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Smart Tax Planning

You can’t claim the home office deduction as a full-time employee with W-2 earnings, but it may be possible with 1099 income as a contractor or self-employed worker.
To qualify, you must use your home office regularly and exclusively for work, and there are two ways to calculate the tax break, according to the IRS.

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If you’re one of the millions of Americans who worked remotely — fully or partially — in 2022, you may be wondering about the home office deduction on your taxes.
While remote work has declined since the early days of the pandemic, nearly 30% of employees were telecommuting in January, according to LinkedIn’s Workforce Confidence Index.

However, many of those workers can’t claim the home office deduction, said Brad Sprong, national tax leader of KPMG Private Enterprise.

More from Smart Tax Planning:

Here’s a look at more tax-planning news.

Assess IRS guidelines for your workspace

Your workspace must meet certain IRS guidelines to qualify for the deduction, said Rob Burnette, CEO of the Outlook Financial Center.
Based on the square footage of a specific area in your home, you must use your “home office” exclusively for work, he said. And the IRS expects it to be the principal place for your business, used regularly. 
“It doesn’t need to be a room with four walls around it,” Sprong said, noting that it could be a designated 200 square feet in your home. But “it would be hard to argue that your kitchen table is exclusively for business,” he added.

Calculate the home office deduction 

There are two ways to calculate the home office deduction: the “simplified option” and the “regular method,” according to the IRS.  
The simplified option uses a standard deduction of $5 per square foot of the portion of your home used for business, capped at 300 square feet, or $1,500. 
The regular method, which is more complicated, uses the percentage of your home used for business, including actual expenses, such as part of your mortgage interest, insurance, utilities, repairs and depreciation. The calculation happens on Form 8829. 

“The simplified method is my favorite way because most people don’t have the records or enough deductions to make the regular method work,” Burnette said. Typically, he calculates it both ways for new clients to see which option provides the bigger tax break.
Of course, some taxpayers may get a bigger tax break by using the regular method. “While it’s more cumbersome, it’s much more beneficial because the simplified option is capped at $1,500,” Sprong said.
But when using the regular method, it’s important to have documentation to show proof of your deductions. “If you’re drawn for audit, it’s an area of focus for the IRS,” he warned. More

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The life of a digital nomad looks even more attractive as return-to-office plans accelerate.
If you are ready to make the leap, here are some money moves to consider first, according to Sophia Bera Daigle, a member of CNBC’s Advisor Council.

On the heels of the Great Resignation, some workers are even more motivated to leave their job in search of a better work-life balance.
To that point, 56% of the workforce is likely to look for a new job in the year ahead, up from 51% in 2022, according to Bankrate’s 2023 job-seeker survey.

In addition to higher pay, workers said that more flexible hours and working remotely are now what’s most important to them.
“The nature of work is shifting for a lot more people,” said Sophia Bera Daigle, CEO and founder of Gen Y Planning, a financial planning firm for millennials.  

More from Ask an Advisor

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

Even among hybrid workers, many would prefer to spend more time working from home than they currently do, according to Bankrate.
Of those who are working from home some of the time, half say they’d like to do so all or most of the time. And roughly one third of those who are currently working from home most of the time said, if they had the choice, they’d like to work from home all the time.
Even before the pandemic, Bera Daigle, a certified financial planner and a member of CNBC’s Advisor Council, knew the daily grind wasn’t for her. After working at traditional financial planning firms since 2007, she quit to be free to work from wherever she wanted.

Despite fears of a recession, there are still plenty of opportunities out there for job seekers seeking a similar arrangement.
Workers have an edge in a cooling but strong job market, experts say, and that gives them the ability to push back on return-to-office mandates.

How to become a digital nomad

For many, the life of the digital nomad is the ultimate goal.
This lifestyle is becoming a lot more popular as the trend of remote working accelerates. The number of digital nomads in the U.S. increased 9% in just 12 months from 2021 to 2022, to a total of almost 17 million, according to the jobs platform MBO Partners.

If you’re contemplating a major career move so you have more location flexibility or don’t have to commute, there are a few things you need to do first, Bera Daigle said.
1. Pay down debt. Before leaving your current position, Bera Daigle recommends strengthening your financial standing by paying down debt, particularly high-interest credit card balances, to improve your monthly cash flow so you can set more money aside. 
2. Pump up savings. “Having emergency savings is really key,” she said.
Divert a portion of your salary every month to a separate savings account. Most financial experts recommend having at least three months’ worth of expenses set aside in an emergency fund or more if you are the sole breadwinner in your family.
3. Pad your retirement plan. If you have access to a 401(k) plan, “maximize contributions now because it could take a while to find a new job and you may not be eligible for a 401(k) right away,” Bera Daigle said.
Eventually, you may be able to roll the old 401(k) into your new workplace plan or an individual retirement account but there could be a waiting period of a few months — or even a year — before you’re able to participate.
4. Open a brokerage account. If you’ve met your short-term savings goals and your retirement contributions are on track, consider opening a taxable investment account to help bridge the gap, Bera Daigle advised. (Although brokerage accounts don’t have the same tax benefits as a workplace retirement plan, there are no income or contribution limits or restrictions on when funds can be withdrawn.)
For those new to investing on their own, start with an index fund that tracks the broader market, like the SPDR S&P 500 exchange-traded fund. Otherwise, mutual funds can be a great way to diversify your portfolio, although these may have higher minimum investments than ETFs.

Sophia Bera Daigle, CEO and founder of Gen Y Planning.

Even though Bera Daigle is now married with a young son and owns a home in Austin, Texas, she still values her ability to work from anywhere in the world.   
To afford extended trips as a family, Bera Daigle allocates money every month into “savings buckets” — a popular strategy for covering expenses such as travel and entertainment. She also leverages travel rewards and credit card points to save on airfare and hotel stays.
“If I’m not using my money to match my values to live a great life, then I’m doing it wrong,” she said. More

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More than $6 billion in scholarships are awarded to college students each year, according to an analysis of U.S. Department of Education data by higher education expert Mark Kantrowitz.
Applying for the awards can help students reduce their education debt.

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As families try figure out how to pay for their children’s college costs in the fall, scholarships are an important avenue to explore.
“Every dollar won in a scholarship could potentially eliminate a dollar borrowed for the student,” said Elaine Rubin, director of corporate communications at Edvisors.

More than $6 billion in scholarships are awarded to college students each year, according to an analysis of U.S. Department of Education data by higher education expert Mark Kantrowitz.
To begin, scholarships are gifts that don’t need to be repaid, and there are thousands of them offered. Some of the awards are based on merit while others are granted because of financial need.
Here’s what else you need to know.

Cast a wide net to find scholarships

Students can use free scholarship matching services to search for the awards, Kantrowitz said. Some of the services he recommends include Fastweb and the College Board’s Big Future.
“These websites match your background profile against a large database of scholarships, showing you only the ones for which you are eligible,” Kantrowitz said.

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.

Scholarship-listing books can also be helpful, he said: “You can find them in the jobs and careers section of your local public library or bookstore.”
(Make sure the book is not more than 1 or 2 years old, Kantrowitz cautioned, because many awards change or end.)
You can also try Googling for different scholarships, Kantrowitz said.
During your search, you’ll want to consider what sets you apart. For example, if you are the first person in your family to attend college, you might type in: “First-generation college student scholarships.”
According to the U.S. Department of Education, students also should ask both their high school counselor and the college’s financial aid office about scholarship opportunities.
The U.S. Department of Labor has a scholarship search database, too.
You should never have to pay to apply for scholarships, Kantrowitz warned: “If you have to pay money to get money, it’s probably a scam.”

Scholarships shouldn’t be ‘the entire plan’

According to calculations by Kantrowitz, around 1 in 8 college students has won a scholarship. The average award is around $4,200. Around 0.1% of undergraduate students received $25,000 or more in scholarships.
“Scholarships are part of the plan for paying for college, but not the entire plan,” Kantrowitz said.
Most families will still want to save for their children’s higher education, file the Free Application for Federal Student Aid, or FAFSA, form, and be wise about not borrowing too much.
Some scholarships are huge, though.
For example, the Regeneron Science Talent Search has a top prize of $250,000 for young scientists. The Coca-Cola Scholars Foundation offers $20,000 college scholarships for those “recognized for their capacity to lead and serve, as well as their commitment to making a significant impact on their schools and communities.”

Scholarships may reduce grants, trigger taxes

One thing to keep in mind when applying for the awards is that some colleges reduce their grants to a student if they receive one, Kantrowitz said. These so-called displacement policies are something to be on the lookout for as you weigh college offers — although some states have actually set limits on the practice.
And while many scholarships are renewable, you may be required to maintain a certain grade point average to remain eligible.
Kantrowitz recommends students search for scholarships every year. “Some scholarships are open to just high school seniors,” he said. “There are also some scholarships that are only open to students who are already enrolled in college.”

In addition, some scholarships may be taxable, Kantrowitz said. It all depends on what you use the money for.
The awards are shielded from taxation if they’re directed only at tuition and books. Amounts applied to room and board, transportation or other living expenses, meanwhile, can count as taxable income.
“They can also ask the scholarship provider for help,” Kantrowitz said. “Some will allow the student to defer their scholarship for a year to avoid needing to spend it on taxable expenses.” More

Ask an Advisor

If you’re ready to move abroad to work or retire, there are a few things to know, according to certified financial planner Jude Boudreaux, a member of CNBC’s Financial Advisor Council.
Roughly 9 million U.S. citizens were living abroad in 2020, according to estimates from the U.S. Department of State. 

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If you’ve dreamed of working or retiring abroad, you may be tempted by the possibility of cheaper housing or health care. But there are some things to consider before making the jump.
Jude Boudreaux, partner and senior financial planner with The Planning Center in New Orleans, works with several expat clients and said the “modern economy” has made living abroad more feasible for some Americans since the pandemic.

“There are a certain number of people who can work remotely and permanently,” which has opened the doors to living abroad, said Boudreaux, who is a certified financial planner and a member of CNBC’s Financial Advisor Council. 

More from Ask an Advisor

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

While a work permit for a local job can be challenging in some parts of Europe, moving abroad may be easier for Americans who are “self-sustaining” with remote work flexibility, Boudreaux explained. 
As for retirees, he has worked with clients on “both sides of the political ledger” seeking more choices and flexibility in their golden years, depending on shifts in the U.S. political environment. 
Roughly 9 million U.S. citizens were living abroad in 2020, according to estimates from the U.S. Department of State. 
For clients weighing the move, he often suggests spending a month in their chosen location first.

“It’s different to navigate the grocery store and health care treatments in a foreign language if you’re not super proficient,” he said.
Here are some other key things to consider.

Income reporting requirements add complexity

One of the key things prospective American expats need to consider is the yearly tax filing requirements, Boudreaux said.
While living abroad, you must pay annual U.S. income taxes on worldwide earnings, including your salary, business profits, investment income and more.
With measures such as the foreign income exclusion and tax credit, you’ll avoid double taxation. But there’s still the added time and expense of filing income taxes in two countries. 

A lot of times we’ll find people or banks that just won’t deal with U.S. citizens because they don’t want to have to deal with the reporting requirements.

Jude Boudreaux

Some financial institutions ‘won’t deal with U.S. citizens’

Some expats also must report foreign accounts to the U.S. Department of the Treasury annually via the Report of Foreign Bank and Financial Accounts, or FBAR. The rule applies to expats with foreign accounts with a total value exceeding $10,000 at any point throughout the year.
“A lot of times, we’ll find people or banks that just won’t deal with U.S. citizens because they don’t want to have to deal with the reporting requirements,” Boudreaux said.
The yearly tax reporting requirements have even led some expats to consider renouncing their U.S. citizenship, according to a 2022 survey from Greenback Expat Tax Services.

The exchange rate is ‘always a concern’

Another consideration is the possible change in your purchasing power when converting money between countries. “The exchange rate is certainly always a concern,” Boudreaux said.
While there are some investment options to help manage that exposure, “most of the time, it’s just kind of a risk that people carry,” he said. “Sometimes it’s better, and sometimes it’s worse.” More

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Savers are poised to get better returns on their cash than they have in over a decade.
But many still don’t know they should be shopping around for the best interest rates.
These tips can help you get started.

Aaronamat | Istock | Getty Images

Over the last 15 years or so, the interest rates you could earn on your cash were very low.
And while the Federal Reserve has changed that with a recent series of interest rate hikes aimed at combating high inflation, many savers still do not know they could be earning more on their cash.

“So few people are earning competitive returns on their savings, despite an environment of very compelling returns,” said Greg McBride, chief financial analyst at Bankrate.
As more accounts provide 4%, 4.5% or even 5% interest and still rising, it’s surprising more dollars are not migrating to those returns, he said.
Just 22% of savers are earning interest of 3% or more on their accounts, according to a recent Bankrate survey. (The online report was conducted between late February and early March and included 3,674 adults.)
That includes 7% who are receiving interest rates of 4% or more.
Most savers are earning far less, with 24% of respondents earning between 1% to 2.99%, and another 24% earning less than 1%.

Some savers — 16% — are not earning any interest at all, while 14% said they don’t know if they are earning any returns on their cash.

The Federal Reserve just hiked rates by a quarter percentage point again, and could continue raising rates this year, as long as economic financial stability keeps up, McBride said.
One key reason why rates will still go up — inflation is still around 6% and not going down as fast as many had hoped, McBride said.
Yet regardless of what happens — whether interest rates go up or inflation goes down — both are a win for savers, McBride said.
What’s more, a possible recession on the horizon means it’s more crucial to have cash set aside and to be earning competitive interest on those balances, personal finance expert Suze Orman recently told CNBC.com.
“An emergency savings account is vital, absolutely vital,” Orman said.
Those who will be most vulnerable in a downturn are those who have no savings set aside, she said.
Experts generally recommend having savings that can cover three to six months of expenses in an easily accessible account.
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“It’s the first line of defense of recovering from a job loss and finding employment again,” Douglas Boneparth, a certified financial planner and president and founder of Bone Fide Wealth, a wealth management firm based in New York City, recently told CNBC.com.
The good news is there are steps you can take now to make sure your cash is poised to benefit from higher interest rates.

1. Open an online account  

Most people are not earning competitive rates on their cash either because they have left it in the same account for years or they simply do not have savings set aside, McBride said. While many people spend hours a day online, they are failing to look for better places to park their cash, he said.
“Take 15 minutes and open an online account,” McBride said.
There are high-yielding, nationally available, federally insured accounts available that require no minimum deposit or no online balance, he noted.
“That is literally available to anyone,” McBride said.
You may not want to limit your search to online savings accounts if it’s nonemergency money. Certificates of deposit, or CDs, Series I bonds, Treasurys and money market funds are also offering competitive returns for your cash.

2. Keep tabs on your money

Even after you’ve found a place for your cash, be sure to keep tabs on it.
“It’s worth checking back and seeing if your bank is still among the most competitive,” McBride said.
You may be able to find a better deal elsewhere for your cash as banks jockey to provide the most competitive rates. If you’re not paying attention, you may miss out, McBride said.

3. Make sure your savings are federally insured

Recent bank woes have put a spotlight on having Federal Deposit Insurance Corp. coverage.
And there’s good reason for that. No depositor has lost any insured funds due to a financial institution’s failure since the FDIC was established in the 1930s.
Generally, the agency covers up to $250,000 per depositor, per bank, per ownership category.
So it’s wise to make sure your balances are covered. Look for the FDIC logo in your bank’s lobby and on their website.
The FDIC also offers an online calculator to help gauge your deposit insurance.
If your deposits are with a credit union, they may qualify for insurance under the National Credit Union Association, which also offers an online tool for consumers to evaluate their deposit risks. More

Women & Wealth: A CNBC Your Money Event April 11 – Register at CNBCevents.com

Less than a quarter, 21%, of employers currently offer non-retirement financial benefits, according to a 2022 survey by the Society for Human Resource Management.
Such an employee assistance program, or EAP, offers support for workers who want help with budgeting, managing money and paying off debt. 
Research shows employees with access to financial education and tools are more likely to increase savings and feel less overwhelmed by debt.

Edwenna Ervin, known as “Eddie” to family, friends and colleagues, was living paycheck to paycheck when she first started working as a customer service agent for Verizon in 2016. She was struggling to come up with enough money to pay down debt.  
“No matter how large your paycheck is, if you don’t know how to save, you don’t know how to apply it to your bills or just manage it, it might as well be a small paycheck,” Ervin said.

One of her managers at the time told her about the company’s employee assistance program, or EAP, a free workplace benefit that offers support for workers facing financial challenges and other issues. The program provided resources and counseling to help Ervin with budgeting, managing money and paying off debt. 

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.

“It helped me work out a way to manage it better, so that I had a balance between what I needed to pay and what I needed to live,” said Ervin, who is now a senior engineer project manager at Verizon working remotely from her South Carolina home. 

Workplace benefits help manage daily finances

Edwenna Ervin works in her home office.

Less than a quarter, 21%, of employers currently offer non-retirement financial benefits, according to a 2022 survey by the Society for Human Resource Management. Companies report that some of the most important benefits to companies include those related to health, retirement savings and planning, and flexible work, but non-retirement financial benefits aren’t far down the list.
Many employers say they are listening to their workers’ needs.
“The traditional focus on financial wellness, which was almost exclusively around the 401(k) plan, it’s just not sufficient anymore. Our employees are asking for help with all aspects of their financial life,” said Kevin Cammarata, vice president of benefits at Verizon. 

“While you can pay workers more, that doesn’t mean they’ll be financially secure,” he said. “So increasingly, we as employers have to help employees do their jobs, earn their wages, but also manage their wages as well.”
Research shows that employees who have had access to financial education and tools, including videos, classes and coaching, are more likely to increase savings, feel less overwhelmed by debt and make progress toward their financial goals.

Not ‘a perfect solution’

Yet, financial literacy advocate Laura Levine says providing those resources through the workplace is “not the perfect solution” and may not reach the most vulnerable employees. 
“If it’s an ‘opt in’ [benefit], you sometimes miss the people who need this, because they’re worried that if they take the course, or take advantage of what’s being offered, that people will judge them for what they don’t know,” said Levine, president and CEO of the JumpStart Coalition, a Washington, D.C.-based nonprofit focused on financial education for students. 
“By the time you’re a working adult, you know, it’s a little bit late, you may have already gone down a path that’s going to be hard to correct,” she said.

Workers at Verizon headquarters in Basking Ridge, NJ.
Tara McCurrie, CNBC

Educating workers and families about finances

Ervin said she wishes she had learned more about budgeting and financial planning much earlier — for herself and her family. 
“We struggled a very long time unnecessarily, because we didn’t have the knowledge or tools or skills to do what we would need to do to make things better,” she said.
After going through the EAP, Ervin raised her credit score. She bought a house and a new car. And, now she helps her parents with their finances. 
Join “Women & Wealth,” a CNBC Your Money event, on April 11 as we explore ways women can increase their income, save for the future and make the most out of current opportunities. Register at cnbcevents.com for this virtual event. 
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Many studies show that there is a strong connection between financial literacy and financial well-being.
Adults who know how to build a budget, save for emergencies and manage debt find it easier to make ends meet in a typical month and are less likely to be considered financially fragile.

These days, most Americans are stressed about money. And yet, when it comes to budgeting, saving and managing debt, many get some simple fundamentals wrong.
For example, according to one LendingTree survey, 65% of Americans think carrying a small balance on their credit card each month will improve their credit score.

That’s incorrect.
Not only can carrying a balance lower your credit score, but sky-high annual percentage rates also make credit cards one of the most expensive ways to borrow money.
When it comes to finances, the answers are rarely this “black and white,” said Kia McCallister-Young, director of the nonprofit America Saves, an initiative of the Consumer Federation of America.
More often, Americans are unsure, especially when pervasive money myths get in the way of good credit habits.
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“In order to find a solution, there needs to be more financial education and there also has to be a change in how we approach money,” McCallister-Young said.
Too frequently, talking about finances is considered taboo, she added. While there is an important role for schools to play, a financial education should begin at home.
“Start talking to your children about finances in an age-appropriate manner,” she advised. Many lessons are learned simply through exposure. “Those conversations are necessary.”

Personal finance in schools gains momentum

Meanwhile, the trend toward in-school personal finance classes is gaining steam.
In the last year, seven more states required high school students to take a personal finance course before graduating, bringing the total to 18, according to the latest data from Next Gen Personal Finance, a nonprofit focused on providing financial education to middle and high school students.
In addition, there are 88 personal finance education bills pending in 28 states, according to Next Gen’s bill tracker.

A ‘wealth of evidence’ shows long-term benefits

Many studies show there is a strong connection between financial literacy and financial well-being.
Students who are required to take personal finance courses starting from a young age are more likely to tap lower-cost loans and grants when it comes to paying for college and less likely to rely on private loans or high-interest credit cards, according to a study by Christiana Stoddard and Carly Urban for the National Endowment for Financial Education. (Students are also even more likely to enroll in college when they are aware of the financial resources available to help them pay for it.)
“Our results show that high school financial education graduation requirements can significantly impact key student financial behaviors,” the authors said in the report.

Further, students with a financial literacy course under their belt have better average credit scores and lower debt delinquency rates as young adults, according to data from the Financial Industry Regulatory Authority’s Investor Education Foundation, which seeks to promote financial education.
In addition, a report by the Brookings Institution found that teenage financial literacy is positively correlated with asset accumulation and net worth by age 25.
Among adults, those with greater financial literacy find it easier to make ends meet in a typical month, are more likely to make loan payments in full and on time, and less likely to be constrained by debt or be considered financially fragile.
They are also more likely to save and plan for retirement, according to data from the TIAA Institute-GFLEC Personal Finance Index based on research over several years.
“The wealth of evidence just continues to grow,” Ranzetta said.

‘The problem is, it’s complicated’

To be sure, the hardest part of adulting continues to be managing money. 
“The problem is, it’s complicated,” said Laurence Kotlikoff, economics professor at Boston University and president of MaxiFi, which works to analyze your spending, saving and insurance to make sure they match your lifestyle and level of wealth.
Say, for example, you are saving for a down payment on a new home and you want to build a budget that also takes inflation and taxes into account, he explained: “Nobody can do this in their head.”
Some online tools can help, Kotlikoff advised. “Use the technology that’s available.” 
“We have to move, as a profession, from studying mistakes to providing answers, just like doctors prescribe medicine.”
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Ask an Advisor

As my younger sister, Janna, gets older into her 20s, she’s been coming to me more frequently with questions about how to spend and save money.
To get the best answers for her, I consulted with financial advisors and experts.

Annie Nova and her sister, Janna McPartland
Courtesy: Annie Nova

When my younger sister, Janna, and I hang out — which is a lot because we live on different floors of the same apartment building — what we talk about usually doesn’t involve money.
We exchange stories about our friends and therapists, commiserate over the latest thing we’re trying to write or go over funny memories.

Yet as Janna, who is a filmmaker, gets older, she’s been coming to me more frequently with financial questions. It seems that when money is causing stress, everything else can feel fraught.
“I think with each year in your 20s, you take on more freedoms,” Janna said. “But to exercise and really enjoy those freedoms, you need a certain amount of financial stability.”
More from Personal Finance:Prioritizing retirement, emergency savings in shaky economyWhether bank crisis causes recession may depend on ‘wealth effect’The IRS plans to tax some NFTs as collectibles
To get the best answers for Janna about how she should be spending and saving, I consulted with financial advisors and experts.
Here’s how they answered 5 of her questions.

1. How much should I have in savings?

To begin, Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida, recommends always having at least one month of your bills in your checking account. “This way if something happens to my paycheck, I don’t have to scramble,” said McClanahan, who is also a member of CNBC’s Financial Advisor Council.
Beyond that, you should have at least three months of expenses easily available in an emergency fund, McClanahan said. “If they have a less stable job, they should aim for six months to a year’s worth of easy to access savings,” she added.
This cash should be in a high-yield savings account, offer higher-than-average returns, experts say. You can find an online savings account offering an interest rate of 3% or more, for example, while the typical savings account rate is around 0.4%.
Make sure the savings account you choose is insured by the Federal Deposit Insurance Corp., which means up to $250,000 of your deposit is protected from loss.

2. Where should I invest money?

Douglas Boneparth, a certified financial planner and founder of Bone Fide Wealth in New York City, recommends people start investing in tax-advantaged accounts designated for retirement.
First of all, starting to invest early for your old age gives you the long time horizon that’s ideal for reaping the benefits of compound interest, experts say.
Retirement accounts, including workplace 401(k) plans and Roth IRAs, also offer tax benefits that you can’t get elsewhere, said Boneparth, another member of CNBC’s Financial Advisor Council.
For example, traditional 401(k) contributions reduce your current taxable income, while after-tax contributions to a Roth IRA can be withdrawn in retirement tax-free.

Before you move on to any other goals, McClanahan says people should make sure they’re saving in their 401(k) at work, especially if their employer offers a match on their contributions. If you meet income qualifications, it’s also smart to salt away as much as you can each year in a Roth IRA (in 2023, the limit is $6,500).
For other things you hope to be able to accomplish, such as buying a house or returning to school, you’ll want to consider your timeline to decide if you should save or invest for it.
Typically, you don’t want to invest for anything you’ll have to come up with the money for within five years, McClanahan said. Money for those purposes should instead also be in your high-yield savings account.
If you are on track for retirement and any near-term goals and still have money available to invest, you should look to put that cash into low-cost index funds that are offered through robo-advisors and brokerage houses, experts say.

3. How many credit cards should I have? How do I find one with the best benefits?

As long as you use them carefully, credit cards can help you to build credit and pick up different perks, said Ted Rossman, senior analyst at Bankrate.com.
“I’d vote for starting small,” Rossman said. To do that, he recommends getting a credit card with no annual fee and putting some routine expenses on there, and always paying your balance in full every month. (Carrying a balance is incredibly expensive because of the high interest rates.)

Janna McPartland

You can pretty easily find a card that offers 2% cash back on your purchases, Rossman said.
Beyond that, he said, you want to think about where you spend most of your money. If a lot of your income goes to groceries, look for a card that pays back 6% at supermarkets. Other cards have more generous cash back offers on dining or travel.
“Know what you want to get out of your rewards,” Rossman said.

4. How do I budget without becoming obsessive?

To get a better understanding of your spending, experts recommend looking back at your purchases over the past couple of months.
McClanahan then breaks down spending into three main categories: “needs,” “wants” and “savings.”
When you look at your spending on “wants,” she said, “make sure that that spending is really bringing value to your life. Too many people spend thoughtlessly.”
One helpful rule of thumb is the 50/30/20 budget, which allocates 50% of your take-home pay toward essential expenses, 30% toward discretionary purchases and 20% toward savings and debt.
Automating your savings each month can help you stay on track, McClanahan said.

5. How do I draw boundaries with friends and family who earn more?

If someone is asking you to do something you can’t afford, McClanahan recommends being as direct as possible with them.
“Say that you are working on saving for other goals and suggest a less expensive alternative,” she said. “This shows them your backbone and might actually encourage them to start saving.”
You might also take control of the plans yourself, McClanahan said.
“Instead of waiting for people to invite you to an expensive place, invite them to something that fits within your budget.”
Any other questions, Janna? You know where to reach me. More