you have to understand the ins and outs of your insurance policy (if you have one).

Make sure you understand your deductible, maximum out-of-pocket costs, and coinsurance ratios. Figure out which services are covered, what your copays for them can be, and which providers are in your network.

Be prepared to call out your insurance provider for failing to uphold their commitments. It’s a sad fact of life that they’ll generally do their best to pay as little as possible, so you may have to put pressure on them to make sure that they pitch in as they’re supposed to. Remember that you can appeal an insurer’s decision and ask for an outside review.

The best time to learn about your insurance policy is before you need it. When someone’s sick or injured, you’re under pressure and not in any condition to dig into the details of insurance. Study your policy as soon as you get it.

2. Negotiate Before Receiving Care, If Possible

Whenever possible, try to reduce the cost of your healthcare before you receive any services. It’s easier to find cheaper services ahead of time than asking for a discount after the fact. 

This isn’t always possible. If you’re rushed to the hospital due to a medical emergency, you can’t take the time to find the most affordable provider or negotiate rates.

When you need non-emergency services, though, try to find ways to lower your prices early.

• Shop around: Just as you would when shopping for a cleaning service, you should compare prices between different medical providers. Hospitals are required to publicly list their prices online. They may be hard to decipher, but they are a starting point to gauge relative affordability.
• Avoid facility fees: One of the most expensive aspects of medical care is the “facility fee” that hospitals tack onto your bill. They’re often hundreds of dollars and rarely covered by your insurance. Ask about facility fees ahead of time and see if you can reduce them by receiving services at another location.

If you find the best possible deal and know that you still won’t be able to afford what you need, don’t be afraid to ask for a reduction. Don’t take the first no for an answer. Ask to speak to someone higher in the organization if early representatives turn you down. Make sure you get any agreements in writing.

Again, it’s worth comparing the prices and looking at which facilities and doctors are in your insurance company’s network before you or anyone in your family needs care. You may not be able to compare prices for the specific service you will need, but you can get a sense of which facilities are more affordable.

3. Look for Discount and Assistance Programs

Many service providers and hospitals have programs in place to help patients who are struggling to afford their bills. There are, of course, humanitarian reasons for them to do so, but there are also business incentives.

They’d all rather collect something than nothing, so it’s in their best interest to make reasonable accommodations for patients in financial trouble. Many of these programs are for people who are uninsured, underinsured or have low incomes.

How to Negotiate a Medical Bill: A Step-By-Step Guide

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Qualification requirements will undoubtedly vary, though, so do your due diligence. You can always start by looking online. Here are some examples of these programs:

• Kaiser Permanente’s Medical Financial Assistance Program
• John Hopkins Hospital’s Financial Assitance and Payment Plans
• United Health Service’s Financial Assistance Program

If you can’t find any discount or assistance programs online, don’t lose hope. Make some calls and ask for help directly. Providers and hospitals may be willing to work with you if you explain your hardship, especially during such trying times as the COVID-19 pandemic.

4. Get Help From a Third Party Organization

Sometimes, even if you do everything right, medical costs can get out of control. Fortunately, unaffordable healthcare costs are a well-known problem, and there are a lot of organizations (both government and private) that are taking it upon themselves to help.

Much like the assistance programs that providers offer, these are usually reserved for people who can demonstrate some kind of hardship. Fortunately, they’re more flexible than most internal programs, and there are many options out there for everyone. There’s assistance for everyone from veterans to people who suffer from particular diseases.

If this option sounds like something you’re interested in, take a look at our guide to getting third-party help with your medical bills: 17 Ways to Get Help Paying Medical Bills in 2021.

5. Ask for an Itemized Bill and Check Every Line

You should always check the explanation of benefits (EOB) that your insurance provider gives you and your itemized medical bills for accuracy. Ensure that you received all of the products and services listed and that the charges are in the amounts you expect. 

You can compare the prices for procedures and medicines against the going market rates with sources like the Healthcare Bluebook. Providers and hospitals have been known to charge extra with scams like the following:

• Upcoding: They may replace one service with another that’s roughly equivalent but more expensive. For example, the consultation you had with a nurse may be billed as time spent with a physician, or you may see a charge for a brand-name medicine when you received a generic version.
• Unbundling: There are often discounts for services that go together, but providers may charge more by splitting them into their respective parts. For example, instead of billing for an appendectomy, they could charge individually for the incision, removal of the appendix, and sutures, resulting in a much higher bill.
• Padding: You may find blatantly false charges for services you didn’t receive. Sometimes, providers and hospitals add fees and hope that patients won’t notice, understand, or have the courage to accuse them of falsehood.

Fraud and scams aside, it’s not uncommon to find simple mistakes in a medical bill. Medical coding, the translation of medical services into codes for insurance providers and billing departments, is a delicate process. Two all but indistinguishable services may have vastly different costs, so you should always double-check each line item.

6. Negotiate a One-time Settlement or Payment Plan

If you can’t qualify for financial assistance or are still struggling to afford your medical bills after receiving aid, don’t waste time negotiating more aggressively. 

Try to get whichever party is billing you to agree to one of the following:

• Lump-sum payment: If they’re worried about collecting over the long-term, a service provider or hospital’s billing department might agree to lower your charges. It helps if you can pay in cash the day you ask for a settlement. 
• Low-interest payment plan: It’s not uncommon for patients to enter into a long-term financing plan so they can pay off their medical bills. If you’re proactive and request this early on, the terms are usually favorable. It’s usually easier than negotiating a settlement since the provider will eventually get their full balance.

Don’t let the bill go to collections before you try for these. The last thing you want is to let things go for so long that you risk defaulting. When your account has gone to collections, debt settlement is something entirely different and will impact your credit score.

If you have the money to offer a reasonable lump sum, settlement is the better option to try first. It’s inherently cheaper and faster than a payment plan. If you don’t have enough to put a substantial payment toward your bills, ask for a payment plan that will let you work off the amount over time.

If you decide to settle your debts, you’ll start the process by writing a debt settlement letter. Learn how to write one and download a sample letter you can use: How to write a debt settlement letter or How to Write a Medical Bill Negotiation Letter

7. Consider a Patient Advocate

Medical billing can be extremely complex, and it’s often difficult for a recovering patient to break the process down, spot potential errors, and negotiate effectively. That’s a challenge at any time, but if you’re coming off a serious illness or injury, it can be insurmountable.

Patient advocates or medical billing advocates are experienced insiders who can study your bill and your insurance company’s explanation of benefits, find errors, and help you negotiate discounts and payment plans.

Some patient advocates, like the Patient Advocate Foundation, provide free services to needy individuals. Others work for an hourly fee or charge a percentage of the amount they cut from your bill.

If you have an unusually large or complex bill, a paid patient advocate may be worth considering.

8. If All Else Fails, Consider Bankruptcy

People declare bankruptcy because of medical debts all the time, and for good reason. It should always be a last resort, but bankruptcy can provide the fresh start that so many people need to escape their unreasonably high balances.

Before you go through with the filing process, make sure you reach out to your service provider or the collections agency to let them know you’re considering it. If you do declare bankruptcy, most of them won’t be able to collect anything from you, and they know it. Telling them that you’re prepared to drop the bankruptcy bomb will often encourage them to negotiate. After all, they’d rather get half of what you owe than none of it.

Remember that once you file for Chapter 7 bankruptcy you will have to wait 8 years to file again. If you have a chronic or recurring medical condition your bills won’t stop piling up during those 8 years. You may wish to delay bankruptcy until there’s no other option.

The post How to Negotiate a Medical Bill: A Step-By-Step Guide appeared first on FinMasters.

Consider this your crash course in audit preparedness. You’ll learn about common audit triggers and tips for how to handle the audit process.

So What Does Being Audited Mean, Exactly?

If you are being audited by the IRS, it means that the agency plans to review your tax return and confirm that the information you’ve provided is accurate. The main goal is to determine whether your income, expenses, and credits – which determine the amount of taxes you owe – have been reported correctly.

Learn more: Get to grips with personal taxation by exploring our comprehensive guide on how do taxes work for individuals.

Different Types of IRS Audits

Not all audits are the same. The IRS may perform the following types of audits:

• Correspondence audit
• Office audit
• Field audit
• Taxpayer Compliance Measurement Program (TCMP)

The exact procedures of each of these audits are quite different. If you receive an audit notice from the IRS, check to see what type of audit to expect.

How Does the IRS Select Who to Audit?

On average, the IRS audits just 3.8 out of every 1,000 tax returns — yielding an audit percentage of just 0.38%^[1]. Still, that may not be terribly reassuring if you’re currently on the receiving end of an audit. According to the IRS, audit selection criteria are based on random selection, computer screening, and auditing returns with a high probability of non-compliance.

What Do I Do if I Receive an Audit Notice?

If you receive an audit notification in the mail, don’t panic. Not all audit types will place you under intense scrutiny. Before you do anything else, check the following:

• What is the stated reason for the audit?
• Does the letter specify the year being audited?
• What type of audit can you expect?

Read this notice carefully, as it will contain important information about why you’re being audited and what to expect. There may also be instructions on what to do next, so read the full letter immediately after you receive it.

Learn more: Find out how to effectively settle IRS tax debt, even if it’s 2, 3, or 4 years old, with our practical guide.

Common Types of IRS Audits

Not every IRS audit is created equal. The IRS uses several different types of audits, each of which has its own level of detail. Here’s what to expect from each type of audit.

• Correspondence Audit – A correspondence audit is the simplest type, as well as the most common. Correspondence audits make up 85% of all audits^[2]. In this audit type, the IRS will simply send a letter asking for clarification about a portion of your tax return and provide a means for you to send information back.
• Office Audit – If the issue is too complex for a correspondence audit, you may receive a letter requesting an “office audit” or a face-to-face audit. In this audit type, you’ll come to an IRS office to answer questions about your tax return. Make sure to bring any documentation about deductions or credits at this time.
• Field Audit – Field audits are the least common, though they’re also the most invasive. During a field or office audit, an IRS agent visits your home or office to discuss your return. This is the most comprehensive audit type. It may examine your lifestyle, income, and business activity. You may want to consult an attorney or accounting professional to help you through this process.
  Field audits are very rare, and it would be very unusual for you to face one.
• Taxpayer Compliance Measurement Program (TCMP) – This rare form of audit is most common among high-income individuals, and it is simply designed to collect statistical data for future audits. The IRS may select specific items for this audit, and you’ll be asked to provide documentation, such as bank statements or receipts, to support your income or deductions.

Learn more: New to filing taxes? Our guide walks you through everything you need to know when filing taxes for the first time.

Common IRS Audit Triggers

While some audits are simply a matter of random selection, the IRS also uses computer systems to flag tax returns for an audit. This can happen due to some of the following common audit triggers.

• Math Errors – Always check your math! If you perform a calculation incorrectly, the IRS may flag your return and leave you subject to an audit.
• High Income – According to a 2022 report by the Government Accountability Office, higher-wage earners were generally more likely to get audited than those from lower income brackets. Those making more than $500,000 per year were especially more likely to be audited^[3].
• Unreported Income – Your employers send forms W-2 and 1099 to both you and the IRS. If your tax return is missing this information, you may receive an audit notice about your unreported income.
• Early Retirement Withdrawals – Did you make an early withdrawal from your retirement account? If so, this may also trigger an audit to ensure that you report these distributions accurately.
• Related Party Audits – You may receive an audit notice if someone you’re financially connected to receives an audit. A common example would be a business partner. If your business partner submitted a tax return that didn’t comply with established regulations, you may also be audited.

Learn more: Our article explains what happens if you don’t file or pay taxes, and why it’s crucial to stay compliant.

Navigating the Audit Process

What does being audited mean for you? The answer depends on the type of audit you’re facing, but there are still some general things you should do from the moment you first receive the audit notice.

Read the Letter Carefully

First, read the audit notice carefully. Make sure that you understand the key elements of the audit.

• What year(s) is the IRS is looking at?
• What is the reason for the tax audit?
• What type of audit will you be facing?

Look for any specific instructions and/or deadlines that will influence your next steps.

Verify the Letter’s Authenticity

Understandably, you may be concerned that the letter is part of some type of fraud or phishing scam. You can verify the letter by checking the contact information against that of the IRS website or by checking that your name, contact information, and Social Security number are accurate. When in doubt, contact the IRS directly through the information on their website.

Respond Immediately

Never, ever ignore a letter from the IRS. Doing so can actually worsen the situation. The letter will usually request a response. Respond immediately and provide any requested documentation. In a correspondence audit, this may be all that’s needed to clear up the situation and move forward.

Cooperate Fully

Unfortunately, there’s not much you can do to get out of the audit. Make sure to cooperate to the best of your ability. Be honest about all of your information. Even a hint of hostility or dishonesty could severely hurt your case.

Keep Detailed Records

Save everything the IRS sends you. Organize your records by date. This will help you maintain your own records as well as provide a trail of documentation that you may need if you choose to seek professional assistance.

Seek Professional Help

If you’re facing a complex tax audit, you may not feel comfortable handling it yourself. You can choose to seek the assistance of a CPA or even a tax attorney to be your advocate with the IRS.

How Far Back Can the IRS Go?

Don’t be surprised if you receive an audit notice for a tax year older than your most recent return. The IRS is fully capable of reviewing past returns to determine prior liability.

Unsure about the #audit process? Our post explains 'What Does Being Audited Mean' and what you should know. #AuditBasics

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For Tax Fraud: Forever

There is no statute of limitations for tax fraud or failing to file a tax return. If the IRS suspects you of these crimes, there is no limit to how far back they can investigate.

For Most Audits: 3 Years

The good news is that the statute of limitations is much shorter for other types of audits. The standard rule is that the IRS can look back at the previous three years. Just be aware that this is three years from the due date (usually April 15), so if you file early, the statute of limitations does not begin until the official April deadline.

For Large Errors: 6 Years

Here’s where it gets a little confusing. For large errors, the IRS can go back six years. A “large” omission is more than 25% of your gross income^[4]. This extends the statute to a full six years.

Understanding the Lookback Period

Keep in mind that the IRS may or may not actually look back this far. In fact, the IRS website states that most audits cover only two years’ worth of returns^[5]. And since correspondence audits (the most common type) are designed to address minor issues, taxpayers can often anticipate a fast turnaround.

Still, it’s always a wise idea to maintain clear, detailed tax records. The good news is that if you use electronic filing systems you can save your financial records indefinitely, so you’re always prepared.

Learn more: Get ahead of tax season with our review of the best tax software providers for 2024, ensuring a smoother filing experience

Consider Professional Help

If you are being audited by the IRS, should you immediately call a CPA or tax attorney? Not necessarily. A simple correspondence audit may be cleared up by providing some additional information. But you might consider reaching out to a professional if any of the following apply.

• Office and Field Audits – Though less common, office and field audits are a bit more invasive. You might request a CPA or tax attorney to represent you.
• Complex Tax Issues – Does your tax situation involve business expenses, rental income, foreign income, or income across multiple states? If so, a CPA may be able to help you sort through complex tax issues to clear up the audit as smoothly as possible.
• Tax Debt – If you’re already aware that you owe tax debt, you might consult a tax professional who can assist you in negotiating a settlement or payment plan with the IRS.
• Tax Fraud – A tax attorney can help you if you’re being investigated for tax fraud. At the very least, they can advise you on your rights and help you resolve the situation with minimal legal consequences.

What Does Being Audited Mean for You?

One thing is certain: being audited doesn’t have to mean the end of the world. If you know more about why you’re being audited and what to expect from the process, you can move forward with greater peace of mind.

If you’re not quite sure how to move forward, don’t hesitate to reach out to a professional. It’s important that you get help right away, especially if you’re facing a deadline from the IRS. After all, the sooner you address the audit, the sooner you can get on with life.

The post What Does Being Audited Mean? appeared first on FinMasters.

The Pros and Cons of Chime

Chime Financial, Inc. is a “neobank”, offering a number of financial technology or FinTech services to consumers. Its fee-free digital bank services are actually not provided by Chime itself, but rather by its partners, The Bancorp Bank and Stride Bank, N.A.

Chime’s Advantages for Consumers

Chime offers two different types of account plans for consumers: a checking account and a high-yield savings account. Because these accounts are provided by Chime’s bank partners, account deposits are insured through the FDIC up to $250,000.

Chime accounts offer several attractive benefits, including the ability to receive direct-deposit funds up to two days early. Checking account owners who have also enrolled in direct deposit can incur overdrafts of up to $200 without fees. Account owners also receive a Visa debit card to use with their Chime account without a credit check.

The Chime savings account features an annual percentage yield (APY) of 2.0%, which is competitive with other digital banks’ savings accounts. There is no monthly fee and no minimum required deposit for the savings account. However, only checking account owners can open a Chime savings account.

Drawbacks to Banking With Chime

As is true of most digital banks, Chime doesn’t offer any brick-and-mortar branches for personal service. Additionally, customers can only take advantage of mobile check deposit services if they’ve also enrolled in a direct deposit program through an employer.

Of greater concern is a recent history of customer complaints regarding Chime’s closing of accounts and withholding of funds on deposit. ProPublica investigated the issue and reported on the company’s practices in 2021, noting that over 900 customers had filed complaints with the Consumer Finance Protection Bureau (CFPB).

Other consumers have raised concerns about alleged fraudulent transactions in their Chime accounts, for which the company is said to have offered no assistance. Some complaints indicated that money was taken from accounts in transactions the customers insisted were unauthorized. Chime said its investigations disproved the claims.

Best Online Bank Alternatives to Chime

Now that you know a little more about this bank, let’s take a look at some reputable alternatives to Chime competing in the market today.

1. Ally
2. Aspiration
3. Axos Bank
4. Capital One 360
5. Current
6. Discover Bank
7. One Finance
8. Quontic
9. Revolut
10. Varo

Compare Chime alternatives

1. Ally

Ally Bank is one of the leading alternatives to Chime, offering a fairly diverse array of account types, including checking and savings accounts. One of its biggest benefits to checking customers is its lack of monthly fees and minimum balances.

Ally also offers credit cards, personal loans, and investments. Its interest rates for funds on deposit in savings accounts remain consistently among the highest in the industry at 4.00% APY for the high-yield savings account.

Ally’s business services are somewhat limited and it has no business checking account on offer.

It also does not support outgoing wire transfers to international recipients, although customers can receive international transfers. As with most digital banks, it does not provide physical locations and there’s no way to deposit cash.

Some consumers have raised concerns about the length of time Ally takes to clear a deposited check.

2. Aspiration

Aspiration offers a unique way to bank online for consumers who want to put their money where their conscience is.

Built on a promise that funds on deposit will never be used to finance ecologically damaging industries and businesses, Aspiration also rewards its consumers when they patronize brands that demonstrate social awareness and consciousness with cash back rewards from between 3% and 5% on qualifying purchases made with the Aspiration debit card.

Remarkably, customers can set their own monthly fee for this account through a “Pay What Is Fair” term—even if the customer wants to pay nothing at all. Customers can upgrade to Aspiration Plus accounts for added benefits and a small monthly fee.

Aspiration doesn’t quite have the breadth of account options that some other companies offer, and it doesn’t pay interest on standard saving account deposits.

If you’re committed to environmental causes, Aspiration is an option you’ll want to consider. If you’re not, Aspiration’s support of those interests won’t necessarily add value.

3. Axos Bank

Axos Bank offers a number of different types of accounts and banking products for both consumers and small businesses.

You can choose from several types of no-fee accounts, from the basic, no-frills Essential account to CashBack checking with 1% rewards for signature-based transactions. There are even specialized accounts for specific demographics, such as Golden Checking for customers over 54 years old and First Checking for young teens.

Axos products aren’t without some downsides. For example, many digital banking companies offer increasing interest rates for their CD products over time, whereas Axos maintains its rate no matter what the CD’s term.

You’ll also pay some transaction fees for certain services, including international card payments.

4. Capital One 360

The Capital One 360 Checking account combines the best features of neobanks with some benefits of traditional banks, such as physical branch locations across the U.S., allowing users in-person access to assistance when needed.

This fee-free account comes with no minimum balance requirements.

You can choose between an online-only account or a hybrid form that allows physical access. Many customers appreciate the stability of a more established, long-lived company that’s part of an expansive ATM network. That makes it one of the most popular Chime alternatives on this list.

Capital One’s digital accounts usually do not permit international wires, so if that’s important to you, you’ll want to look elsewhere. Additionally, users are charged fees for certain types of transactions, such as outgoing wire transfers to other U.S. recipients.

5. Current

Current offers mobile-only checking and savings accounts with features that especially appeal to parents and teenagers. Current is a fintech, not a bank, and banking services are provided by Choice Financial Group, which is FDIC insured.

Customers enjoy low fees overall but be aware that there are some fees that can’t be avoided such as $3 fee + 3% International Transaction fee for cash withdrawals at an International ATM, for instance. Basic checking accounts are no-fee, as well as the premium version, and the popular Teen Banking account.

Current checking accounts do not offer the opportunity to earn interest on deposited funds, but they do offer the opportunity to build credit when you use tour Current debit card. Savings accounts offer up to 4% APY.

If you’re searching for more robust or sophisticated banking solutions with a variety of features and tools, you might find Current products a bit too restrictive and bare-bones.

If you lose your debit card, you’ll have to fork over $5 for the replacement, or $20 for an express fee to get it as soon as possible.

6. Discover Bank

Discover, a major credit card company with over 40 million customers, also offers online banking services.

Its accounts carry no annual fees and extremely competitive interest rates on its money market and savings accounts, up to five times the national average for similar accounts. The company provides an intuitive digital interface with a good user experience (UX).

Discover’s products also extend to personal loans, home equity loans, and several credit cards with varying types of bonuses and rewards offered.

As with many digital banks, Discover Bank does not offer in-person services or brick-and-mortar branch offices. You can also probably find better initial sign-up bonuses from other providers, but if that matters less to you than keeping most or all of your digital banking at one location, you’ll want to give Discover a closer look.

7. One Finance

One Finance offers savings and checking services to consumers featuring a commitment to competitive interest rates for savings accounts and lines of credit through its partnership with Coastal Community Bank. It wraps both savings and checking into a single account that offers a debit card, overdraft protection, early access to direct-deposit funds, and savings benefits such as an APY of up to 5.00%. 

That single account might appeal to many consumers in its simplicity, but it might also strike others as highly limited. And, like other digital banks, it offers no physical branch locations or offices for in-person service.

8. Quontic

Quontic bills itself as an “adaptive digital bank” that offers interest on checking accounts with a $100 minimum opening deposit in an attempt to meet the needs of consumers who are underserved or shut out by traditional banking institutions.

It offers a diverse array of checking and savings accounts, as well as mortgage lending services.

Quontic does have some physical locations for mortgage lending services in the U.S.

Although Quontic charges no fees for many of the most common checking and banking services, such as incoming wires, cashier’s checks, money orders, and overdrafts, you will incur fees for a dormant account, stop payments, and other services.

9. Revolut

Revolut lets its customers choose from three tiered account levels: Standard, Premium, and Metal. Each account carries its own set of terms, from the no-fee Standard to the $45 per month Ultra account.

It offers users free transfers to other Revolut customers, early direct deposit access, and a competitive rewards program including cash back for purchases made at partner vendors.

Customers will also appreciate Revolut’s financial tools, including analytics and budgeting aids.

Revolut has no brick-and-mortar locations in the U.S. or elsewhere, and some features are limited to other geographic markets outside U.S. borders. Additionally, in order to access the greater benefits of the premium accounts, customers must pay high monthly fees.

10. Varo

Varo Bank offers no-fee checking accounts through its own banking charter (no partner banks). You can choose from a checking account, a savings account, and cash advances, as well as take advantage of financial planning and credit-building tools to help you reach your money goals faster. Varo products mostly carry no fees.

Varo is a member of a large ATM network, assuring access to cash when and where you need it.

The APY is fairly competitive starting at 3% for customers who receive direct deposits of $1,000 per month or more. Customers can later qualify for an APY of 5% by receiving direct deposits totaling $1,000 or more, and ending the month with a positive balance in both the Varo Bank Account and Savings Account.

On the downside, Varo offers no sign-up bonuses, whereas many competitors do. Like most digital banks, it has no physical locations. And some users may find its account choices somewhat restricted.

Compare Chime Alternatives

Bank on Digital for Your Financial Needs

If you’re looking for a new bank, digital banks are an increasingly attractive option. Chime and these alternatives to Chime offer many of the same banking services you’d get from a physical bank, often at attractive terms.

A little research and time can help you identify the company that comes closest to fitting your needs.

Let your answers to these questions guide your search. Be sure to look up independent reviews for any digital bank, whether it’s Chime or one of these alternatives to Chime, and don’t hesitate to reach out to customer support for your top candidates and ask any remaining questions you may have. Sometimes, a positive customer service experience can tip the scales in favor of a decision.

The post Top 10 Chime Alternatives for 2024 – Banking Beyond Chime appeared first on FinMasters.

Remember that while online legal services can help you with many simple legal problems, they are not always a substitute for hiring a lawyer!

What LegalZoom Does

When you consider online legal services, chances are that the first name you think of is LegalZoom. LegalZoom has been at the forefront of online legal services for more than 20 years.

It has a good reputation as a one-stop shop for your legal needs regarding personal, business, or professional matters. It provides the most flexible range of services in the sector, from business creation to protecting intellectual property, registered agent services, and contract templates that let you fill in your information. LegalZoom helps its customers create legal documents such as wills and living trusts, copyright registrations, trademark applications, and business formation documents without needing a lawyer.

For a fixed monthly fee. LegalZoom can also provide access to a lawyer if you have special legal issues that their forms don’t cover.

In addition, its Social Impact Team focuses on closing the justice gap by providing funding, products, and resources to underserved and underrepresented communities.

For comparison, LegalZoom offers three packages for setting up an LLC: free, $249, and $299, each offering a higher level of service. State fees are additional.

LegalZoom Alternatives

Other companies have also created comprehensive legal products and offer strong customer service. You have multiple options for getting the legal help you want through high-quality alternatives.

Most of these companies offer services focused on setting up a company. If you need other forms of legal services, consider LegalZoom or a lawyer in your area.

Consider these options before choosing an online legal services provider:

• ZenBusiness
• BetterLegal
• Rocket Lawyer
• Northwest Registered Agent
• Swyft Filings

Compare LegalZoom alternatives

ZenBusiness

ZenBusiness makes simple legal filings easier and less expensive for small business owners. The company helps you prepare and file your business documents, avoiding the necessity of bringing in lawyers or other potentially costly professionals to do the job for you. Zenbusiness is an all-in-one platform with a team of experts that has helped over 300,000 businesses grow. They are quick and accurate.

Here is the typical process for forming a company using ZenBuisness:

• Select your filling option and services
• File your formation documents with the appropriate state
• Receive confirmation from the state
• Review the documents that will be sent to your dashboard

Once your registration is complete, ZenBusiness provides you with services to grow your business.

ZenBusiness has an excellent Starter package that includes all the requirements for creating an LLC. The Starter package includes training for forming an LLC, a one-year free annual reporting service, and two free amendments.

There’s also a pro package at $199/year and a premium package at $299/year, offering additional services and faster processing times. Both the starter and pro packages allow you to add individual premium services for an additional fee.

The fee does not include state fees.

This is a socially conscious organization that strives to do good while expanding. It is in partnership with Kiva.org to help reduce poverty by creating loans for women and others who want to own businesses.

ZenBusiness has a 100% precision warranty, so you can expect everything to be done correctly.

Visit ZenBusiness

BetterLegal

BetterLegal claims to be the fastest LLC formation company in the industry, offering corporation and LLC formation in two business days. It also provides registered agent services.

Although it is a small company, its services are very good. However, it does not provide the range of legal services LegalZoom does.

BetterLegal is neither a law firm nor a substitute for a law firm or a lawyer. BetterLegal helps individuals establish their companies. It cannot provide legal advice, explanations, options, opinions, or recommendations regarding legal rights, appeals, the structure and activities of the enterprise, the use of commercial and legal forms, or general commercial and legal strategies.

BetterLegal also provides a range of services through partner companies, including banks, online accounting firms, registered agents, and an insurance company.

Although it focuses mainly on business creation processes, BetterLegal provides many other services related to the creation and operation of an enterprise. Additional BetterLegal services include:

• Compliance services, including the submission of annual returns.
• Development of operating agreements and by-laws.
• Filing changes, such as those required to change your company’s name, address, operating status, or membership information.
• A company license search service.

BetterLegal is one of the LegalZoom alternatives to consider if you need small business-related services and speed is one of your main criteria.

BetterLegal charges a flat $299 fee (your state may charge its own fees) and promises business setup in two days.

Visit BetterLegal

Rocket Lawyer

Rocket Lawyer is an online legal technology business. It provides individuals and small to medium-sized businesses with online legal services, including incorporation, estate plans, and legal document review.

Rocket Lawyer also offers an extensive package of real estate and personal finance documents and services, including:

• Lease agreements
• Eviction notices
• Complaints to landlords
• Real estate purchase agreements and warranty deeds
• Divorce settlement agreements
• Loan modification letters
• Credit report dispute letters
• Debt validation letters

And many more.

Rocket Lawyer offers a network of lawyers for consumers and small businesses to consult on legal matters through the On Call service. Attorney fees through have discounted rates.

It also introduced Legal Health Score in 2008, which allows individuals and companies to understand their level of legal well-being.

From the start, the company targeted entrepreneurs. Its original sales model offered a base plan and a pro plan that individual legal documents at less than standard lawyer rates. As part of the basic plan, the company provided interactive legal templates and step-by-step instructions to help companies. The Pro Plan provided clients with access to consultations, document reviews, and legal representation from local attorneys.

Rocket Lawyer has adopted a subscription model. You can pay $39.99/month or $239.00/year. Your state may charge additional fees.

Visit Rocket Lawyer

Northwest Registered Agent

Northwest Registered Agent provides registered agent services. It also provides business development services and focuses on providing first-class customer support to agents across the U.S.

It is important to note that many companies that sell Limited Liability Business Deposit (LLC) and Registered Agent services offer several paid packages with upgrades, such as Employer Identification Number (EIN) filing and operating agreements. The Northwest Registered Agent departs from this practice by providing only one paid package that includes its Registered Agent service and the formation of LLCs.

The company charges $39 to form an LLC, and you are responsible for paying all applicable fees to your state. Northwest offers registered agent services for a fixed $125 per year.

If you select the “Pay In Full” option, Northwest charges $225 to create your LLC and provide you with registered agent services for a year. They are very friendly and competent, with excellent client service and support.

When you sign up for their annual service and opt to pay monthly, you will be required to pay the total yearly amount if you cancel before the term ends. Northwest does not reimburse for services purchased or rendered unless an error has been made.

Visit Northwest Registered Agent

Swyft Filings

Swyft Filings is an affordable business education service with one of the fastest processing times in the industry. With their quick application process and strong customer support team, you’ll have all the resources you need to launch your business in no time. It is preferable for small businesses or entrepreneurs who need their business up and running quickly for a low price. Many users have successfully formed their companies.

They are known for their:

• Fast turnaround
• Affordable Packages
• Guaranteed Results
• Long-term Access to Customer Support
• User-Friendliness
• Training Guides for Businesses.

Customers create legal documents such as wills and living trusts, copyright registrations, trademark applications, and business formation documents without needing a lawyer.

​​Keep in mind that Swyft Filings is a document filing service. They are not a law firm and are not in a position to give you legal advice.

The basic package is free, with a standard package at $199 and a premium package for $299.

Visit Swyft Filings

How Do LegalZoom Alternatives Measure Up?

Review the chart below to see what the alternatives offer and decide which services matter most to you. You may want to focus on a less expensive alternative because it offers only the products you want.

*In certain jurisdictions

LegalZoom is one of the most comprehensive services on the market. It is also expensive, so make sure you need what you are paying for. Some alternatives offer a lower price by focusing on a few areas rather than trying to be everything to everybody.

If you can find a cheaper service that’s focused on an area that fits your needs, you might be better off with that.

Remember that there are also ways to get free legal help and if you can find one of those in your area you should consider that option!

The post 5 Best LegalZoom Alternatives for 2024 appeared first on FinMasters.

Fortunately, the foundations of the American tax system have remained consistent for a long time. The tax deductions and credits available may change from year to year, but the basic principles do not. Here’s an introduction to the different types of taxes for individuals in America and an overview of how they function.

In this post:

• How Income Taxes Work
  • Ordinary Income Taxes
  • Payroll Taxes
  • Self-Employment Taxes
  • Capital Gains Taxes
• Other Taxes
• Getting Professional Help

How Income Taxes Work

America taxes its citizens in many ways, but income taxes seem to get the most attention. There’s something viscerally upsetting about giving up such a large part of the fruits of your labor. I know my jaw hit the floor the first time I saw how much of my paycheck disappeared thanks to federal and state taxes.

Despite the discussion and scrutiny, Americans still seem to understand their income taxes the least. Here’s what you need to know about how income taxes work.

Some of the taxes in this article exist only at the federal level, some at the state, and others at both. The rules and rates vary widely from state to state, so make sure to double-check the details that apply in your location.

How Ordinary Income Taxes Work

Ordinary income includes things like your wages, interest from your savings accounts, and ordinary dividends. It gets taxed at the federal and the state level, and it’s usually what causes people to have to file an annual tax return.

There’s a surprisingly persistent misconception about ordinary income taxes: that earning more money can bump you into a higher tax bracket and leave you paying more tax on all of your income.

As a Certified Public Accountant (CPA), many people have asked me to help them avoid this, but that’s not how ordinary income taxes work. America’s income tax is progressive, which means that the government taxes you at a specific rate for every range of earnings.

For example, if you’re a single filer, you’ll only pay 10% on your first $11,000, but you’ll pay 12% on income from $11,000 to $44,725.

These are the progressive federal tax brackets for the 2023 tax year (check your local state government’s website for their rates):

Income taxes are calculated by applying the rates above to your taxable income. That’s your gross income adjusted for any above-the-line deductions (like contributions to retirement accounts) and either itemized deductions or the standard deduction.

Learn More: Would you like to pay less money in taxes? Take a look at our favorite tips for lowering your annual tax bill: 8 Practical Ways to Cut Your Taxes.

How Payroll Taxes Work

Income taxes aren’t the only thing that your employer deducts from your paycheck. They are also responsible for withholding payroll taxes, also known as FICA taxes. Unlike federal or state income taxes, payroll taxes are flat, not progressive. They include the following two taxes:

• Social Security at 6.2%
• Medicare at 1.45%

Both employers and employees have to pay this tax on all salaries, bonuses, and tips for a total of 7.65% payroll tax each.

Unlike income taxes, there’s not much you can do to avoid payroll taxes when you’re an employee. Any deductions you can qualify for only affect your adjusted gross income, which has no bearing on payroll taxes. The tax rates apply to your gross W-2 wages.

How Self-Employment Taxes Work

Self-employed people (as sole proprietors) pay the same income taxes that employees do, though they can take deductions for ordinary and necessary expenses that help reduce their income.

Taxation 101: How Do Taxes Work For Individuals?

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One notable difference is that, because the IRS considers them both employer and employee, they have to pay double the FICA tax: 15.3% total instead of 7.65%. Fortunately, they can deduct the “employer” half of that tax as a business expense.

How Capital Gains Taxes Work

The next most common set of income tax brackets are the capital gain tax brackets. They’re generally more favorable than ordinary income tax rates, but they follow a similarly progressive structure. They apply to:

• Profits on capital assets sold after a year: If you sell a capital asset (like a car, house, or stock) at a gain after holding it for a year, the profits get taxed at capital gains rates. If you hold it for less than a year, the profits are ordinary income, and you’ll pay your marginal (highest) tax rate on them.
• Qualified dividends: Dividends from qualifying businesses get taxed at capital gain rates. Most dividends are qualified, but check the 1099-DIV form that your investment brokerage sends around tax time to make sure yours are.

Here are the federal capital gains tax brackets for the 2022 tax year (check your state website for its capital gains tax rates):

Which of the three rates you pay depends on your total taxable income for the year, not solely on how much capital gains income you earn.

Learn More: Tax-advantaged accounts can help you avoid paying capital gains tax on the dividends and gains generated by assets you invest in for retirement. Take a look at our introduction to the options available: An Introduction to Tax-Advantaged Retirement Accounts.

Other Taxes

Unfortunately, your income isn’t the only thing that you have to pay taxes on. Federal and state governments collect revenues in several other ways. Some of the most common are:

• Property Taxes: State and local governments charge property taxes on real estate, whether they’re personal or investment properties. They may demand anywhere from 0.28% to 2.47% of a property’s value each year.
• Estate and Gift Taxes: Transferring your wealth to someone (except your spouse) may trigger estate or gift taxes if your assets are valuable enough. Fortunately, they have to be really valuable. There’s an exclusion of $16,000 in gifts per recipient each year. There’s also a lifetime exclusion of $12,6 million that protects people when they exceed this, including estate transfers at death.
• Sales and Excise Taxes: State and local governments collect sales and excise taxes when you buy goods and services. The rates vary, ranging from 0% in Alaska to 7.25% in California.

These taxes don’t get as much widespread attention as taxes on income and earnings for many reasons. Not every American owns a house to pay property tax on, sales taxes only amount to a few dollars in most transactions, and gift taxes are easily avoidable for most people. It’s still worthwhile to acknowledge them. Property taxes are a vital consideration when buying a home, and sales taxes are a significant aspect of a city’s cost of living. Don’t ignore the other types of taxes just because they’re not coming out of your paycheck every two weeks.

Learn More: Interested in learning which of the taxes we’ve covered means the most to the IRS? Take a look at our review of their biggest sources of revenue: Federal Tax Revenues: Where Does the Money Come From?

Getting Professional Help

The tax guidance industry generates billions in revenue each year for good reason. Understanding how the code works and which variables affect each other is a full-time job. Unless you make it yours, you’ll probably be unable to keep up with all of the complications.

If your tax return only includes W-2 wages, you can get away with filing your taxes on your own. Look into the IRS Free File Program, which is designed for taxpayers filing relatively simple tax returns. If you’re self-employed or have a sophisticated investment strategy, it’s probably worth the money to hire a tax expert. A Certified Public Accountant or Enrolled Agent can help you make sure that you’re not missing anything that could cost you.

The post How Do Taxes Work? | Understanding Taxes for Individuals appeared first on FinMasters.

Microsavings apps, as the name implies, help consumers increase their savings in small, incremental amounts. These apps will round up transactions, transfer small amounts from checking to savings regularly, help cancel unused subscriptions, and more. Many have no minimum fees and no withdrawal limits.

Fact: Right now, 21% of Americans say that they would have to borrow money if they had an unexpected $400 expense. Microsaving can help you prepare for unexpected events. 

While low-income households are the target market for most microsavings apps, young people and savvy consumers of all income levels can use microsavings apps to save $1000 or more annually.

Here’s how microsavings apps work, and how you can use them to reach your savings goals.

How Microsavings Apps Work

Most microsavings apps make small transfers from your checking account to a savings account. The most common feature is a round-up feature in which the app automatically takes the spare change from each transaction and saves it in an account. If your latte is $4.57 with tax, the app will use $5 to pay for the transaction and transfer the remaining $0.43 into a savings account. 

Other common features include: 

• Automatic transfers of a specified amount with each paycheck.
• Overdraft protection to stop automatic transfers if your balance is too low or a large payment, like a credit card or student loan payment, is scheduled. 
• Some, like Acorn, offer investment in exchange-traded funds (ETFs).
• Most are FDIC insured up to $250,000 or $500,000.
• Bonus incentives for recommending the app.
• Customized savings accounts for specific goals.

Microsavings apps save money, but they also build motivation and encouragement to reach bigger savings goals. You won’t save enough to retire on, but you’ll establish the habit of saving and budgeting resources. That can set you up to meet bigger savings goals. 

Microsavings apps save money, but they also build motivation and encouragement to reach bigger #savings goals.

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Why Microsavings?

Microsavings apps aim to address inertia or confusion about saving while building consumers’ confidence. Apps like Acorns, Tip Yourself, Qapital, and Digit aim to turn small savings wins into bigger savings goals. 

Noteworthy: The average American household saved between 5% and 10% of their income from 2010 to 2020. That’s not enough to create security for retirement and future goals. Add inflation rates of 2-3% and the average American household is only actually saving a small amount of what they will need for the future. 

Microsavings aim to rectify this indirectly.  Most people won’t be able to put aside an extra $1000 a month, but a microsavings app might help them save $100 a month. Microsavings apps can be an effective way to build the habit of saving, especially for lower-income families.

Long-Term Financial Goals

Even small savings can lead to big financial gains. A 25-year-old who starts with just $100 and places $100 per month in exchange-traded funds or other investment accounts with an average rate of return of 6% will have over $16,000 in 10 years and nearly $200,000 at age 65. 

Microsavings apps help set habits that can bring wealth through small changes. Even if you start saving $200 per month at age 40, you can have $136,000 at age 65. That might not be enough to fund retirement, but it is certainly enough for an added cushion and security. 

Who Can Use Microsavings Apps?

There is no age limit on microsavings apps. Whether you just got your first job or have already passed retirement, microsavings apps are a way to have fun while saving money. Awards and motivation – including watching your savings grow – will keep you motivated. 

Students

Students and recent graduates are the ideal target market for microsavings apps. You learn about money and savings, and you have the most time until retirement to leverage those savings. Even $200 saved when you are 20 will become over $2700 by retirement with 6% interest, and without any additional contributions. 

Families

Setting up microsavings apps for the whole family can be a fun way to learn about savings together. Show your kids how much you save from each purchase, and reconsider whether you need that extra latte or meal out. You can also turn it into a savings competition as you work towards shared goals such as a vacation, house upgrades, or a special meal out. 

Setting up microsavings apps for the whole family can be a fun way to learn about #savings together.

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Professionals

These apps automate savings. With so many other responsibilities, setting up microsavings apps to manage your savings means you don’t have to think about it. Some apps will have upper limits, while others let you send a percentage of every deposit into a savings account. With so many other responsibilities, setting an app to transfer 10% for savings can feel liberating. 

Advantages of Microsavings Apps 

Microsavings apps aim to remove barriers to entry. You can open microsavings accounts with even $1. That makes saving an achievable goal for anyone. With low (or no) minimum deposit and lower fees than many traditional savings accounts, microsavings apps make it easier to save, even for low-income families or on a tight budget. 

The benefits of microsavings apps are:

• Ease of use
• Automatic savings
• Low costs and fees
• No minimum deposit

Microsavings apps are good for anyone who struggles to save regularly. They are psychologically appealing as you can see how small amounts add up to real savings over weeks or months. The momentum built through small savings can inspire other savings habits. 

Microsavings apps make saving a part of your daily routine, gradually setting new systems in place that allow for greater savings. They are a way to build your emergency fund, save for a special goal, or save for retirement. 

Microsavings apps can help low-income families to take steps to build savings. The first step is often the hardest, and removing obstacles with microsavings apps can help families save more over time. 

Disadvantages of Microsavings Apps 

Microsavings apps come under criticism for their low potential impact. Saving $10 a week will not be enough for retirement, or even for an emergency fund. Another potential downside is accessibility: these apps require a smartphone that is compatible with the app, something that is out of reach for some low-income families. 

Not all microsavings apps are created equal. Whether you can save, FDIC insurance coverage for your savings, and investment opportunities all vary by app. Fees also vary widely. Some microsavings apps don’t pay interest, reducing total savings advantages.

Taken together, microsavings apps have a lot of advantages for most people, but research to select the best app for your needs is important. 

Best Microsavings Apps

You can get started using microsavings apps by exploring the ones listed below.

Qapital

Qapital was founded by Katherine Salisbury and George Friedman, who wanted savings and cash allocation capabilities their bank didn’t offer. A behavioral economist, Dan Areily, joined them, and the result is Qapital.

The Payday Divvy function automatically splits your paycheck into savings, bills, and daily expenses. 

The app also allows you to set savings rules. You can specify weekly savings amounts, and you can round up your purchases so that your “spare change” goes to savings. A “guilty pleasure” setting creates a savings deposit every time you buy at one of your favorite shops, and you can allocate money to pay taxes on freelance income. 

The budgeting tool helps you manage monthly needs and budget for special events such as weddings. You can also invest by placing your money in any of five portfolios ranked from “conservative” to “very aggressive.”

There are three plans. “Basic” costs $3 per month, and “Complete” costs $6 per month. The “Master” plan costs $12 per month. You choose your plan based on the features you want. 

There are no minimum account balances for any of the plans. 

Oportun (formerly Digit)

In November 2021 Digit, an established microsavings app, was acquired by Oportun, a broader company providing a range of financial services, including loans, credit cards, investment services, and the savings functions formerly provided by Digit.

Oportun personal loan borrowers have free access to the savings functions. You can also sign up for the app without a loan. 

The Oportun saving function works in three steps.

• You link your bank account to your Oportun account. Oportun uses this link to analyze your spending habits.
• You set your savings goals.
• Oportun automatically sets aside a small percentage of each of your transactions to help you meet your goals.

The focus is on knowing how much you can spend on any given day, given your bills, savings, and investments. In short, you set up your expenditures based on paying yourself first. 

Also, you can invest in a portfolio based on your investment goals. Digit moves the money for you daily. 

Accounts are insured up to $250,000 by the FDIC. You can withdraw funds at 55,000 ATMs.

Oportun costs only $5 per month. The app works on both iPhone and Android phones.  

SmartyPig 

The focus of SmartyPig is on getting a good rate on your savings. The site offers higher-than-usual interest rates. You more you save, the better your rate. The idea is to increase your savings by adding interest. Note that interest rates change as the market fluctuates, so your initial rate may rise or fall. 

You can set a savings amount you want to deposit regularly. In other words, “set it and forget it” so you automatically save money. You withdraw money by transferring it to your bank account.

There are no fees for opening an account or withdrawing money. You can also set up multiple accounts for multiple projects or goals.

Money on deposit is held by the Sallie Mae Bank and is insured by the FDIC.

Guac

Guac uses what it calls “auto-tip technology” to build savings. Each time you spend, the app adds a “tip” to your expense and moves it to an FDIC-insured savings account.

You can set the percentage you want to save and set different savings goals with different target dates. You can also earn cashback on purchases from within Guac’s own marketplace.

Guac imposes no monthly fees, minimum balances, or withdrawal limits. Deposits are automatic and immediate, and setup is quick and easy. There’s even an analytics function to keep you up to date on your progress. A free trial is available, and you can earn rewards by inviting friends.

Guac describes itself as the “best savings app in the market”. They have a vested interest in believing that, but the features do seem worth a close look if you’re shopping for a savings app.

Apps Where Savings Are Not the Primary Feature

You can find other savings opportunities by looking at apps whose main focus is not savings but do offer a savings option. 

Take a look at these:

• Revoult
• Chime
• Current
• Keep the Change

Micro-investing Apps 

Some apps put your money in the stock market or other investments. Here are a few to explore. 

• Acorns
• Stash
• Moneybox

Each of these apps offers different features and priorities. Choose the one that best fits your needs!

How We Chose the Best Microsavings Apps

Microsavings apps come with a variety of options, interest and savings choices, price points and fees, and other unique features. Here are the main factors we used to evaluate them:

1. Minimum deposit. Most microsavings apps will allow you to start with even $1.

2. Interest rate. If the app’s interest rate is less than the rate paid by your bank’s high-yield savings account, consider transferring savings to your bank or investment account instead. 

3. Investment options. Many microsavings apps offer the option to invest the money you save in ETFs. If there is no investment option, consider transferring savings to an investment account at regular intervals. 

4. FDIC Insurance. Is the app’s savings account FDIC insured, and up to what amount? FDIC-insured accounts of up to $250,000 or $500,000 are standard for microsavings apps. 

5. Fees. How much are the monthly fees, and how are they charged? If you choose an app with a fee, be sure the features or extra savings justify the fee.

6. Number of accounts. Many apps will allow you to have multiple savings accounts for an emergency fund, retirement, a new house, etc. Some will also allow you to choose whether to hold the funds in savings or invest in ETFs. 

7. Savings Rules. Many apps allow you to set savings triggers like, “Save $1 every time I make a purchase at Starbucks” or “Save $2 with every restaurant purchase”.

A microsavings app can jumpstart your desire to save and show you new ways to save more in even a month. Each of the top apps offers a balance of automated features, security, and automatic savings options to help you reach your personal savings goals. 

Once you get in the habit of saving, you can set bigger goals. It’s even possible to save $10,000 in six months! It all starts with making saving a regular part of your life, and a microsaving app can help you do that.

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