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    Mastering this skill is the ‘hardest part’ of personal finance, advisors say

    Ask an Advisor

    Balancing lifestyle costs with regular saving and investing is perhaps the toughest part of personal finance, said Douglas Boneparth, a member of CNBC’s Financial Advisor Council.
    Households should consider mastering their cash flow before investing, he said.
    Examine any “thoughtless” regular spending to eke some additional savings from your paycheck each month, said Carolyn McClanahan, also a member of the Advisor Council.

    Nitat Termmee | Moment | Getty Images

    The following is an excerpt from “This week, your wallet,” a weekly audio show on Twitter produced by CNBC’s Personal Finance team. Listen to the latest episode here.
    Being a “master of cash flow” is a key element of household finance — and also one of the most challenging, said certified financial planner Douglas Boneparth.

    What does mastering that skillset mean? It’s a two-pronged concept: Knowing what it costs to fund your lifestyle and understanding what you can consistently save and invest, said Boneparth, president of Bone Fide Wealth and a member of CNBC’s Advisor Council.
    “Balancing these two things [is] arguably the hardest part of all of personal finance,” he said.
    Often, people are too quick to invest without having this foundation, he said.
    While investing for long-term goals is important due to the power of compounding, “what good is investing if you can’t stay invested?” Boneparth said. Without discipline around cash flow, an unforeseen life event may arise that causes you to dip into those investments that you’d hoped not to touch for years, he added.
    Once households have a grasp on cash flow, they can set and prioritize measurable goals: building an emergency cash reserve and saving for retirement, a down payment or a child’s college education, for example, Boneparth said.

    More from Ask an Advisor

    Here are more FA Council perspectives on how to navigate this economy while building wealth.

    Households that feel financially stretched can examine if they engage in any “thoughtless spending,” said Carolyn McClanahan, a CFP and founder of Life Planning Partners in Jacksonville, Florida.
    She recommends examining what households spend on necessities like housing and transportation (and ensuring that spending in these categories is as cost-efficient as possible) and “wants.” Comb through the latter category to ensure you’re using the services on which you regular spend, like gym memberships and subscriptions to music services such as Spotify and Pandora, McClanahan said.

    You can divert any savings — even if it’s just $5, $10 or $25 a month — into a savings account, she added.
    “That adds up quickly,” she said.
    Savers should make sure these deposits happen automatically, ideally the day after a paycheck hits their bank account.
    “If you don’t see [the extra money], you don’t miss it,” McClanahan said. More

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    American Airlines pilots vote for potential strike while airline says negotiations are progressing

    American Airlines and the pilots’ union are negotiating a new contract.
    More than 99% of pilots who voted approved of allowing the union to call a potential strike, a step other airlines’ pilots have recently taken.

    Pilots talk as they look at the tail of an American Airlines aircraft at Dallas-Ft Worth International Airport.
    Mike Stone | Reuters

    American Airlines pilots have voted overwhelmingly to allow their labor union to call a strike while the carrier said talks for a new contract are getting close to a conclusion.
    Pilot strikes are rare and would require permission from the federal National Mediation Board. The vote doesn’t mean a decision to call a strike would happen immediately.

    More than 96% of American’s pilots participated in the vote and 99% of them voted to allow the union to call a strike, the Allied Pilots Association said Monday.
    The APA called the strike authorization vote in March as talks for a new deal dragged on. American Airlines CEO Robert Isom had said the airline was ready to raise pay to match rival Delta Air Lines, whose pilots approved a four-year deal earlier this year with 34% raises and other improvements.
    “Today marks a proud milestone in our pilot group’s unity and resolve and an important step on our path to securing the contract we have earned and deserve — one that prevents management from operating at a discount to our competitors and includes our ‘must have’ quality-of-life priorities,” APA president Capt. Ed Sicher wrote to pilots Monday.
    A spokeswoman for American Airlines said the carrier believes a deal is “within reach” and that a “handful” of issues are left to complete.
    “The finish line is in sight,” she said in a statement. “We understand that a strike authorization vote is one of the important ways pilots express their desire to get a deal done and we respect the message of voting results.”

    Including higher 401(k) contributions, at the end of a potential four-year deal at American, a captain flying narrow-body planes would make $475,000 at the top of the scale while the most senior captains of wide-body planes would make $590,000 per year, based on a recent contract proposal.
    Pilot contract talks have been difficult throughout the industry, including at American, United Airlines and Southwest Airlines, as pilots seek not only increases in pay but quality-of-life improvements such as better, more predictable schedules as travel demand improves following the pandemic. More

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    Jamie Dimon: ‘This part of the crisis is over’ after JPMorgan Chase acquires First Republic

    The crisis that led to the downfall of three regional U.S. banks in recent weeks is largely over after the resolution of First Republic, according to JPMorgan Chase CEO Jamie Dimon.
    JPMorgan emerged as the winner of a weekend auction for First Republic after regulators decided that time had run out on a private sector solution.
    “There are only so many banks that were offsides this way,” Dimon told analysts in a call shortly after the deal was announced.

    Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., during a Bloomberg Television interview at the JPMorgan Global High Yield and Leveraged Finance Conference in Miami, Florida, US, on Monday, March 6, 2023.
    Marco Bello | Bloomberg | Getty Images

    The crisis that led to the downfall of three regional U.S. banks in recent weeks is largely over after the resolution of First Republic, according to JPMorgan Chase CEO Jamie Dimon.
    JPMorgan emerged as the winner of a weekend auction for First Republic after regulators decided that time had run out on a private sector solution. The Federal Deposit Insurance Corporation seized the bank and New York-based JPMorgan announced early Monday that it was acquiring nearly all of the deposits and most of the assets of First Republic.

    “There are only so many banks that were offsides this way,” Dimon told analysts in a call shortly after the deal was announced.
    “There may be another smaller one, but this pretty much resolves them all,” Dimon said. “This part of the crisis is over.”
    Shares of regional banks including PacWest and Citizens Financial slumped in premarket trading.

    This story is developing. Please check back for updates. More

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    FAA launches faster, high-altitude flight routes to avoid congestion along the East Coast

    The FAA has launched nearly 170 new flight routes along the congested eastern U.S.
    The new routes are mostly above 18,000 feet, when aircraft are cruising, and aim to reduce crowding on popular paths.
    The FAA continues to deal with a staffing shortage that has also prompted airlines to scale back summer schedules in the New York area.

    A United Airlines plane taxis at Newark Liberty International Airport, in Newark, New Jersey, on Jan. 11, 2023.
    Kena Betancur | AFP | Getty Images

    The Federal Aviation Administration has launched nearly 170 new flight routes that are shorter and faster, aiming to cut down on congestion in the eastern U.S.
    It’s part of a seven-year effort from the FAA and airlines to redraw high-altitude route maps for planes, the agency said Monday.

    The FAA launched the 169 new routes last week, and is abandoning older ones, which were longer and zigzagged more. Those longer routes were designed for planes relying on ground-based radar and not the GPS that modern aircraft use. The new ones will be more direct.
    The new paths are mostly above 18,000 feet, when aircraft are cruising, and aim to reduce crowding on popular routes. Some of the new routes are over the Atlantic Ocean and the Gulf of Mexico.
    “The change helps prevent delays by giving the agency more capacity to direct traffic to specific routes based on the aircraft’s destination,” the FAA said in a release. “When weather occurs, controllers will also have more flexibility. Finally, fewer converging points and more simple flows enhance safety.”
    The FAA estimated that the new routes would reduce about 6,000 minutes of travel time a year.

    Arrows pointing outwards

    The change comes just before the summer travel season, which airline executives expect to be busy. Pressure from the airline industry has mounted on the FAA to address congestion and delays, though airline staffing issues have also played a role in exacerbating disruptions.

    Last year, 1.7 million flights, more than 20% of those operated by U.S. airlines, were delayed, up from 1.5 million, or roughly 16% of flights, in 2019, before the pandemic, according to flight-tracking site FlightAware. So far this year, 22% of U.S.-airline operated flights have been delayed, according to the site’s data.
    Some of the new routes are for flights to and from Florida, where airlines face obstacles such as frequent thunderstorms, military activity and space launches. Last month, the FAA said it would take airline flight disruptions into account when approving rocket launches.
    “American has long been a proponent of unlocking additional high-altitude routes along the East Coast and we are optimistic they will have significant benefits for our customers and team members,” American Airlines COO David Seymour said in an e-mailed statement.
    Separately, several airlines including JetBlue Airways and United Airlines are reducing flights in the New York City and Washington, D.C., areas because of the FAA’s shortage of air traffic controllers, part of a plan to reduce disruptions. More

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    Bipartisan attorneys general call on Medicare to cover Alzheimer’s treatments

    Attorneys general from 23 states, Washington D.C., and two U.S. territories called on Medicare to cover Alzheimer’s treatments without restrictions.
    Medicare severely restricts access to a promising new antibody treatment called Leqembi, which costs $26,500 per year.
    Members of Congress have also called on Medicare to provide full coverage.

    The Alzheimer’s drug LEQEMBI is seen in this undated handout image obtained by Reuters on January 20, 2023.
    Eisai | via Reuters

    Democratic and Republican attorneys general in nearly half of U.S. states are calling on Medicare to provide unrestricted coverage of antibody treatments for Alzheimer’s disease, according to a letter released Monday.
    The push by attorneys general from 23 states, Washington D.C., and two U.S. territories adds to mounting pressure on the federal Centers for Medicare and Medicaid Services to end a controversial policy that severely restricts access to new drugs like Eisai’s and Biogen’s Leqembi.

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    Twice-monthly infusions of Leqembi have shown promise in slowing progression of early Alzheimer’s to more advanced stages of the mind-wasting disease. Medicare’s decision to restrict coverage means only wealthy seniors can afford to pay $26,500 per year out of pocket.
    “We ask that CMS provide unrestricted Medicare coverage for FDA-approved Alzheimer’s treatments, consistent with its decades-long practice of covering FDA-approved prescription drugs for Medicare beneficiaries,” the attorneys general, led by Oklahoma’s Gentner Drummond, told CMS Administrator Chiquita Brooks-LaSure and Health Secretary Xavier Becerra.
    The attorneys general acknowledged that Leqembi is associated with certain side effects, such as brain swelling and bleeding, but they said families and their doctors can assess these risks against the benefit of patients being able to recognize their loved ones for a longer period.
    In a nation with deep political divisions, the push to provide broad access to Alzheimer’s treatments is one of the few issues both sides of the aisle can rally around. More than 70 House lawmakers and 18 senators called on Medicare to provide unrestricted coverage of Alzheimer’s treatments in February.
    The push by members of Congress and state attorneys general comes after Medicare rejected a request by the Alzheimer’s Association to cover Leqembi without any conditions.

    “After careful review of the request and supporting documentation, we are making this decision because, as of the date of this letter, there is not yet evidence meeting the criteria for reconsideration,” CMS said in February.

    CNBC Health & Science

    Read CNBC’s latest global health coverage:

    Unlike Medicare, the Veterans Health Administration agreed to cover leqembi for veterans aged 65 and older who meet certain eligibility criteria.
    Leqembi received expedited approval from the Food and Drug Administration in January. Under its current policy, Medicare will only cover antibody treatments that receive expedited approval for patients participating in clinical trials. Eisai’s trial has concluded, which means the overwhelming majority of seniors do not have access to the drug.
    The attorneys general said the decision puts older Americans living in rural areas at a disadvantage, because clinical trials are typically hosted in larger cities far from small towns.
    “It is an enormous physical and financial burden for Medicare beneficiaries to travel to thew few research institutions that host trials,” the attorneys general said. “Patients, families and caregivers in rural areas should have the same opportunity to access treatment.”
    The language of the letter is similar to the letters sent by House lawmakers and senators to Medicare in February.
    Medicare has agreed to provide broader coverage of Leqembi if the treatment receives full FDA approval on July 6. But the program for seniors will still require patients to participate in so-called “registries” that collect data about the treatment. Brooks-LaSure promised Congress last week that these registries will not restrict access to the treatment.
    But Robert Egge, the Alzheimer’s Association chief policy officer, told CNBC that the registries will restrict access despite what Medicare has promised. He said the association is not aware of any substantive work that has been done to set up the registries.
    Brooks-LaSure said private sector entities can start setting up the registries now.
    The attorneys general said Alzheimer’s disease and other forms of dementia cost the U.S. $321 billion in 2022, which is a substantial financial burden on federal health insurance programs. Medicare and Medicaid picked up an estimated 67% of the health-care costs or $239 billion for the disease in 2021, the attorneys general said.
    “Unless a treatment to slow, stop or prevent the disease is approved and accessible to people, Alzheimer’s is projected to reach a total cost of $1 trillion by 2050,” the attorneys general said.
    The letter was signed by the attorneys general from Arizona, Arkansas, Connecticut, D.C., Florida, Idaho, Indiana, Maine, Michigan, New Hampshire, New Jersey, New Mexico, North Dakota, Northern Mariana Islands, Minnesota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, South Carolina, Texas, Utah, Vermont, Virginia and West Virginia. More

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    JPMorgan Chase takes over First Republic after U.S. seizure of ailing bank

    JPMorgan acquired all of First Republic’s deposits and a “substantial majority of assets.”
    The acquisition came after regulators took possession of First Republic, resulting in the third failure of an American bank since March.
    First Republic set off a new wave of concern last month with the revelation that it lost more deposits than expected in March.

    A worker cleans the exterior of a First Republic bank on April 26, 2023 in San Francisco, California. 
    Justin Sullivan | Getty Images

    Regulators took possession of First Republic on Monday, resulting in the third failure of an American bank since March, after a last-ditch effort to persuade rival lenders to keep the ailing bank afloat failed.
    JPMorgan Chase, already the largest U.S. bank by several measures, emerged as winner of the weekend auction for First Republic. It will get all of the ailing bank’s deposits and a “substantial majority of assets,” the New York-based bank said.

    JPMorgan is getting about $92 billion in deposits in the deal, which includes the $30 billion that it and other large banks put into First Republic last month. The bank is taking on $173 billion in loans and $30 billion in securities as well.
    The Federal Deposit Insurance Corporation agreed to share losses on mortgages and commercial loans that JPMorgan assumed in the transaction, and also provided it with a $50 billion credit line.
    JPMorgan said it was making a payment of $10.6 billion to the FDIC.
    Since the sudden collapse of Silicon Valley Bank in March, attention has focused on First Republic as the weakest link in the U.S. banking system. Like SVB, which catered to the tech startup community, First Republic was also a California-based specialty lender of sorts. It focused on serving rich coastal Americans, enticing them with low-rate mortgages in exchange for leaving cash at the bank.
    But that model unraveled in the wake of the SVB collapse, as First Republic clients withdrew more than $100 billion in deposits, the bank revealed in its earnings report April 24. Institutions with a high proportion of uninsured deposits such as SVB and First Republic found themselves vulnerable because clients feared losing savings in a bank run.

    Shares of First Republic had lost 97% as of Friday’s close.

    $13 billion hit

    The weekend auction, which drew bids from JPMorgan Chase and PNC, as well as interest from other banks, was a “highly competitive bidding process,” according to the FDIC.
    The transaction will cost the FDIC’s Deposit Insurance Fund an estimated $13 billion, according to the regulator. By way of comparison, the SVB process cost the fund about $20 billion.
    The California Department of Financial Protection and Innovation said Monday it had taken possession of First Republic and appointed the FDIC as receiver. The FDIC accepted JPMorgan’s bid for the bank’s assets.
    “As part of the transaction, First Republic Bank’s 84 offices in eight states will reopen as branches of JPMorgan Chase Bank, National Association, today during normal business hours,” the FDIC said in a statement. “All depositors of First Republic Bank will become depositors of JPMorgan Chase Bank, National Association, and will have full access to all of their deposits.”
    JPMorgan CEO Jamie Dimon touted the acquisition in a statement early Monday morning.
    “Our government invited us and others to step up, and we did,” he said. “This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise.”
    In the wake of the takeover Monday morning, the Treasury Department sought to reassure Americans about the country’s financial system.
    “The banking system remains sound and resilient, and Americans should feel confident in the safety of their deposits and the ability of the banking system to fulfill its essential function of providing credit to businesses and families,” a Treasury spokesperson said.

    Weak link

    First Republic’s deposit drain in the first quarter forced it to borrow heavily from Federal Reserve facilities to maintain operations, which pressured the company’s margins because its cost of funding is far higher now. First Republic accounted for 72% of all borrowing from the Fed’s discount window recently, according to BCA Research chief strategist Doug Peta.
    On April 24, First Republic CEO Michael Roffler sought to portray an image of stability after the events of March. Deposit outflows have slowed in recent weeks, he said. But the stock tanked after the company disavowed its previous financial guidance and Roffler opted not to take questions after an unusually brief conference call.
    The bank’s advisors had hoped to persuade the biggest U.S. banks to help First Republic once again. One version of the plan circulated recently involved asking banks to pay above-market rates for bonds on First Republic’s balance sheet, which would enable it to raise capital from other sources.
    But ultimately the banks, which had banded together in March to inject $30 billion of deposits into First Republic, couldn’t agree on the rescue plan, and regulators took action, ending the bank’s 38-year run. More

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    Stocks making the biggest moves premarket: First Republic, JPMorgan Chase, SoFi Technologies & more

    A view of the First Republic Bank logo at the Park Avenue location, in New York City, March 10, 2023.
    David Dee Delgado | Reuters

    Check out the companies making headlines before the bell:
    First Republic Bank, JPMorgan Chase — First Republic shares were halted during premarket trading after falling more than 45%. The move comes after JPMorgan took control of First Republic after the beleaguered bank was taken over by regulators. JPMorgan Chase added 3.6% in the premarket.

    SPDR S&P Regional Banking ETF — The regional banking fund fell 0.4% in premarket trading as investors reacted to the failure of First Republic. That bank had a weighting of less than 0.15% in the fund as of Friday. Among other regional banks, PacWest was one of the biggest decliners, falling more than 5%.
    Norwegian Cruise Line — The cruise line stock jumped 3% after Norwegian Cruise Line Holdings beat first-quarter expectations on the top and bottom lines. The firm reported an adjusted per-share loss of 30 cents, narrower than the anticipated 41 cent loss, according to consensus estimates from Refinitiv. It posted revenue of $1.82 billion, greater than the expected $1.75 billion.
    General Motors — The auto giant saw its stock climb nearly 3% in premarket after Morgan Stanley upgraded GM to overweight from equal weight. The Wall Street firm’s analyst Adam Jonas said GM’s stock is oversold. The stock is down 2% year to date despite recent strong earnings.
    Exxon Mobil — Shares slid 1.5% after Goldman Sachs downgraded the oil giant to neutral from buy, saying its multiyear run could be cooling. On Friday, the stock rose 1.3% after the company said it saw record first-quarter profit.
    SoFi Technologies — SoFi Technologies jumped 6% after the company’s quarterly results topped expectations. The student loan refinancing firm reported a loss of 5 cents per share on revenue of $460.16 million. Analysts polled by Refinitiv expected a loss per share of 7 cents on revenue of $441 million.

    ON Semiconductor — The semiconductor stock rose 1.2% ahead of the firm’s first quarter earnings reportlater Monday. Analysts polled by Refinitiv expect a profit of $1.09 per share on revenue of $1.93 billion.
    — CNBC’s Alex Harring, Yun Li and Jesse Pound contributed reporting. More

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    First Republic fails, and is snapped up by JPMorgan Chase

    When branches of First Republic Bank, the latest regional lender to buckle in the face of surging American interest rates, open on May 1st, they will do so as branches of JPMorgan Chase. The banking giant snapped up the troubled California-based lender in an auction arranged by the Federal Deposit Insurance Corporation (fdic), a regulator, over the weekend. JPMorgan will buy all of First Republic’s $100bn-odd deposits; losses on the bank’s residential and commercial loans will be shared with the fdic. First Republic began to look vulnerable after the collapse of Silicon Valley Bank (svb) in March. Both banks had lots of depositors not covered by federal deposit insurance, who tend to be flighty. And flee many did: First Republic’s deposit base collapsed in the first quarter of the year, from $176bn at the end of 2022 to $104bn at the end of March. The bank turned to expensive short-term borrowing, some of it from the Federal Reserve’s emergency facilities, to plug the gap. Loans it had made when interest rates were low have slumped in value, leading to worries about its solvency. In short, First Republic faced a more extreme version of the problem faced by other lenders. Rapidly rising interest rates have hit American banks on both sides of the balance-sheet. Their assets, in the form of loans and bonds, are worth less thanks to high interest rates. Their liabilities, in the form of deposits, are increasingly uncompetitive against highly liquid and safe American money-market funds, which offer yields of almost 5%.The deal offers two points of reassurance for the rest of the American banking system. The first is that the takeover is not a bolt from the blue. First Republic’s share price fell by 89% between March 8th and 20th, the period of acute panic after the fall of svb. Since then, its name has been top of the list of lenders about which investors are fretting. When its share price began crashing again after it released a dismal set of quarterly earnings on April 24th, other American banks’ shares were unruffled, offering hope that its woes will not be contagious.The second point of reassurance is that a sale has been arranged at all. It suggests big banks still see opportunities in acquiring the assets of their struggling peers. The takeover may also be a step towards a healthier industry. America has around 4,700 banks and other savings institutions; some consolidation would not go amiss. On this occasion, a rule that banks with more than 10% of deposits nationwide cannot buy other lenders appears to have been waived to get a deal through, since it would have disbarred JPMorgan from making the purchase.But such reassurance applies to the banking industry as a whole—not to firms in similar positions. The first attempt to steady First Republic came in March when several big banks, including JPMorgan, announced they would deposit $30bn with the institution. Evidently, the vote of confidence was insufficient to reassure investors and depositors. Despite their resilience in the last week of April, American regional-bank shares are down 30% from two months ago, and have not recovered at all since svb’s collapse. Attractive yields on short-term government bonds held by money-market funds will continue to be a source of pressure. Meanwhile, the fdic estimates that its deposit-insurance fund will shoulder a cost of about $13bn in facilitating the deal, to add to the $20bn it lost after the collapse of SVB and the $2.5bn when Signature Bank went under. Together, the losses account for more than a quarter of the $128bn the deposit fund held at the end of 2022. As the fund is run down, banks may be forced to chip in to refill it.The questions now are how other midsized banks respond to the pressure of rising rates, and what the extent of the economic damage will be. PacWest Bancorp, another regional lender with a battered share price, recently announced it was exploring asset sales in response to deposit outflows. Tan Kai Xian of Gavekal, a research firm, has noted that more asset sales by smaller banks means fewer new loans, and more conservative lending standards: “This self-reinforcing cycle seems unlikely to be quickly broken.” America’s banking turmoil is not yet at an end. ■ More