Money Management

April 15 is the tax-filing deadline for 2023 returns. But read on to see why you may be subjected to another deadline. [[{“value”:”

It may not exactly come as a surprise that taxes are due this year on April 15. After all, that’s the standard filing deadline. So hopefully at this point, you’ve either submitted your return to the IRS or are really close to doing so.

If you don’t think you’ll be able to finish your taxes by April 15, it definitely pays to request an extension. The IRS will give you six more months to file if you put in that request by April 15, and you don’t even have to rack your brain to come up with a creative reason for it.

If you owe the IRS money and are late with your tax return, there can be a costly penalty involved. So that’s a situation you’ll want to avoid.

But if you’re self-employed, there’s another tax-related item you’ll need to check off your list by April 15. And unlike your 2023 return, this is one thing you can’t get an extension on.

You need to make your first estimated tax payment

Salaried workers have taxes withheld from their wages every pay period. But if you’re self-employed, that doesn’t happen. As such, it’s on you to pay the IRS as you go by making estimated tax payments on your earnings every quarter. And your first estimated payment for 2024 is due on April 15, the same day as tax returns for the previous year.

Your subsequent estimated tax payments are due as follows:

June 15, 2024Sept. 15, 2024Jan. 15, 2025

The reason your final tax payment for 2024 is due in January, not Dec. 31, is that you might receive some payments very late in the year — as late as Dec. 31. It wouldn’t necessarily be reasonable to expect you to calculate your tax obligation from the previous quarter in a single day. So the IRS gives you a couple of extra weeks to run those numbers.

Do you need to make estimated quarterly tax payments?

As a general rule, if you expect to owe $1,000 or more in taxes due to self-employment income, then you should be making estimated quarterly payments. If all of your income is freelance in nature, then you should be making estimated tax payments on your total income. If you’re a salaried worker with a side hustle, you should be making estimated payments on your gig earnings only, assuming you expect to owe $1,000 or more in taxes on those earnings.

To be clear, if you expect to owe less than $1,000 in taxes on freelance income, you still have to pay it to the IRS — but you don’t necessarily have to pay it in advance. You can pay it in conjunction with filing your next return and generally avoid a penalty.

Now, figuring out your estimated tax payments can be tricky. You can use online tools but they may not be so comprehensive. A better bet is to consult an accountant or tax professional and have them run the numbers for you. They can take your total tax picture into account and help you arrive at estimates that may be far more accurate than the ones you come up with yourself.

Of course, when you’re self-employed, it’s also a good idea to keep extra money in your savings account in case you end up owing the IRS during tax season. This can happen even if you have a professional calculate your estimated tax payments for you.

For now, though, make sure not to forget about your first estimated tax payment for 2024. You may be focused on finishing your tax return by April 15, but you’ll also want to get that payment submitted as well.

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Driving without insurance is illegal, but people do it anyway — with devastating consequences. Here’s what could happen if you’re hit by one. [[{“value”:”

Nearly all states require their drivers to have insurance to get behind the wheel legally. But, like any law, there are always those willing to break it. The Insurance Information Institute (III) estimated that about 14% of drivers were uninsured in 2022, the most recent data available. And in some states, this figure was closer to 25%.

That’s not just a problem for the uninsured driver. It’s also a big deal for their victims. Here’s what could happen to drivers who are hit by someone uninsured.

The immediate aftermath

Typically, if one driver crashes into another, both parties pull over and exchange names and insurance information. They should also notify the police of the accident and take photos of the damages. But things may not play out that way if the driver who caused the accident doesn’t have insurance.

It’s still worth exchanging names and contact information, taking photos, and contacting the police. The uninsured driver could face fines, the revocation of their driver’s license or registration, or even jail time for failing to meet state insurance requirements.

Some drivers without insurance, knowing the consequences, choose not to stick around after causing an accident. If they try to flee the scene, call the police and tell them as much as possible about where the accident occurred, what the vehicle looked like, and who was driving it. You will likely need to file a police report.

Next steps

The at-fault driver is legally responsible for paying for the damages on their own, but that doesn’t mean they can. Drivers injured by an uninsured motorist can try suing them. However, this takes time and money and still may not lead to a satisfactory conclusion.

Those hoping to get their medical bills and vehicle repairs tended to quickly can fall back on uninsured/underinsured motorist coverage, if they have it. This pays for the policyholder’s expenses if they are hit by a driver who lacks insurance or who lacks enough insurance to cover the full cost of the damages.

Those without this coverage are unfortunately on their own. They’ll have to pay for their vehicle repairs and any hospital bills out of their own pocket or wait to see if they receive any funds from the at-fault driver.

How to prepare

Some states require their drivers to carry at least some uninsured/underinsured coverage, but in most, this protection is optional. Even in states where it is required, limits are usually low — often just $25,000 per person and $50,000 per accident. The bare minimum may not provide adequate protection in the event of an accident with an uninsured driver.

It could be worth increasing the policy’s coverage limits to include this protection if it’s not already there. All major car insurance companies provide uninsured and underinsured motorist protection.

Shopping around is the best way for drivers to find a great deal. Claiming all possible discounts can help too. For example, many companies enable drivers to bundle their renters or homeowners insurance and their auto insurance to save on both. Raising the policy’s deductible can also reduce premiums significantly.

It’s best for drivers lacking uninsured/underinsured coverage to act promptly to increase their policy limits. Accidents can happen at any time and uninsured drivers can be anywhere. Fortunately, many insurers enable drivers to purchase a policy online in minutes, so it’s possible to get the protection you want quickly when you’re ready.

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You need to make sure you and your partner are on the same page financially. Read on for some key discussions to have. [[{“value”:”

Whether you’re married or in a committed relationship, you and your partner need to be in sync on several key issues. And many of those are financial in nature. With that in mind, here are three money-related conversations you and your partner should have every year.

1. The “How’s our debt?” conversation

U.S. consumers aren’t exactly strangers to debt. For example, as of late 2023, almost 170 million consumers carried a credit card balance, according to TransUnion.

But carrying debt can be stressful. And it also has the potential to strain a relationship. So if you and your partner are carrying debt, it’s important to get to a place where you can feel better about it.

And you don’t necessarily have to be debt-free to get to that place. If you’re making good progress on your credit card balances, for example, that may be enough to do good things for your outlook.

The point, however, is to make sure that you’re both feeling OK with where you are in the context of debt. This doesn’t just mean talking about how much of an existing loan or balance you’ve paid. It could also mean discussing potential debts that you’re looking to take on, like a mortgage.

2. The “Are we meeting our goals?” conversation

It’s not a given that you and your partner share the exact same financial priorities. Maybe your primary financial objective is to buy a house in the next two years, while your partner’s top objective is to start funding a retirement account.

Either way, it’s important to support each other’s goals and check in on the ones you’re working toward jointly. If you find that you’re not making great progress, put your heads together and see if spending changes might lead to different results. For example, if you’re trying to save a certain amount of money to buy a new car, you may decide jointly to put a temporary ban on restaurant meals, cook at home, and bank the difference.

3. The “Are we happy with our lifestyle?” conversation

Being generally content with your lifestyle could help your relationship thrive. But if you’re both miserable, or if one of you is miserable, that’s something you’ll want to talk through.

Maybe you’re doing OK financially, but it’s coming at the expense of your mental health because you work a demanding job that leaves you with very little downtime. Or maybe your partner is tired of their boring job and wants to do something more exciting that would require a pay cut or require them to work odd hours (for example, such as if they want to turn their love of music into a career by starting a band for hire).

Perhaps you’re living comfortably, but aren’t feeling financially secure. You may, in that case, decide to downsize to a smaller rental so you can allocate more money to your savings account.

Or, you both might feel like you’re actually saving too much and aren’t spending enough of your income in ways that could be making your lives happier. For example, maybe you and your partner jointly earn $150,000 and are trying to aggressively save $50,000 a year for retirement. But if that’s making it so you’re never able to go out to eat or take a vacation, you may need to rethink that plan.

Being on the same page financially is a great way to keep your relationship strong. So schedule time with your partner to have these key financial conversations at least once a year — or more frequently if you feel the need.

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If you have money to save or invest, it can be difficult to decide where it belongs. Asking yourself these questions will give you the answers you need. [[{“value”:”

Deciding where to put your money is very important because there are different kinds of accounts that make sense for specific situations. The wrong choice could end up costing you, which is unfortunate since it’s often difficult to decide what’s best for each dollar.

For most people, a savings account and a brokerage account are two options that you’ll have to decide between at some point in your life. If you’re in this situation and aren’t sure which is right for you, here are a few key questions that you should ask yourself to help you decide.

Do I want to keep my money safe or maximize my potential return?

Brokerage accounts and savings accounts are designed for different purposes.

Savings accounts are meant to keep your money safe and accessible. As long as you choose an FDIC-insured savings account and keep your balance below FDIC insurance limits (most often $250,000 per account), you can’t possibly lose your money in a savings account. But the potential returns you can earn are limited.

Although some savings accounts offer rates above 5.00% right now, the national average rate is still 0.47% for all savings accounts. The current 5.00% rates are also driven by today’s unusually high interest rate environment and aren’t likely to last for the long term.

With a brokerage account, things are different. You put money into a brokerage account to invest. And there’s a risk of losing money when you do that. Of course, you could potentially earn a lot too. It’s reasonable to expect 10% average annual returns if you put your money into an index fund tracking the S&P 500 (a financial index made up of around 500 large U.S. companies). If you buy individual stock shares and make good investments, you could earn much more than that.

Think carefully about whether you’re willing to take on more risk with the money for a greater potential reward. If you are OK with possibly losing some of your cash in exchange for a good chance of earning a generous return on your investment, then a brokerage account is a better choice. If it’s critical you have the money — say, because it’s for a down payment for a home you’re buying soon — choose a savings account.

When will I need the money?

Your timeline for needing the money also matters. That’s because solid investments usually perform well over the long haul. For example, check out the chart below of the performance of the S&P 500. In some years it goes way up, but in others way down. So while you should make 10% on average over many years, you could easily lose money if you invest it and have to take it out soon and you have bad timing.

As a general rule, unless you can leave the money invested for around two to five years, it should be in savings instead of a brokerage account. Otherwise, the risk is too high that you’ll end up buying and selling at a bad time before you make enough profits to break even.

Where are my other assets?

Finally, you should think about where most of your money is. If you already have a lot of cash in savings but very little invested, then it may be time to take a chance on the market. If you have a ton of money invested, though, and very little liquid cash in a savings account, diversifying into savings could be a good idea.

As a good rule of thumb, you should subtract your age from 110 and put that percentage of your portfolio into stocks and the rest into safer investments like bonds, CDs, and even high-yield savings accounts.

By considering these issues, you can make the right choice about whether money should go into savings or into a brokerage account. You can have an asset allocation that makes sense for you and that helps set you up for a more secure future.

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Women tend to face more challenges in the financial realm than men. Here are the tools that all women should know about to help navigate those challenges. [[{“value”:”

Existing as a woman comes with unique challenges that don’t affect men, or at least not to the same degree. And, unfortunately, that doesn’t stop at your bank account. So it’s important for women to take the necessary steps to ensure their finances are as secure as possible.

Here are three tools that can help.

1. For finance beginners: The CFPB’s financial education resources

You might be new to the world of finance or didn’t get the opportunity to learn until now (if so, you’re not alone: studies have shown that women tend to have less financial knowledge than men). In this case, the Consumer Financial Protection Bureau (CFPB) is a great resource to start learning financial literacy. It offers a wide range of educational resources that can help you understand specific financial topics, like housing, loans, and savings accounts, or navigate that part of your life based on specific circumstances, like being a new immigrant or developing a disability.

Managing money isn’t always an easy task, especially if your life circumstances change substantially. So it helps to have a wealth of knowledge to fall back on when that happens.

2. For investing newbies: Roth IRAs

Most people know that an important part of managing your personal finances is carving out funds for retirement. But women, as a group, tend to outlive men (in fact, 85% of those who live to age 100 are women). Add to this the fact that women also tend to experience more medical illnesses than men, and one thing is clear: It’s even more expensive for women to retire. Because of this invisible pink tax, it’s vital to put away as much money for retirement as possible.

You may only be contributing enough to your 401(k) to get your employer match, which is a solid strategy because it ensures you’re not leaving free money on the table. But it probably doesn’t come close to the $23,000 annual contribution limit. Upping your contribution amount can help.

But then there’s the problem of taxes — since 401(k)s reduce your taxable income now, that means you’ll have to pay taxes in retirement. A Roth individual retirement account (IRA) is a way around that. It allows you to pay taxes on that money now, so when you’re retired, that money is tax free and you get to keep it all. That can be especially helpful if you are lucky enough to make it to an old age.

3. For all: Emergency funds

Whether you’re single or have a partner, it’s important to save money. That’s especially true for women, who earn an average of 82% of what men earn, according to the most recent analysis from the Pew Research Center, and are therefore more at risk of falling behind financially.

As a general rule, it’s best to save three to six months’ worth of necessary expenses. But a key distinction for women is that it’s vital to have at least some of that money in a separate account that’s only accessible to you if you’re with a partner. There’s no way to know what will happen in the future, but by making sure that you have access to emergency cash that is yours alone, you’ll have the freedom to make the best decisions for yourself should your life change in an unexpected way.

It’s also the best way to protect yourself against financial abuse, which happens in 99% of domestic abuse situations, according to the National Network to End Domestic Violence.

Money can be used to create a life you love, but it can also be a tool to protect yourself and those you love. So it’s important to not only learn about the ways it can help you, but also take steps to implement those ideas in your daily life.

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No long-term savings at age 30? You’re not doomed. Read on to see how you can still grow a really nice nest egg in time for retirement. [[{“value”:”

Saving for retirement during your 20s isn’t easy. It’s tough to part with a chunk of your income when you have pressing bills to pay and, in many cases, credit cards or loans to pay off.

That said, Fidelity advises workers to have the equivalent of 1x their salary saved by age 30. So if you’re 30 years old earning $60,000 a year and you have $0 in your individual retirement account (IRA) or 401(k), then, well, you’re $60,000 short of where Fidelity thinks you need to be.

But don’t despair if you’re 30 without retirement savings. Believe it or not, if you commit to saving from this point on, you might not only manage to retire comfortably, but you might end up in a position to kick off retirement with $1 million to your name or more.

It’s not too late to play retirement catch-up

If you’re 50 years old with no retirement savings, that’s a pretty unfortunate spot to land in. If you’re 30 with no savings, you’re in a very different situation. You still have many decades of work ahead of you. And that gives you a prime opportunity to save and invest before retirement arrives.

Over the past 50 years, the stock market’s average annual return has been 10%. If you go heavy on stocks in your retirement portfolio, it’s reasonable to assume that your investments might generate that same return.

So let’s say that starting at age 30, you manage to sock away $350 a month for retirement. Let’s also say you want to retire at age 67, which is full retirement age for Social Security purposes for someone your age.

Assuming the 10% return above, you’re looking at a balance of almost $1.39 million by the time your retirement arrives. Make it $450 a month, and you’re looking at around $1.78 million.

Even if you can only afford $250 a month in retirement savings from this point onward, that still leaves you with a portfolio worth $990,000 by age 67 (once again, assuming that same 10% return). And while that’s not quite $1 million, it’s pretty darn close.

Put the process on autopilot

If you’ve reached the age of 30 without making a single IRA or 401(k) contribution, then it may be hard to get into the habit of saving in one of these plans consistently. A good bet is to commit to a monthly savings contribution and put it on autopilot. If you sign up for your employer’s 401(k) plan, your contributions will be deducted from your pay automatically. And that’s a good way to stay on track.

If you opt for an IRA, find one with an automatic savings feature. Then, arrange for whatever monthly sum you can swing to leave your checking account every month on a given date and land in your IRA automatically. That could prevent you from spending that money rather than setting it aside for retirement.

Getting to age 30 without retirement savings isn’t the best thing in the world, but it’s far from the worst. And if you commit to funding a retirement plan from that point forward, you may be surprised — in a good way — at just how much wealth you’re able to amass for the remainder of your career.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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