Finance

U.S. Treasury Secretary Janet Yellen said Monday that future discussions between the U.S. and China will focus on Beijing’s need to change its policy on industry and the economy.
She noted U.S. conversations with the Chinese would continue later this month at the International Monetary Fund and World Bank Group spring meetings in Washington, D.C.
Instead of global trade, Beijing’s oversupply concerns tend to focus on the deflationary aspects, detriments to banking sector health and local governments’ fiscal stress, said Yue Su, principal economist for China at The Economist Intelligence Unit.

U.S. Treasury Secretary Janet Yellen said Monday that future discussions between the U.S. and China will focus on Beijing’s need to shift its policy on industry and the economy, as she wrapped up the fourth and final full day of her trip to China on April 8. 2024.
Pedro Pardo | Afp | Getty Images

BEIJING — U.S. Treasury Secretary Janet Yellen said Monday that future discussions between the U.S. and China will focus on Beijing’s need to change its policy on industry and the economy.
“We intend to underscore the need for a shift in policy during these talks — building on the over two hours I spent on this topic with the Vice Premier last week,” she said in prepared remarks for a news conference Monday, as she wrapped up the fourth and final full day of her trip to China.

She arrived in Guangzhou on Thursday and is set to depart Beijing on Tuesday.
Yellen said her conversations with Chinese officials during the trip discussed plans Beijing had for its economy, but she did not elaborate. Yellen also declined to share what tools the U.S. might use to prevent China’s industrial policy from resulting in the loss of American jobs.
She noted U.S. conversations with the Chinese would continue later this month at the International Monetary Fund and World Bank Group spring meetings in Washington, D.C.

China’s industrial overcapacity — or excess production of goods that undercuts global competitors on price — has increasingly become a point of international concern. Other countries claim such production is often heavily subsidized.
However, instead of global trade, Beijing’s oversupply concerns tend to focus on the deflationary aspects, detriments to banking sector health and local governments’ fiscal stress, said Yue Su, principal economist for China at The Economist Intelligence Unit.

“We anticipate further anti-subsidy and anti-dumping investigations on Chinese manufacturing to take place throughout the remainder of the year, particularly as inflation becomes less of a concern for many developed economies,” Su said. “These investigations may extend to Chinese overseas factories, including those in ASEAN countries.”

A call to boost domestic demand

When asked about potential solutions, Yellen pointed to how China could boost domestic demand relative to supply by adding support for retirement or children’s education.
High costs of living, including housing and health care, have encouraged many Chinese to save rather than spend.
Yellen acknowledged that efforts to reduce industrial overcapacity or increase domestic demand would not be resolved quickly.
“This is a matter that we have discussed over more than a decade in China,” she told reporters.
Consumer demand in China didn’t rebound from the pandemic as quickly as many analysts had expected. In contrast to governments in the U.S. and Hong Kong, Beijing did not issue stimulus checks, but instead focused on cutting business taxes and fees.

National security talks

China has also sought to bolster its technological capabilities in the face of growing U.S. restrictions on how Chinese companies can access that tech.
Both Washington and Beijing have increasingly cited national security as the reason for new measures.
Yellen on Monday said both sides exchanged information on the use of economic tools in national security, and should continue to do so. “We are committed to no surprises,” she said.
During her trip, Yellen met with top Chinese officials including Premier Li Qiang in Beijing and Vice Premier He Lifeng in Guangzhou.

“Over the past year, we have put our bilateral relationship on more stable footing,” Yellen said in prepared remarks for her meeting with Li on Sunday.
“This has not meant ignoring our differences or avoiding tough conversations,” she said. “It has meant understanding that we can only make progress if we directly and openly communicate with one another.”
In a readout from China, Li said Beijing hoped the U.S. would abide by market economy norms and avoid politicizing trade issues. He said the development of China’s new energy industry will make important contributions to global carbon neutrality efforts.
The U.S. and China agreed to “intensive exchanges on balanced growth in the domestic and global economies,” according to a Treasury readout after Yellen’s meetings with Vice Premier He.
The two countries also agreed to “start Joint Treasury-PBOC Cooperation and Exchange on Anti-Money Laundering to expand cooperation against illicit finance and financial crime,” the readout said.
The Chinese side did not explicitly mention such agreements, but said both sides planned to maintain communication. Beijing also “expressed serious concerns” about U.S. trade restrictions.
The Chinese readout described the talks as “constructive,” and noted conversations about “balanced economic growth,” “financial stability” and “anti-money laundering.” That’s according to a CNBC translation.
The U.S. Treasury secretary also met Minister of Finance Lan Fo’an, the mayors of Beijing and Guangzhou, representatives of U.S. businesses, and professors and students at Peking University during the visit.

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Ripple CEO Brad Garlinghouse said he expects the entire value of the crypto market to double this year, citing the arrival of the first U.S. spot bitcoin exchange-traded fund and upcoming so-called bitcoin “halving.”
“The overall market cap of the crypto industry … is easily predicted to to double by the end of this year … [as it’s] impacted by all of these macro factors,” Garlinghouse said.
One of the other factors Garlinghouse sees pushing the crypto market to new highs is the possibility of positive regulatory momentum in the United States.

Brad Garlinghouse, CEO of Ripple, speaks at the 2022 Milken Institute Global Conference in Beverly Hills, California, U.S., May 4, 2022. 
Mike Blake | Reuters

The CEO of blockchain startup Ripple sees the combined market capitalization of the cryptocurrency market topping $5 trillion this year.
Ripple’s Brad Garlinghouse told CNBC that he expects the entire value of the crypto market to double, citing macro factors including the arrival of the first U.S. spot bitcoin exchange-traded fund (ETFs), as well as the upcoming so-called bitcoin “halving.”

“I’ve been around this industry for a long time, and I’ve seen these trends come and go,” Garlinghouse told CNBC. “I’m very optimistic. I think the macro trends, the big picture things like the ETFs, they’re driving for the first time real institutional money.”
“You’re seeing that drives demand, and at the same time demand is increasing, supply is decreasing,” Garlinghouse said. “That doesn’t take an economics major to tell you what happens when supply contracts and demand expands.”

The first U.S. spot bitcoin ETFs were approved on Jan. 10 by the U.S. Securities and Exchange Commission. They trade on U.S. stock exchanges and allow institutions and retail investors to gain exposure to bitcoin without directly owning the underlying asset.
The bitcoin halving is a technical event that takes place roughly every four years in bitcoin’s history. It halves the total mining reward to bitcoin miners, which are volunteers on the bitcoin network that use high-powered computers to verify transactions and mint new tokens.
The last such event took place in 2020, and the next one is slated to happen later this month.

“The overall market cap of the crypto industry … is easily predicted to to double by the end of this year … [as it’s] impacted by all of these macro factors,” Garlinghouse said.
The total crypto market capitalization was roughly $2.6 trillion as of April 4. If the market were to double, that would imply a new total crypto market cap of $5.2 trillion.
Bitcoin has risen more than 140% in the last 12 months.
It hit a record high above $73,000 on March 13, according to CoinGecko data. It has since fallen well below the $70,000 level, however.

The world’s digital currency has been the main token driving gains for the broader market.
Bitcoin accounts for about 49% of the entire crypto market, with a market capitalization of $1.3 trillion as of April 1.

Positive signs on U.S. crypto regulation

One of the other factors that Garlinghouse sees pushing the crypto market to new highs is the possibility of positive regulatory momentum in the United States.
This year being an election year, crypto hopefuls are optimistic that the next administration will be more accommodating to the crypto industry with its policy focus.
The SEC under Chair Gary Gensler has been aggressive in its enforcement on crypto companies, including Ripple itself.
The SEC targeted Ripple with a securities lawsuit alleging it illegally sold XRP, a cryptocurrency Ripple is closely associated with, in unregistered securities deals. Ripple denies the claims and is fighting the suit.

Read more about tech and crypto from CNBC Pro

“One of the things actually I’ll say on the macro tailwinds for the industry: I think we will get more clarity in the United States,” Garlinghouse said.
“The U.S. is still the largest economy in the world, and it’s unfortunately been one of the more hostile crypto markets. And I think that’s going to start to change, also.”
Garlinghouse isnt the only crypto bull predicting outsized gains for the crypto market this year.
Marshall Beard, chief operating officer of U.S. crypto exchange Gemini, recently told CNBC at a crypto conference in London that he expects the bitcoin price to rise to $150,000 later this year.
“Everything went up so fast already this year, there’s just a lot of activity, a lot of adoption, new regulation, ETFs, the halving, miners needing to get out,” Beard told CNBC.
“You’re going to see violent moves up and down until that new all-time high, which I think will be $150,000,” Beard added. “It probably happens this year. I think it moves so fast … and I think that momentum, the supply shock, it moves crazy quickly.”
WATCH: Bitcoin serves different purposes for different people, says Anthony Pompliano More

A new ETF is trying to capture profits in the municipal funds space.
BondBloxx’s Joanna Gallegos is behind the IR+M Tax-Aware Short Duration ETF (TAXX) — which launched less than a month ago. 

“When you think about municipal bond portfolios, you really want people to think beyond them and look for the relative value of after-tax income,” the firm’s co-founder and COO told CNBC’s “ETF Edge” on Monday. 
Gallegos sees actively managed municipal bond exchange-traded funds as an income-generating opportunity in a high rate environment. She expects healthy returns even if the Federal Reserve starts to cut interest rates this year.
According to the BondBloxx website, almost 62% of TAXX’s holdings are in municipal bonds. Its five largest muni holdings by state as of Thursday were Illinois, Pennsylvania, New Jersey, New York and Alabama.
The ETF also includes exposure to corporate and securitized bonds. The firm states the fund’s mixed-bond approach presents a “wider opportunity” to increase after-tax total returns. FactSet describes the fund as “tax efficient” — balancing strong after-tax income opportunities with capital preserved through both municipal and taxable short-duration fixed income securities. 
“Right now, the portfolio’s tax-equivalent yield is close to 6%. It’s about 5.88 as you look at it,” Gallegos said. “It’s just the year to be thinking about taxes.” 

As of Friday, TAXX is down 0.2% since its March 14 launch date.
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US Federal Reserve Governor Michelle Bowman attends a “Fed Listens” event at the Federal Reserve headquarters in Washington, DC, on October 4, 2019. 
Eric Baradat | AFP | Getty Images

Federal Reserve Governor Michelle Bowman said Friday that it’s possible interest rates may have to move higher to control inflation, rather than the cuts her fellow officials have indicated are likely and that the market is expecting.
Noting a number of potential upside risks to inflation, Bowman said policymakers need to be careful not to ease policy too quickly.

“While it is not my baseline outlook, I continue to see the risk that at a future meeting we may need to increase the policy rate further should progress on inflation stall or even reverse,” she said in prepared remarks for a speech to a group of Fed watchers in New York. “Reducing our policy rate too soon or too quickly could result in a rebound in inflation, requiring further future policy rate increases to return inflation to 2 percent over the longer run.”
As a member of the Board of Governors, Bowman is a permanent voting member of the rate-setting Federal Open Market Committee. Since taking office in late 2018, her public speeches have put her on the more hawkish side of the FOMC, meaning she favors a more aggressive posture toward containing inflation.
Bowman said her most likely outcome remains that “it will eventually become appropriate to lower” rates, though she noted that “we are still not yet at the point” of cutting as “I continue to see a number of upside risks to inflation.”
The speech, to the Shadow Open Market Committee, comes with markets on edge about the near-term future of Fed policy. Statements this week from multiple officials, including Chair Jerome Powell, have indicated a cautious approach to cutting rates. Atlanta Fed President Raphael Bostic, an FOMC voter, told CNBC he likely sees just one reduction this year, and Minneapolis Fed President Neel Kashkari indicated no cuts could happen if inflation does not decelerate further.
Futures traders are pricing in three cuts this year, though it has become a close call between June and July for when they start. FOMC members in March also penciled in three cuts this year, though one unidentified official in the “dot plot” indicated no decreases until 2026 and there was considerable dispersion otherwise about how aggressively the central bank would move.

“Given the risks and uncertainties regarding my economic outlook, I will continue to watch the data closely as I assess the appropriate path of monetary policy, and I will remain cautious in my approach to considering future changes in the stance of policy,” Bowman said.
Weighing inflation risks, she said that supply-side improvements that helped bring numbers down this year may not have the same impact going forward. Moreover, she cited geopolitical risks and fiscal stimulus as other upside hazards, along with stubbornly higher housing prices and labor market tightness.
“Inflation readings over the past two months suggest progress may be uneven or slower going forward, especially for core services,” Bowman said.
Fed officials will get their next look at inflation data Wednesday, when the Labor Department releases the March consumer price index report.

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Trump has proposed a baseline 10% tariff on all U.S. imports and a levy of 60% or higher on imported Chinese products.
Speaking to CNBC’s Steve Sedgwick on the sidelines of the Ambrosetti Forum on Friday, Koo said protectionism was a “horrible thing,” but that Trump’s approach “does have some economic logic.”

Former U.S. President Donald Trump speaks after attending a wake for New York City Police Department (NYPD) officer Jonathan Diller, who was shot and killed while making a routine traffic stop on March 25 in the Far Rockaway section of Queens, in Massapequa Park, New York, U.S., March 28, 2024. 
Shannon Stapleton | Reuters

Decades of trade deficits and a strong dollar created too many “losers” in the U.S. economy who turned to Donald Trump’s protectionist policies, according to Richard Koo, chief economist at the Nomura Research Institute — and those conditions remain.
Trump’s “America First” economic policies led his administration to institute a slew of trade tariffs on China, Mexico, the European Union and others, including slapping 25% duties on imported steel and aluminum.

As the Republican nominee for the 2024 presidential election, Trump has proposed a baseline 10% tariff on all U.S. imports and a minimum levy of 60% on imported Chinese products.
These policies have drawn widespread criticism from economists, who argue that tariffs are counterproductive, as they make imported goods more expensive for the average American.
Speaking to CNBC’s Steve Sedgwick on the sidelines of the Ambrosetti Forum on Friday, Koo said protectionism was a “horrible thing,” but that Trump’s approach “does have some economic logic.”
“When we studied economics and free trade, in particular, we were taught…that free trade always creates both winners and losers in the same economy, but the gain that winners get is always greater than the loss of the losers, so the society as a whole always gains. So that’s why the free trade is good,” he noted.
Koo nevertheless argued that this rests on the assumption that trade flows are balanced or in surplus, while the U.S. has been running huge deficits for the last forty years, which have expanded the number of “losers.”

“By 2016, the number of people who consider themselves losers of free trade, were large enough to elect Trump president, and so we have to really go back and say to ourselves: what did we do wrong to allow this many people in United States to view themselves as losers of free trade?” he said.
For Koo, the key problem was the exchange rate, as the strength of the U.S. dollar incentivized foreign imports and hurt U.S. companies exporting around the world.
“We kind of let the exchange rate be decided by so-called market forces, speculators, my clients, Wall Street types, but the foreign exchange rate has to be set in a way that the number of losers does not grow to a point where the free trade itself is lost,” Koo said.
He pointed to a similar pivotal moment in 1985, when President Ronald Reagan faced the same issue of a strong dollar and rising protectionism. At the time, Reagan responded by facilitating the Plaza Accord with France, West Germany, Japan and the United Kingdom to depreciate the U.S. dollar against the respective currencies of these countries through intervention in the foreign exchange market.

“That’s the kind of thing we should have been more conscious of doing. Instead of allowing [the] dollar to go wherever the market takes [it], and then these people who are not as fortunate as we are in the financial markets, end up suffering and end up voting for Mr. Trump,” Koo added.
He argued that economists need to move beyond the idea that the trade deficit is simply down to “too much investment” and “too few savings” in the U.S., as this means deficit can only be reduced by remaining in recession until domestic demand weakens so much that U.S. companies can export more goods, which would not be possible in a democracy.
Koo again pointed to past dealings with Japan, suggesting that if the argument held that overseas companies are just filling in where U.S. companies cannot satisfy domestic demand, then the American companies fighting Japanese firms in the 1970s and 70s should have recorded huge profits due to excess demand.
“But that did not actually happen. It’s the opposite that happened. So many of them went bankrupt, so many losers of free trade were left in the streets, because it was not savings and investment issue, it was the exchange rate issue,” he said.
“The dollar should have been much weaker, and Reagan understood that that’s why he took that action.”
President Joe Biden’s administration has also broken from Washington’s decades-long spotlight on free trade deals and has retained any of the measures enacted under the Trump administration.
However, rather than focus on imposing new tariffs, Biden has instead bet big on industrial policies such as the CHIPS and Science Act and the Inflation Reduction Act to bring manufacturers back to the United States, particularly in rapidly-growing sectors such as semiconductors and electric vehicles. More

Since November, Nio has partnered with at least four Chinese automakers — Changan, Geely, Chery and JAC — for developing battery swap standards and expanding the network in China.
Nio has installed more than 2,300 battery swap stations but said less than a fifth currently are breaking even.
The company’s investment in battery swap stations is about two years ahead of market demand, CEO William Li said at an event last month here Nio announced a partnership with battery giant CATL.

Pictured here is a Nio battery swapping station in Haikou, Hainan province, China, on May 9, 2023.
Bloomberg | Bloomberg | Getty Images

BEIJING — Chinese electric car company Nio has been expanding its battery swap partnerships in a bid to gain an edge on the infrastructure side of the EV ecosystem.
Since November, Nio has partnered with at least four Chinese automakers — Changan, Geely, Chery and JAC — for developing battery swap standards and expanding the network in China. Nio also announced agreements earlier this year to work with two local battery companies on battery swap services.

All these efforts are aimed at alleviating consumers’ anxiety about driving range. While having a large network of battery charging stations helps address those concerns, battery swapping is a faster method as it takes only a few minutes.
“Swapping right now is mainly driven by Nio. Of course, Nio found out this is an ecosystem,” CLSA’s deputy head of research Ding Luo said in an interview. “If only one player is trying to build up the whole ecosystem, it’s impossible for [them]. That’s why they’re thinking whether they can invite some partners.”
Battery swapping still isn’t mainstream because the car batteries need to be standardized, he added.
While a charging station resembles a typical gas station, battery-swap technology is housed in a shed-like structure. It uses machines to automatically exchange depleted batteries for pre-charged ones in compatible cars.
Nio said in mid-March that it completed 40 million battery swaps compared with nearly 37 million charges at its public stations — Nio consumers can also access third-party charging stations, or install one at home.

“I think our outlook is very simple,” Shen Fei, senior vice president of Nio’s power division, said in Chinese translated by CNBC. “The first thing is to serve Nio’s users, and then provide a good battery charging and swapping experience, make charging more convenient than refueling, and at the same time help the company sell more cars.”
The company claims that with battery swap, drivers can get a fresh charge in three minutes, if they opt in for a paid battery service plan.
Shen said more car models will be added to Nio’s battery swap network, while adding that swapping can allow drivers to keep abreast with improvements in battery technology. He did not specify which automakers will likely be added to its network.
Power services and other products account for just about 10% of Nio’s total revenue. The company said that category of “other sales” for 2023 grew by 69% to 6.36 billion yuan ($895.9 million). Nio does not break out swap station revenue.

Battery swap’s checkered past

Battery swapping has been tried by the industry with mixed success, especially in the U.S.
Tesla and a startup called Better Space tried out swapping more than 10 years ago, but the venture soon closed.
In 2021, another startup, Ample, opened its battery swap stations in the San Francisco area — aimed at Uber drivers using the Nissan Leaf car.
While it’s not clear how much headway Ample has made in the U.S., the company has since expanded its partnerships overseas. Last month the company announced it would serve corporate car fleets in Kyoto, Japan, while it teamed up with Stellantis to roll out battery swaps this year in Madrid, Spain.
“For swapping to work it can’t be niche,” Tu Le, head of consultancy Sino Auto Insights, said. “Battery inventory investment is massive, so it needs to be amortized over lots of swapping.”
But he was cautious on whether Nio could sell enough of its own premium-priced cars to make the economics work. “For now I still think the combination of swapping and charging makes for a pretty attractive feature set, but swapping alone likely doesn’t help them sell that many more cars.”
“I think the nudge the Chinese government gave to encourage others to join forces with Nio on swapping could create the necessary pool of vehicles to make swapping viable,” he added.

The business of charging

Nio is the first major electric car company to roll out battery swap stations in addition to charging stations, alongside its own vehicles in mainland China and Europe.
The company has installed more than 2,300 battery swap stations, and plans to install 1,000 more this year.
Nio’s investment in battery swap stations is about two years ahead of market demand, CEO William Li said last month, adding that less than a fifth of battery swap stations that Nio operates are processing 60 orders a day, likely the minimum orders needed for a station to break even.
Nio’s battery charging stations, on the other hand, reached profitability last year, according to the company. It plans to build 20,000 more this year.
Passenger car battery swap stations can cost around $500,000 to build, while a relatively basic charging station with two ports costs around $200,000 to $300,000, according to Shay Natarajan, a North America-based partner at Mobility Impact Partners, a private equity fund that invests in transportation.
CLSA’s Luo said businesses also prefer to invest in normal charging stations than swap stations because they make a higher return. But if businesses want to install faster-charging stations, he said they might face power grid challenges.
CLSA’s analysis found that the power required for five superchargers in one location would be more than what 300 families would normally consume.
Tesla is also collaborating with automakers in battery charging, with its over 50,000 superchargers worldwide that claim to restore about two-thirds of a battery’s charge in 15 minutes.
In February, Ford reached a deal that allows its electric cars to use Tesla’s superchargers in North America. General Motors announced a similar agreement last year.

Sustainability considerations

The rapid development of electric cars, ostensibly aimed at reducing carbon emissions, also raises questions about battery waste.
Nio pointed out that recent growth of new energy vehicles, which include hybrids, means nearly 20 million batteries will be reaching the end of their eight-year warranty period between 2025 and 2032.
Last month, the company announced a partnership with battery giant Contemporary Amperex Technology to develop batteries with a longer lifespan, particularly for those used in swap stations.
Nio claimed that by using battery swap and big data, it can retain 80% of a battery’s capacity after 12 years of use. Nio also said last month that CATL will develop batteries with longer lives for the company.
— CNBC’s Lora Kolodny and Michael Wayland contributed to this report. More

Investors may want to stick with fixed income investments — possibly even adding to them — despite the Federal Reserve’s intention to cut interest rates this year.
“Your biggest mistake could be rushing back into equities before you’re considering all these opportunities in fixed income,” BondBloxx co-founder and COO Joanna Gallegos told CNBC’s “ETF Edge” this week.

Though off its peak of more than 5% in late 2023, the benchmark 10-year U.S. Treasury note yield has reaccelerated over the past month. As of Thursday’s market close, the yield was hovering near 4.31%. It touched 4.429% on Wednesday, a high for this year.
To manage interest rate volatility effectively, Gallegos suggests investors look to exchange-traded funds focused on intermediate term bonds.
“If you go into the intermediate space, whether it’s in credit or within Treasurys, you’re taking on some risk and you’re going to benefit from a total return tail wind when rates go down,” she said.
Morgan Stanley Investment Management’s Tony Rochte recommends a similar medium-term strategy with vehicles like the Eaton Vance Total Return Bond ETF (EVTR) under his firm’s management.
“It’s right now a 6-year duration, about a 6.6% yield,” the firm’s global head of ETFs said in the same interview. “It’s a best ideas portfolio.”

Rochte also pointed to municipal bond funds, like the Eaton Vance Short Duration Municipal Income ETF (EVSM), for income-generating opportunities.
“We also converted a municipal bond mutual fund last Monday here at the NYSE to an ETF, symbol EVSM, and that’s a municipal. Again, 3 1/2% yield, almost a 6% taxable equivalent yield. So these are very attractive rates in the current environment.”
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YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

There are some basic, but important, aspects of personal finance that households often overlook.
Credit scores, retirement savings, basic estate planning, emergency savings and tax withholding top the list, according to financial advisors.

Image Source | Image Source | Getty Images

Managing one’s personal finances can seem like a hodgepodge of never-ending checklists and rules of thumb.
With all sorts of financial considerations vying for attention — budgeting, saving, paying off debt, buying insurance, being savvy shoppers — consumers may inadvertently overlook some important nuggets.

Here are some of the biggest financial blind spots, according to several certified financial planners on CNBC’s Digital Financial Advisor Council.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

1. Credit scores

Consumers often don’t understand the importance of their credit score, said Kamila Elliott, CFP, co-founder and CEO of Collective Wealth Partners based in Atlanta.
The score impacts how easily consumers can get a loan — like a mortgage, credit card or auto loan — and the interest rate they pay on that debt.
The number generally ranges from 300 to 850.
Credit agencies like Equifax, Experian and TransUnion determine the score using a formula that accounts for factors like bill-paying history and current unpaid debt.

Lenders are generally more willing to give loans and better interest rates to borrowers with credit scores in the mid- to high-700s or above, according to the Consumer Financial Protection Bureau.
Let’s say a consumer wants a $300,000 fixed mortgage for a 30-year term.
The average person with a credit score between 760 and 850 would get a 6.5% interest rate, according to national FICO data as of April 1. By comparison, someone with a score of 620 to 639 would get an 8.1% rate.
The latter’s monthly payment would cost $324 more relative to the person with a better credit score — amounting to an extra $116,000 over the life of the loan, according to FICO’s loan calculator.

2. Wills

Ilkercelik | E+ | Getty Images

Wills are basic estate planning documents.
They spell out who gets your money after you die. Wills can also stipulate who will take care of your kids and oversee your money until your children turn 18.
Planning for such a grim event isn’t fun — but it’s essential, said Barry Glassman, CFP, founder and president of Glassman Wealth Services.
“I’m shocked by the number of well-to-do families with kids who have no will in place,” Glassman said.
Without such a legal document, state courts will choose for you — and the outcome may not align with your wishes, he said.
Taking it a step further, individuals can create trusts, which can assign more control over details like the age at which children gain access to inherited funds, Glassman said.

3. Emergency savings

Westend61 | Westend61 | Getty Images

Choosing how much money to stash away for a financial emergency isn’t a one-size-fits-all calculation, said Elliott of Collective Wealth Partners.
One household might need three months of savings while another might need a year, she said.
Emergency funds include money to cover the necessities — like mortgage, rent, utility and grocery payments — in the event of an unexpected event like job loss.
A single person should generally try to save at least six months’ worth of emergency expenses, Elliott said.
That’s also true for married couples where both spouses work at the same company or in the same industry; the risk of a job loss occurring at or around the same time is relatively high, Elliott said.
Meanwhile, a couple in which the spouses make a similar income but work in different fields and occupations may only need three months of expenses. If something unexpected happens to one spouse’s employment, the odds are good that the couple can temporarily lean on the other spouse’s income, she said.
Business owners should aim to have at least a year of expenses saved since their income can fluctuate, as the Covid-19 pandemic showed, Elliott added.

4. Tax withholding

Elenaleonova | E+ | Getty Images

Tax withholding is a pay-as-you-go system. Employers estimate your annual tax bill and withhold tax from each paycheck accordingly.
“Ten out of 10 people couldn’t explain how the tax withholding system works,” said Ted Jenkin, CFP, CEO and founder of oXYGen Financial based in Atlanta.
Employers partly base those withholdings on information workers supply on a W-4 form.
Generally, taxpayers who get a refund during tax season withheld too much from their paychecks throughout the year. They receive those overpayments from the government via a refund.
However, those who owe money to Uncle Sam didn’t withhold enough to satisfy their annual tax bill and must make up the difference.

People who owe money often blame their accountants or tax software instead of themselves, even though they can generally control how much is withheld, Jenkin said.
Someone who owes more than $500 to $1,000 may want to change their withholding, Jenkin said. That goes for someone who gets a big refund as well; instead, they may wish to save (and earn interest on) that extra cash throughout the year, Jenkin said.
Workers can fill out a new W-4 form to change their withholding.
They may wish to do so upon any major life event like a marriage, divorce or birth of a child to avoid surprises come tax time.

5. Retirement savings

Shapecharge | E+ | Getty Images

“I think people underestimate how much money they’re going to need in retirement,” Elliott said.
Many people assume their spending will decline when they retire, perhaps to roughly 60% to 70% of spending during their working years, she said.
But that’s not always the case.
“Yes, maybe the kids are out of the house but now that you’re retired you have more time, meaning you have more time to do things,” Elliott said.
She asks clients to envision how they want to spend their lives in retirement — travel and hobbies, for example — to estimate how their spending might change. That helps guide overall savings goals.
Households also don’t often account for the potential need for long-term care, which can be costly, in their calculations, she said.

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