Money Management

Emergency expenses or situations can arise at any time. Read on for advice to follow to make sure you’re prepared. [[{“value”:”

Life has a sneaky way of costing more than anticipated. You might pull out of your driveway, hit a nail, and find yourself charging a $150 replacement tire on your credit card. Or, you might wake up to no heat — and a $500 repair to fix your HVAC system.

Situations like these are often unavoidable. So it’s important to have plenty of money in savings for when they arise.

Alarmingly, though, data from TIAA finds that 1 in 8 Americans don’t have enough cash reserves to cover a $2,000 emergency. And that’s problematic, because ideally, you should have an emergency fund with enough cash to pay for at least three months of essential bills. That way, if you were to lose your job, you’d potentially be covered until you’re gainfully employed again.

If you don’t have the cash reserves to cover a $2,000 emergency, then chances are, you don’t have a complete emergency fund (either that, or your essential monthly expenses are really low). If that’s the case, it’s important to boost your savings before the next crisis arises. Here are a couple of ways to go about that.

1. Cut your spending and bank the difference automatically

If you have a fully loaded emergency fund and are doing well financially, then there’s no reason to cut back on expenses that bring you joy, whether it’s streaming services or takeout meals. But if you don’t have a three-month emergency fund, and you’re not close to having one, then it’s time to do a serious assessment of your spending and find ways to cut corners immediately.

To be clear, you don’t have to commit to a lifetime of reduced spending. But let’s say you need $6,000 in savings for a three-month emergency fund and you only have $1,500 so far. It could pay to lead a really frugal lifestyle until your bank account is at least closer to the $6,000 mark.

Once you’ve identified expenses in your budget that you can cut back on, calculate what they amount to and set up an automatic transfer that allows you to bank the difference. For example, if you’re freeing up $150 a month, arrange for that amount to leave your checking account after your monthly paycheck arrives and land in your savings automatically.

2. Boost your income with a side hustle

It’s not easy to maintain a pared-down lifestyle, just as it’s not so easy to work a side hustle into your schedule. But again, this isn’t something you have to do permanently. It’s something worth pushing yourself to do just until your savings are in a better place.

Think about your schedule and what sort of side gig you can manage. If you need flexibility, you may want to stick to a job you can set your own hours for, like delivering food or groceries. But if your goal is to secure guaranteed income, then you may want to sign up for shift work, such as working evenings or weekends at a local retailer where you know you’ll make a certain hourly wage.

Remember, the nice thing about side hustle income is that it’s extra. Since it’s not earmarked for existing bills, you have the opportunity to save it all, minus what you might owe the IRS in taxes (something to definitely be mindful of if you’re being paid on a freelance basis and wages aren’t taken out of your earnings).

The fact that a large chunk of Americans can’t cover a $2,000 expense is alarming but not so shocking. If you’re in that camp, you owe it to yourself to try to change your financial picture so a major unplanned bill doesn’t drive you into costly debt.

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If I’m setting a financial goal, I consider the opportunity cost and more. Find out the key things to think about when deciding on money goals. [[{“value”:”

Setting financial goals is important. After all, if you don’t have any objectives you’re working toward, it’s much harder to make wise decisions when managing your personal finances. You’re also less likely to accomplish big things if you don’t have a specific plan for what you want to have happen and how to get there.

I don’t want to just set goals and fail to follow through, though, as that could get discouraging and make it less likely I’ll be able to end up where I want to financially. To make sure this doesn’t happen, there are four things I always consider before setting a financial goal. Here’s what they are.

1. How excited am I about the goal?

The first and most important thing I always consider is whether I’m excited about what I’m hoping to accomplish. I’ve found I always do better at working toward something if it’s an objective I really want.

Obviously it’s more fun to save for things like a vacation than to save up three to six months of living expenses for an emergency fund. But I realize I have to set practical goals too. So, when I’m trying to put money in savings for something boring like a car repair, I know I’ll have to work harder to succeed.

If you’re setting your own goals, think about your motivation level. When possible, try to frame your objective as something you’re excited about (so, for example, saving for car repairs could be reframed in your mind as saving to be able to drive yourself and your kids safely on a road trip). If you can’t do that but the goal is an important one, try giving yourself little rewards after you hit certain savings milestones.

2. How long will it take me to accomplish?

Next, I think about my timeline. This helps to define exactly what I need to do to achieve what I want. For example, it’s less helpful to say my goal is to save for a down payment than to say I want to save for a down payment to buy a house in two years.

By clearly defining when I need the money saved, I can create a sense of urgency. I can also use a calculator, like the one at Investor.gov, to figure out exactly what I need to do to stay on track for my goal. For example, if I needed to save for a $30,000 purchase in three years, I’d be able to figure out that I must save $833.33 per month. This gives me something specific to aim for.

If you’re setting goals, be sure you have a timeline too. Otherwise, they aren’t really goals so much as vague wishes for the future.

3. Do I have a reasonable chance of success?

After defining what I’m trying to work toward and how long I have to do it, I take the time to carefully think about whether I have a reasonable chance of success. If not, it’s pointless to set the objective.

For example, if you set a goal, like mentioned above, to save $833.33 per month, but that would eat up all your spare cash, you’re very unlikely to succeed. If you don’t think you have a realistic chance of doing what’s needed, you’ll want to revise your goal ASAP so you can work toward something practical.

4. What are the opportunity costs?

Finally, the last step is to think about what I’m giving up by working toward a particular goal. See, like most people, I don’t just have an unlimited supply of money. If I devote money to, say, a vacation fund, that means I can’t put it into a retirement account or save for kids’ college funds.

Now, that doesn’t mean I won’t save for vacation or other fun things. I definitely do. I just think it’s important to make an informed choice about how to divide up my dollars after thinking about what else I’m giving up. You should do the same so you make sure you’re really using your money for things you value the most.

These four steps have worked well to help me set goals I actually achieve. Give them a try to see if they can work for you, too.

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Opening a separate bank account for your business can help you in many important ways. Learn why it’s a good idea here. [[{“value”:”

If you’re running a small business, you have a few important choices to make. One of those choices is whether to open a separate bank account for your company or whether you should just deposit the money you make into your own personal account.

For most people, opening a separate account almost always makes sense. Here’s why that’s the case, along with some tips on deciding what’s right for you.

A separate bank account may be important for certain business structures

In some cases, it’s crucial to have a separate company account because of the way your business is structured.

For example, if you form a partnership with others, company money needs to go into an account owned by the partnership. It wouldn’t make sense to have profits and losses coming out of an individual person’s bank account.

Even if you’re running a business by yourself, you’ll need a separate account if you structure the company as anything except a sole proprietorship. For example, limited liability companies (LLCs) and S-corporations both provide protection from liability, and an S-corp gives you more flexibility with your taxes. But maintaining “corporate formalities” is crucial to get the benefits these structures provide.

Maintaining corporate formalities means you actually treat your business like a separate legal entity. And that means it needs its own bank account.

Keeping your accounts separate can help simplify your taxes

No matter how you’re running your business, you’ll want to have a separate bank account to make filing taxes simpler. You can often deduct certain business expenses — and it can be easier to track and see what those expenses are if they’re coming out of a dedicated company account.

It’s easier to track potential profits with separate accounts

If you’re mixing your business and personal funds, it can become complicated to figure out how much your company is spending and how much it’s making. You don’t want that to happen because then you won’t know if you’re successful or how profitable your business actually is.

If you have a separate account you run your transactions through, it’s pretty easy to see how much your business is spending, how much it’s bringing in, and what profits you have left over.

There are limits on what separate accounts will do for you

While having separate accounts is a good idea, there are limits on exactly what this can accomplish. Say, for example, you’re operating a company on your own and you take on a bunch of debts for the business which you end up not being able to pay.

Even if you have a separate bank account for the company, creditors can still come after you and the money in your personal account. This is always true unless you set up a business structure that makes you completely separate from your company, you don’t cosign for the debt, and you maintain financial separation from the business.

So, be aware that while a separate account almost always makes sense, you may have to take additional steps to keep your personal assets safe. Talking to an accountant or a business lawyer can be helpful if you want to make sure your personal assets aren’t at risk as a result of your company’s activities.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

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.The Motley Fool has a disclosure policy.

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Selling toys online could be a great way to supplement your paychecks. Learn how you can get started. [[{“value”:”

When most people lose their spouse while shopping, they call or text to find out where they are. When I lose my husband, I head for the Hot Wheels aisle. Nine times out of 10, I find him there carefully checking every package on the shelf. While he has a pretty extensive collection, it’s not just a hobby for him. Every once in a while, he stumbles across a rare Treasure Hunt car, and those can be worth big money to the right buyer.

Though some may find it surprising, it’s possible to sell toys you pick up for a few dollars for tens or even hundreds of dollars online. You just need to know what to look for.

What kinds of toys can you sell online?

The short answer to this is that you can sell any toy that has a decent number of collectors. You can check out what kind of market there is for a certain type of toy by looking on popular sites, like eBay, to see what others charge for these items.

Vintage toys can have a big appeal, especially if they were really popular back in the day. But these can be tough to find in stores. You may run across some at thrift stores or yard sales. However, you probably aren’t going to be able to bank upon a steady stream of revenue from old toys you dig up.

It’s also possible to make money off of some newer toys, as the Treasure Hunt Hot Wheels prove. My husband just found one a few weeks ago going for over $80 online and it only cost him $1.18.

The key is knowing which toys are valuable and what to look for. If you’re not already familiar with the toys, you’ll want to do some research online to learn which ones go for the most money and where they often turn up.

Sometimes, specific store chains might get exclusive products you can’t get elsewhere. Or there might be limited edition items that had a short production run. These are typically some of the most valuable toys you can find.

Set a budget when you go shopping so you know how much you’re willing to spend. And if you’d like to save yourself a little money on your purchases, consider using a cash back app to scan your receipt.

How do you make money selling toys?

Once you’ve found a toy you believe is valuable, look online to see what others are charging for it and use this information to set your price. You might want to set your price a little lower if you hope to sell it quickly. If you don’t have an account on eBay or a similar site, now’s the time to make one.

Describe your item carefully so interested buyers can find it easily. For example, “Hot Wheels Treasure Hunt car” isn’t a very useful description because there are lots of them and collectors may be looking for a specific one. So including the make and model of the vehicle would make sense here.

If the toys you’re selling are part of a set, you can often get more by selling them as a group than you could by selling each individually. Some collectors who lack the time or interest to go out searching for collectibles on their own are willing to pay a premium to get everything they’re looking for in one place.

Do what you can to keep the toys in good condition. If they’re in the package, don’t take them out. Don’t try to touch up chipped paint or replace broken pieces either, as this might hurt their value with some collectors.

When you list the items, take good photos that are well lit so customers can see what they’re buying. Include images from multiple angles as appropriate.

Finally, be prompt with shipping and answering customer questions. Good service is one of the best ways to build a base of repeat customers.

Selling toys probably won’t replace your day job unless you have a big budget to build your inventory and the freedom to travel all over hunting for new merchandise to sell. But it can still be a great way to supplement your regular paycheck. Just remember to keep track of what you’ve bought and sold so you can report this income at tax time.

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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.The Motley Fool has a disclosure policy.

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Putting more money into certain materials used for a home remodeling project makes sense. Here’s why. [[{“value”:”

After buying a house in December, I’ve been working on remodeling it from the ground up. I decided to pay for the remodeling costs out of pocket rather than buying with a rehab loan because I wanted to keep my mortgage bills as low as possible. Mortgage rates were very high when I got my loan, so I’m being pretty careful with what I spend.

There are, however, certain areas where I’m willing to splurge to get exactly what I want — and there are good reasons for that. Here are three of the big things I’m happy to spend extra money on.

1. New windows

One of my biggest splurges is new windows for my home. The house already has windows. But they are old, energy-inefficient, and not as pretty as I would prefer. I’m replacing many of them with triple-pane windows that have some added architectural details like mullions (those little white lines between the window panes).

While I’m spending a lot of money on new windows, I’m very happy with splurging on this. Not only will they make my home look better, but I’ll also benefit from lower energy bills. Since windows have been shown to be responsible for 25%-30% of residential heating and cooling energy use, I’ll eventually make back a lot of what I spent in the form of reduced utility costs — especially since I’ll be staying in my home for a long time.

And as I’m enjoying lower energy bills, I’ll also enjoy looking out my beautiful new windows.

If you are remodeling, you may want to look for upgrades that are both energy efficient and that will improve the look of your home — like windows and doors. This can give you a double bang for your buck.

2. Custom cabinets in many rooms

I’ve discovered that fully custom cabinets can be cheaper than stock cabinets. In fact, it ended up being much less expensive for me to have the custom cabinet company that constructed my kitchen in Pennsylvania travel up to Florida to make the cabinets for my new home, rather than using a non-custom company in the area.

But I’m still considering cabinets a splurge because instead of just putting in a kitchen, I’m putting in custom built-ins in almost every room. For me, this splurge is worth it for a few reasons. I’ll be using these cabinets every day, so I want them to be high quality. They can also be designed to fit my space exactly so I can use it most efficiently.

Last, and perhaps most important of all, these gorgeous solid wood cabinets are going to last. I’ve already had them in my old house for 12 years and they’ve stood up to my toddlers much better than most of my furniture. Since so much furniture is cheaply made, I’d rather invest more for better quality upfront and know I won’t have to buy new things in a few years.

If you’re remodeling a kitchen or doing any home improvement projects, you may want to look into finding a custom cabinet maker to add some finishing touches. It could end up being less expensive than going to a big box store or buying furniture from your local shop.

3. Appliances

Finally, I’m also opting to spend a lot of money on high-quality appliances. I’m doing this for a few reasons, including because I think they’ll last longer, they’ll save me money in other ways, and because I’ll be interacting with them daily.

For example, I spent a few thousand dollars to buy a plumbed-in coffee maker with built-in milk frother — but this should save me money for years to come since I can switch to making my lattes at home all the time. I also sprung for a high-quality dishwasher, which cost about double some cheaper models, because it’s pretty well known that the brand I bought has a solid reputation for getting dishes really clean, and we do not pre-rinse in our household.

Ultimately, my choices have been to invest more upfront in exchange for lower bills later. If you have the money to do so, you may also want to focus your splurges on buying the best now, as it may pay off for you, too.

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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.The Motley Fool has a disclosure policy.

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