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Life Changes

67% of parents spend 20% or more of their household income on child care, up from 51% in 2022, according to an annual report by Care.com.
To compare, the U.S. Department of Health and Human Services considers 7% of household income affordable for child care.

Jenny Goff, right, reaches out to a child at Central Park Child Care Center in Vancouver, Washington.
Ariane Kunze | The Columbian via AP

The cost of child care in the U.S. has been increasing, and many families spend more than what the government considers affordable. 
Two-thirds of parents, 67%, spend 20% or more of their household income on child care, according to a recent report by Care.com that surveyed 3,000 U.S. parents. That’s up from 51% who reported spending that much in 2022.

While 79% of families anticipate spending more than $9,600 per child this year, many are spending significantly more. On average, families spend 27% of their household income on child care, which for 59% of parents surveyed means shelling out $18,000 a year per child, Care.com found. 
For perspective, the U.S. Department of Health and Human Services considers 7% of income to be affordable for child care.  
“Child care is claiming a disproportionate amount of household incomes, and a decade of rising child care costs should be a wakeup call that the system as we know it completely fails the vast majority of families,” wrote Tim Allen, CEO of Care.com, in a statement.
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Why child care costs are so high 

Rising fees at child care centers are contributing to the growing costs of child care, as well as inflation and changes in parents’ work status, according to Care.com.

Many day care centers shuttered during the pandemic, leaving the few that stayed open with limited slots available. That resulted in long waitlists — and fees to get on those lists, said certified financial planner Sophia Bera Daigle, founder of virtual firm Gen Y Planning.
Some child care centers ask for a non-refundable waitlist fee, which can be around $75, as well as a “new child fee” upon enrollment into the center, which can range from $100-$600, said Daigle, who is also a member of the CNBC FA Council. The new child fee is usually used to fund teachers’ education, books and materials for the classes, she added.
“People are on waitlists for day cares way longer, it’s hard to get their kid into day care in a lot of metropolitan areas,” Daigle said.

Parents are also facing changes in their work situations. Some who had fully remote jobs during the pandemic are now having to go back to the office some or all of the time and are faced with new child care needs, added Daigle.
However, the bigger challenge is access to care, said Carolyn McClanahan, a CFP and the founder of Life Planning Partners in Jacksonville, Florida. With fewer providers, if a family can’t find or access child care, one parent may be forced to leave the workforce, cutting off a second stream of income.
“It’s hard not to be a two-earner family,” said McClanahan, who is also a member of the CNBC FA Council.

How to plan ahead for child care costs

Some families are relying on their friends and family members, or even relocating to be closer to family. Others are working multiple jobs or adjusting their work schedules, Care.com found.
Financial advisors say there are several other ways parents can plan ahead to help cover child care costs. Here are a few things families may want to look into: 

1. Start building emergency savings early
Child care is just one of many expenses that come up when you have a family, and so it’s important to think about having cash reserves. Set up an emergency fund before you start having kids. “Make sure you have plenty of savings to weather the storm of the challenges of having a child,” said McClanahan.
2. Try to eliminate high-rate debt
Eliminating any monthly debt payments before you have a baby can be helpful in reducing expenses and freeing up money in your budget for day care costs, said Daigle. She points to high car payments as an example. The average monthly car payment reached $733 in the second quarter of the year, according to auto site Edmunds. “If they’re able to pay off their car before the baby comes, that can be really helpful,” she added.
3. Research company child care benefits
Many employers offer what’s known as a child care FSA or dependent care FSA, which typically allows you to set aside up to $5,000 per year using pretax dollars from your paycheck, said Daigle. Families can use those funds to cover qualifying expenses for eligible dependents.
“You can submit a reimbursement … for basically the first $5,000 that you’re paying in day care costs,” she added. More

Going on strike can be a powerful tool for workers, but they face a number of risks when doing so.
Here’s what workers should know about their rights.

Writers Guild of America and Screen Actors Guild members and supporters on a picket line outside Paramount Studios in Los Angeles on July 17, 2023.
Bloomberg | Bloomberg | Getty Images

The recent wave of worker strikes have ushered in a new era: the “summer of strikes,” also known as hot strike summer.
Employees at UPS, Amazon, Starbucks and entertainment companies across Hollywood have walked off the job or threatened to do so over the last few months in an effort to pressure their bosses to improve conditions and pay them more.

More than 200 strikes have occurred across the U.S. so far in 2023, involving more than 320,000 workers, compared with 116 strikes and 27,000 workers over the same period in 2021, according to data by the Cornell ILR School Labor Action Tracker.
“Workers have more bargaining power given the strength of the economy,” said Harry Katz, a professor at Cornell University.
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Employees who withhold their labor can face a number of consequences, including losing their job and health insurance, experts said. As a result, they should learn their protections.
“Strikes are a powerful tool for exercising power, but because our labor law is so weak it comes with great risk for workers,” said Sharon Block, a professor at Harvard Law School and the executive director of the Center for Labor and a Just Economy.

Here’s what to know.

Workers typically have the right to strike

The National Labor Relations Act of 1935 codified the right to strike into law. As a result, all workers covered by the NLRA have the right to participate in lawful strikes, Block said.
What is a lawful strike?
The National Labor Relations Board defines two classes of lawful strikers: those protesting unfair labor practices at their workplace and those who are fighting its economic conditions.
“If workers are standing together in a strike for better wages and working conditions, they should feel confident that their strike is protected,” Block said.
That includes workers who are not in unions, she added, “as long as they act collectively.”

That last part is important.
“Strikes have to be ‘collective action’ to be protected,” said Kenneth Dau-Schmidt, a law professor at Indiana University Bloomington. “Generally that means you have to do it as a group.”
Two people can constitute a group, he said, but “the larger, the better.”
Even then, there are exceptions.
Those in the private sector covered by the Railway Labor Act, which includes most railway and airline employees, are subject to that law rather than the NLRA.

“Workers covered by the Railway Labor Act are also allowed to strike, but there are many more obstacles and procedures for them to get through before they can strike,” Dau-Schmidt said.
“The RLA system is set up to facilitate mediation and presidential or congressional intervention before a strike, so big railway strikes are rare,” he added.
Most government employees are prohibited from striking in the U.S. Only a handful of states — about eight — have passed their own laws permitting certain public sector workers to strike.
Meanwhile, Dau-Schmidt said: “No state allows police or firefighters to strike.”

Strikers can be replaced in many cases

Under the NLRA, workers can’t be fired or discriminated against for participating in a strike.
However, economic strikers can be permanently replaced if their employer hires someone else to do their job, Dau-Schmidt said: “Permanent replacement looks a lot like firing from the employees’ perspective.”
Strikers must be offered a position vacated by their replacement before anyone else is hired, though, Block said.

UPS reached a tentative agreement to renew a five-year labor contract with the Teamsters ahead of a July 31, 2023 deadline, averting a costly strike.
Bloomberg | Bloomberg | Getty Images

“Strikers just have to make an unconditional offer to return and wait for an opening,” she said.
If workers were on strike due to unfair labor practices, they may have a right to reinstatement, but that process, Dau-Schmidt said, “can often take a long time and people often move on to other jobs.”
And employees “can never be sure their strike will be found to be an unfair labor practice strike,” he cautioned.

Pay and health insurance is ‘a real problem’

Workers who go on strike generally lose their wages, Dau-Schmidt said. “If you don’t work, you don’t get paid.”
Yet if the strike was over unfair labor practices, which was caused by violations of the law by their employer, they may qualify for back pay, he added.

Strikes have to be ‘collective action’ to be protected. Generally that means you have to do it as a group.

Kenneth Dau-Schmidt
law professor at Indiana University Bloomington

Economic strikers typically also get their other workplace benefits, including health insurance, nixed.
“Health insurance is a real problem,” Dau-Schmidt said. “Employers can suspend or end coverage.”
But, he said, “sometimes employers won’t kick employees off of the health insurance right away because it escalates the conflict and almost ensures an unhappy ending.”

Some states offer unemployment benefits to strikers

There is no federal law guaranteeing workers on strike jobless benefits, said Michele Evermore, a senior fellow at The Century Foundation.
But two states — New York and New Jersey — provide some unemployment coverage to strikers.
There is also a bill working its way through the Massachusetts Legislature that would offer unemployment benefits to those who have been on strike over a labor dispute for 30 days or more.
“States have the right to decide that they do not want to see striking workers and their families go hungry while they are fighting for a fair work contract,” Evermore said. More

The Spotify logo on the New York Stock Exchange, April 3, 2018.
Lucas Jackson | Reuters

With markets facing pressure at least in the short term, investors should try to build a portfolio of stocks that can weather the storm and offer long-term growth potential.
Here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performance.

Domino’s Pizza

related investing news

Domino’s Pizza (DPZ) reported mixed results for the second quarter, with the company blaming a decline in its market-basket pricing to stores and lower order volumes for the shortfall in its revenue compared to analysts’ expectations.
Nonetheless, BTIG analyst Peter Saleh reiterated a buy rating on Domino’s with a price target of $465 and said that the stock remains his top pick. (See Domino’s Financial Statements on TipRanks) 
In particular, Saleh expects the company’s Uber Eats partnership, changes in the rewards program, and the launch of its pepperoni Stuffed Cheesy Bread to boost the top line in the fourth quarter and into 2024.
The analyst noted that the pizza chain’s entire menu will become available to Uber Eats customers at regular menu prices, without any deals or coupons. Interestingly, the company is targeting the higher-income customers on Uber Eats and reserving the discounts and other benefits for its own ordering channels.
“We expect the improvement in delivery sales, coupled with declining commodities, to translate to healthier unit economics and accelerated domestic development next year and beyond,” said Saleh.

Saleh ranks No. 331 out of more than 8,500 analysts tracked on TipRanks. Also, 64% percent of his ratings have been profitable, with an average return of 12.9%.  

Meta Platforms

Next up is Meta Platforms (META). The social media platform recently delivered upbeat second-quarter results and issued better-than-anticipated guidance for the third quarter, signaling improved conditions in the digital ad market.
Following the print, Monness analyst Brian White raised his price target for Meta to $370 from $275 and maintained a buy rating, saying that the company’s second-quarter results reflected strong execution and its massive cost-improvement measures.
The analyst noted that management’s commentary during the earnings call reflected positive vibes, backed by an improving digital ad market and a compelling product roadmap. He highlighted the momentum in Meta’s short-video feature Reels, which is growing at a more than $10 billion annual revenue run rate across apps. He also mentioned the better-than-expected traction in Threads and the company’s significant investments in artificial intelligence.        
White cautioned investors about regulatory risks and internal headwinds. However, he said that in the long run, “Meta will benefit from the digital ad trend, innovate with AI, and participate in the build-out of the metaverse.”
White holds the 27th position among more than 8,500 analysts on TipRanks. His ratings have been profitable 67% of the time, with each rating delivering an average return of 20.7%. (See Meta Platforms Stock Chart on TipRanks)

Spotify

White is also bullish on audio streaming company Spotify (SPOT). While Spotify’s second-quarter revenue and Q3 2023 guidance missed analysts’ expectations, the analyst contended that results were “respectable” with meaningful year-over-year growth of 27% in monthly active users (MAU) to 551 million.
Commenting on Spotify’s decision to increase the price of its subscription offerings, White noted that the price hikes will impact most subscribers beginning September, thus having a small impact on the third quarter but contributing meaningfully to the fourth-quarter performance.
While the analyst acknowledges an intense competitive backdrop, he said that “Spotify is riding a favorable long-term trend, enhancing its platform, tapping into a large digital ad market, expanding its audio offerings, and improving its cost structure.”
White raised his 2024 estimates and reiterated a buy rating while increasing the price target for SPOT stock to $175 from $160. (See Spotify Blogger Opinions & Sentiment on TipRanks)  

Microsoft

Another tech giant in the week’s list is Microsoft (MSFT), which has been making headlines this year due to its generative AI advancements. The company’s fiscal fourth-quarter results topped Wall Street’s estimates. That said, the revenue outlook for the first quarter of fiscal 2024 fell short of expectations.
Nonetheless, Goldman Sachs analyst Kash Rangan, who ranks 459th among more than 8,500 analysts tracked on TipRanks, remains bullish on MSFT stock. (See Microsoft Hedge Fund Trading Activity on TipRanks)           
The analyst thinks that in the short term, there might be concerns about when the company’s ramped-up capital investments will pay off. However, he observed that historically, whenever Microsoft increased its capital expenditure in the cloud market, Azure growth rate shot up meaningfully and margins rebounded, driving the stock price higher. 
With a strong presence across all layers of the cloud stack, Rangan said that Microsoft is well positioned to capture opportunities in several long-term secular trends, including public cloud and SaaS adoption, digital transformation, generative AI and machine learning, analytics and DevOps.
In line with his bullish stance, Rangan reiterated a buy rating with a price target of $400. He has a success rate of 59% and each of his ratings has returned 10% on average.

General Motors

We now drive toward legacy automaker General Motors (GM), which impressed investors with robust growth in its second-quarter revenue and earnings. Additionally, the company raised its full-year outlook for the second time this year.
Recently, Tigress Financial Partners analyst Ivan Feinseth reaffirmed a buy rating on the stock with a price target of $86, noting the company’s strong execution and the ramp-up of new electric vehicle launches and production.
The analyst highlighted that the company continues to witness robust demand for its full-size SUVs and pickups, which is driving its revenue and cash flow higher and funding the transition and expansion of its EV production.
Feinseth called GM’s Ultium platform and supply chain for EV battery production its significant competitive advantage. The analyst is also positive about the company’s recent initiatives to expand its charging network.
“In addition to the ramp-up of EV production, GM’s ramp-up of high-value software and services as it plans to double company revenue to $275-315 billion by 2030 should drive significant increases in Return on Capital (ROC) and Economic Profit,” the analyst said.     
Feinseth holds the 215th position among more than 8,500 analysts on TipRanks. His ratings have been successful 61% of the time, with each rating delivering an average return of 12.9%. (See General Motors Insider Trading Activity on TipRanks) More

FA Playbook

After another interest rate hike from the Federal Reserve, some money market mutual funds are paying above 5%.
Currently, it’s a higher return compared with high-yield online savings accounts or new Series I bonds.
But these assets are less liquid and not protected by Federal Deposit Insurance Corporation coverage.

dowell | Moment | Getty Images

After another interest rate hike from the Federal Reserve, investors have several competitive options for cash, including money market funds, with yields currently above 5%. But there are trade-offs to consider, experts warn.
Money market funds — which are different than money market deposit accounts — are a type of mutual fund that typically invests in shorter-term, lower-credit-risk debt, such as Treasury bills.

With yields closely tied to the federal funds rate, some of the biggest money market funds are paying north of 5%, as of Aug. 4, according to Crane Data. Money market fund assets notched a record of $5.52 trillion for the week ending Aug. 2, the Investment Company Institute reported.

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Currently, some money market mutual funds are outperforming assets such as high-yield savings accounts or newly purchased Series I bonds.
The top 1% of savings accounts were paying an average of 4.65% as of Aug. 4, according to Deposit Accounts, compared with a 0.42% average for traditional banks. By comparison, the top 1% average for a one-year certificate of deposit was above 5.5% as of Aug. 4.
Meanwhile, Series I bonds, a government-based and inflation-protected asset, are offering 4.3% annual interest on new purchases through October.

Money market funds have less liquidity than savings

Christopher Lyman, a certified financial planner with Allied Financial Advisors in Newtown, Pennsylvania, said he’s still proposing money market mutual funds for certain clients, with the caveat of higher risks or more stipulations for accessing the money.

Typically, it takes three to five business days to sell a money market mutual fund and transfer the money from your investment account to savings.
“But when the money is at your bank, it’s a much quicker process,” he said.
Lyman said that lag could be a “deal-breaker” if you’re house hunting and need to tap the funds within 48 hours, for example.
What’s more, the U.S. Securities and Exchange Commission recently adopted “liquidity fees” for certain money market funds for withdrawals when daily outflows exceed 5% of the fund’s value.

Money market funds aren’t risk free

While money market funds typically invest in lower-risk assets, experts say it’s important to know the funds aren’t risk free.
“It’s a rarity that such funds lose value,” said CFP Randy Bruns, founder of Model Wealth in Naperville, Illinois. But it happened when investors pulled billions from the Reserve Primary Fund in 2008, which dropped its net asset value from $1 to $0.97, he said.
This is known as “breaking the buck.” 
Bruns said it’s important for investors to know that money market funds aren’t protected by the Federal Deposit Insurance Corporation, which generally offers depositors $250,000 of coverage per bank, per account type.
While the government stepped in to cover depositors during the Silicon Valley Bank collapse, there’s not an explicit guarantee it would happen again, Lyman said. More

Some experts are backing off their predictions that a recession may be looming.
The latest economic data points to the possibility of a soft landing for the U.S. economy as the Federal Reserve works to tamp down inflation.
However, consumers would be wise to watch for changes in inflation, the labor market and interest rates in the coming months, experts say.

Lucigerma | Istock | Getty Images

Predictions that a recession may be looming for the U.S. economy have so far not come to fruition. Now, some experts are backing off the prediction altogether, including Federal Reserve staff economists.
“What’s out: Mild recession,” states new economic research released by Bank of America this week.

“What’s in: Soft landing, no recession,” the firm’s research declares.
Economists and other experts have been calling for a downturn for a more than a year now, mostly due to high inflation and the steps policymakers have been taking to curb it. Officially, a downturn is defined as defined as a decline in gross domestic product for two consecutive quarters.
As the Federal Reserve has embarked on a series of interest rate hikes to bring inflation down to its 2% target, the concern has been that may tip the economy into a recession.
Inflation has subsided, though it is still above 2%, per the latest government data.
The unemployment rate is still at “near all-time lows,” Bank of America noted. Friday’s jobs report showed the unemployment rate was 3.5% based on new July data, “just above the lowest level since late 1969.”

Unemployment and other factors — growth in economic activity, wage and price pressures in the “right direction” — prompted Bank of America to reassess its previous calls for a mild recession in 2024.
While the firm is weighting those baseline expectations for a soft landing at 45% to 50%, other outcomes are still possible.
“We still think the most likely alternative is a mild recession,” said Michael Gapen, head of U.S. economics at Bank of America, which the firm puts at odds of 35% to 40%.
Meanwhile, the most optimistic outcome, with stronger GDP growth, comes in at 10% to 15%.
Recessions historically tend to be caused by black swan events — unpredictable circumstances that come as a surprise — that are difficult to precisely forecast, noted Mark Hamrick, senior economic analyst at Bankrate.
“I don’t have much confidence at all in the ability to predict the timing of a recession unless there’s an event that’s right in front of us that suggests that one is imminent,” Hamrick said.
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Other experts point to the Federal Reserve’s role in steering the economy.
“When we get a recession, it tends to be because we had a problem with monetary policy,” said William Luther, director of the Sound Money Project at the American Institute for Economic Research.  
As Fed officials target a soft landing for the U.S. economy, several moving factors will continue to affect Americans’ wallets in the coming months.

1. Cooling inflation may not prompt lower prices

People stand at the check-out counter after shopping at a grocery supermarket in Alhambra, California, on July 13, 2022. 
Frederic J. Brown | AFP | Getty Images

While the U.S. economy is not in a recession, many Americans think we’re already in a downturn, various surveys show. Moreover, some people fear a downturn as severe as the Great Recession.
Blame high inflation, which has prompted prices on everyday items consumers buy to soar.
“When inflation picks up, people become more pessimistic in general,” Luther said. “The general public does not like inflation.”
Bank of America’s new projections see inflation slowing more gradually, with the Federal Reserves preferred measure for inflation — the personal consumption expenditures, or PCE — falling to 2% year over year in the second half of 2025.
While that’s going in the right direction, households will still have to play catch up, Gapen said.
“Just because inflation comes down doesn’t mean the level of these prices come down,” Gapen said. “Just the rate at which they’re rising slows.”
For example, a steak dinner that now costs $50 at a New York restaurant may rise to $52 instead of $60 as inflation slows. But the price won’t come down to $35, he said.
To recover, consumers will have to have their wages catch up to where inflation is, which could take a few years, Gapen said.

2. There may be further moderation in hiring

A sign posted outside a restaurant looking to hire workers in Miami, May 5, 2023.
Joe Raedle | Getty Images News | Getty Images

While the unemployment rate came in at 3.5% in July, that may tick up and peak at 4.3% in 2025, Bank of America projects.
“I think the labor market will continue to cool,” Gapen said. “The question is do we get large-scale layoffs? Right now, the data doesn’t support that.”
Employers have announced plans to cut 481,906 jobs in the first seven months of this year, up 203% from 159,021 cuts for the same period in 2022, according to Challenger, Gray & Christmas, Inc., a global outplacement and business and executive coaching firm.
That year-over-year percentage change for job cuts has declined steadily in recent months as companies seek other ways of cutting costs rather than letting go of workers, according to Challenger’s research.
For many employers, that means slower hiring.
The unemployment rate has been between 3.4% and 3.7% since March 2022, Hamrick noted.
While the last two recessions brought much higher unemployment rates, with 10% in October 2009 and 14.7% in April 2020, a future downturn does not necessarily have to bump joblessness up as high, he said.
“Recessions don’t always bring double-digit unemployment rates,” Hamrick said.

3. Now is the time to lock in high rates on cash

JGI/Jamie Grill

The Federal Reserve approved a new hike in July that brought interest rates to the highest levels in more than 22 years. The central bank could raise rates again before the year is over.
Bank of America expects one more 25 basis rate hike this year. However, the firm also foresees rate cuts poised to begin in June 2024. The firm’s outlook projects cuts of 75 basis points in 2024 and 100 basis points in 2025.
“The biggest risk at the moment is that the Federal Reserve will over tighten monetary policy,” Luther said. “If it is too tight, then we will have a recession.”
If the Fed overcorrects, interest rates may start coming down next year, he said.
While Hamrick said it is premature to “place a heavy bet” on rate cuts, there are strategic moves investors may want to make now, he said.
High rates have pushed the average credit card rate to 20.5%, even for well-qualified borrowers, Hamrick noted. On the flip side, savers are able to earn 3% to 5% on their savings.
“This is the time to try to bolster emergency savings while looking to achieve other financial goals like saving for retirement and paying down debt,” Hamrick said.
For people who do not need immediate access to their cash, it may be a good idea to lock interest rates in with longer-dated terms, such as with a certificate of deposit, he said. More

Life Changes

The Mega Millions jackpot has grown to an estimated $1.25 billion this week, the fourth-largest prize in the game’s history.
While states receive a chunk of every lottery ticket, the federal government doesn’t collect its share until there’s a winner, a tax expert says.
The next Mega Millions drawing is at 11 p.m. ET on Friday.

The Mega Millions jackpot grew to $1.25 billion on August 3, 2023.
Justin Sullivan | Getty Images

After months of no winners, the Mega Millions jackpot has grown to an estimated $1.25 billion this week, the fourth-largest prize in the game’s history.
If you win, there’s a choice between two pretax options: an estimated $625.3 million lump sum or a 30-year annuity worth $1.25 billion. The lottery, however, benefits more than just the lucky winner because the federal government and some states also receive a portion of the revenue.

The next Mega Millions drawing is Friday at 11 p.m. ET. The chance of winning the jackpot is roughly 1 in 302 million.

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State lottery revenue isn’t consistent

While states receive a chunk of every lottery ticket, the federal government doesn’t collect its share until there’s a winner, explained Aravind Boddupalli, research associate in the Urban-Brookings Tax Policy Center.
Roughly 65% of proceeds from lottery ticket sales go to winners, according to the North American Association of State and Provincial Lotteries. Some 6% goes to retailers, 5% covers lottery administration and 24% goes to public beneficiaries.
In 2021, states received a total of nearly $30.4 million in lottery revenue, defined as ticket sales minus prizes, according to Census data analyzed by the Tax Policy Center.
Boddupalli said the revenue typically goes into the state’s general fund but is earmarked for specific programs, such as education, infrastructure, health care, the environment and more. There’s a state-by-state list of these programs here.

“There’s a little bit of a conundrum with this, though,” Boddupalli said.
Lottery revenue isn’t as consistent as income tax revenue, which may cause program funding shortfalls.
Most states also have a mandatory upfront income tax withholding on lottery winnings, according to the Tax Foundation, which may not cover the total state and marginal rates. The top marginal rates are above 10% in some states.

Federal tax bill on a $1.25 billion Mega Millions jackpot

The federal government receives a sizable chunk of revenue after the lottery announces a winner because there’s a mandatory 24% federal withholding.
If you pick the $625.3 million lump sum, the 24% federal withholding automatically sends more than $150 million to the IRS.
However, the final bill will likely represent millions more since the windfall pushes the winner into the 37% income tax bracket.

For 2023, the 37% rate applies to taxable income of $578,126 or more for single filers and $693,751 or higher for couples filing together. You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income.
Single lottery winners will pay $174,238.25, plus 37% of the amount over $578,125. But for couples filing jointly, the total owed is $186,601.50, plus 37% of the amount above $693,750.
Friday’s Mega Millions drawing comes about two weeks after a single ticket sold in California won Powerball’s $1.08 billion jackpot. That game’s top prize is back down to $124 million, with roughly 1 in 292 million odds of winning the jackpot. More

A new TikTok filter that has gone viral lets people get a look at their future selves.
Experts say the visual images may help inspire people to plan for their later years, even as we are hardwired to think short term.

Darya Komarova | Moment | Getty Images

‘The dots need to be connected for consumers’

Exposure to our older selves is only part of the process of making decisions for retirement, experts say.
While the TikTok filter has recently made it popular to look at our future selves, this type of application has been around since the early 2000s, said Joseph Coughlin, director of the Massachusetts Institute of Technology AgeLab.
Once people see an image of their older selves, they tend to feel differently about their future decisions.  Whether those effects will last six months or a year from now is uncertain, he said.
Successful, lasting behavioral changes typically come with incentives to work toward, such as saving money or exercising, Coughlin said. But once the incentives stop, the behavior often does as well, he said.
Pairing the videos with prompts to save more money or invest more toward retirement may be effective, according to UCLA’s Hershfield. Otherwise, it’s unlikely people will separately take the initiative to log into their accounts and make financial changes, he said.
“The dots need to be connected for consumers, especially given how many other things that they have to think about,” Hershfield said. 

Other research shows we may be hardwired to think short term. 
Many people have a self-control bias, which means they are wired to be “spenders rather than savers,” said Victor Ricciardi, a visiting finance professor at Ursinus College and co-author of the book, “Advanced Introduction to Behavioral Finance.”
Different types of personalities can also come into play when it comes to saving. For instance, a person who is more of a planner or analytical thinker in their daily lives is more likely to think about their future self, versus someone who takes more risks, Ricciardi said.
Moreover, seeing their older selves may prompt some people to focus more intently on living for today, said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida. She is also a member of the CNBC FA Council.
But that approach may backfire when someone does reach retirement age.
On the flip side, research shows that if people make emotional connections and think about the money they will spend in the future, it will help incentivize them to save, said Ricciardi.

Ways to incentivize yourself to plan for the future

Drazen Zigic | Istock | Getty Images

The good news is that planning for “future you” now can pay off substantially in the long run. 
Just about a quarter of why someone dies at a given age is due to genetics, according to McClanahan, who is also a physician. The rest is mostly lifestyle.
“The best way to prepare is always keep yourself physically in good shape,” McClanahan said.
Additionally, when it comes to money, the earlier you start, the more you will benefit from compound interest — whereby the money you earn gets reinvested and earns even more.
Here are three ways to make smart decisions that benefit you now and in the future.
1.  Focus on creating financial flexibility. Rather than focusing on retirement, think of saving as a way to give you more choices in the future, McClanahan suggested.
2. Pay attention to how much you spend. If you have a high-cost lifestyle that will not only cost more now, but will also require you to save more towards retirement, McClanahan said.
3. Think of yourself doing everyday activities. To be more inspired to plan for your future self, it helps to realistically picture who that person will be and what they will need, Coughlin said. Ask yourself how your older self will approach everyday things like who you will have lunch with or how you will get an ice cream cone. “Sometimes your goals are simple and the things that make you smile, Coughlin said. More

Even as transactions get increasingly cashless, there’s still a place for paper currency — especially when it comes to guilty pleasures.
Cash makes it easier to forget a transaction ever happened, according to new research by Stanford professor Szu-chi Huang.

Nopphon Pattanasri | Istock | Getty Images

A cashless society is nearly within reach.
After years of reluctance, Americans finally abandoned paper currency during the pandemic in favor of “tap and go” transactions and have now almost entirely embraced contactless and digital payment methods. Cashless payment volumes are only expected to increase going forward, according to a recent report by PwC. 

However, there’s still a hidden advantage to making purchases with cash, new research found, especially if you want to forget the transaction ever happened.
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Consumers pay with credit cards to remember and cash to forget, according to a paper by Szu-chi Huang, associate professor of marketing at Stanford Graduate School of Business.
When shoppers are motivated to forget a purchase because it is difficult to justify, they are more likely to use cash rather than a credit card, the analysis of more than 118,000 real-world purchases found, because cards create a “paper/electronic trail” that “aids memory retrieval.”
Paying with cash also works well when it comes to hiding purchases from a partner or spouse, according to a separate report by Bankrate.com. “Cash is more anonymous,” said Bankrate’s credit card analyst Ted Rossman.

It’s more common than you think: One-third of Americans admit they have committed some form of financial infidelity, according to another survey. Most often, they are spending more than they feel their significant other would be comfortable with. Others have a secret account or credit card or some sort of hidden debt.

The pros and cons of cash

On the upside, paying with cash can be a smart move for those trying to stick to a budget.
Most experts recommend using the envelope method, or “cash stuffing,” to stay disciplined. In this case, spending money is divided up into envelopes representing your monthly expenses, such as groceries and gas. When the money in one envelope is spent, you’re either done spending in that category for that month, or you need to borrow from another envelope, Rossman explained.
“Adhering to this approach keeps you from going into credit card debt,” he said.
But paying with cash forgoes the rewards and protections that come with credit.

There are some grocery rewards cards that can earn you as much as 6% back at supermarkets, while a generic cash-back card will earn you 2%. Further, there are also federal mandates to protect you when you use your credit card if, for example, you never receive an item you’ve paid for.
And then there is the added security of contactless and digital payment methods, such as Apple Pay.
They are embedded with a near-field communication antenna that can be used for proximity payments via radio waves. There is also a dynamic cryptogram, or code, which is unique for each individual transaction.
This is similar to chip cards’ smart technology, also known as EMV, which can process card transactions with embedded smart chips — except it is much faster.
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