Money Management

If you don’t have kids, you must be rich, right? Not necessarily in money. Keep reading to learn more about childfree financial differences. [[{“value”:”

I decided many years ago that I wasn’t going to be a parent, and I’ve spent adulthood listening to a wide array of assumptions about people like me. One that comes up frequently is that people without kids must have gobs of extra money.

On a base level, this supposition makes sense — after all, having children is expensive. Research from The Motley Fool Ascent found that the average cost of raising a child in the United States is over $310,000. And that cost is just from birth to age 17, and doesn’t include any higher education costs.

Even despite saving this much money by not having children, childfree folks are not universally rich or even necessarily financially comfortable. Personally, I spent most of my adult years living paycheck to paycheck without much money in my savings account, until extremely recently.

But it was the flexibility and time I gained by not having children that made it possible for me to improve my financial standing. Let’s discuss why childfree people aren’t always rich in money — instead, the financial benefits of a life without kids come from other factors.

Rich in time and flexibility — but perhaps not in money

Being financially comfortable or even wealthy is dependent on factors outside of parenthood status, like your family’s level of passed-down wealth, having a well-paying job, or even just plain luck (like a Powerball winner). And remember, financial disaster can strike anyone, regardless of whether they have kids. We’re all potentially susceptible to an expensive illness, a major home repair, or a job loss.

If you’re sans kids, you might be supporting other family members with your income. Or you might be working a lower-paying job, leaving you with less cash to save and invest for the future. You might be disabled and receiving Social Security disability payments, which limits how much you can earn from a job.

I know childfree people in all these situations. But they are sometimes rich in another way: They have more time and flexibility than parents often do. And that sometimes means an increased ability to invest in oneself.

What can you do with more time and flexibility?

The short answer is, potentially a lot. I used time and flexibility to turn my financial life around these last few years. When I decided three years ago that my museum career was no longer serving me, I applied for more than 400 jobs in digital content before finally getting hired for one. I took on a side hustle two years ago, and worked a lot more than the typical 40 hours a week to get out of debt. And I’ve kept working hard through 2023 and into 2024, saving money so I can buy a home and keep building my career as a freelancer.

If you don’t have kids, you might have the opportunity to make time and flexibility work for you, too. If getting more education under your belt would make it possible for you to change careers and earn more, you can explore that option. You can take a dream job part way around the world without worrying about the school system in the area you’re moving to. You might even decide to quit your dead-end job and go freelance — even though it means paying a ton more for health insurance. Many people with children would struggle to make any of these moves.

And if the simple goal of greater financial security is something you dream of, it’s likely much easier for you to take on a casual side hustle for 10 or 15 hours a week. The money you earn won’t already be earmarked for bills, so you can use it to pay off debt, start saving for a big purchase (like a house), or even just give yourself more breathing room in your budget.

Don’t fall for the myth that all childfree people take lavish vacations, live in giant mansions, and are somehow above the financial issues that parents struggle with. We all still need the money fundamentals, like an emergency fund to help us cope with unplanned expenses. Childfree people just might have more time and flexibility to save the money to make it happen.

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It’s important to get your small business off to a good start. Keep reading to learn how you can accomplish that. [[{“value”:”

If you recently started a small business, you’re in good company. In his recent State of the Union address, President Biden said that a record 16 million Americans are starting small businesses. And he called each one “a literal act of hope.”

But the moves you make during your first year in operation have the potential to make or break your business. So with that in mind, here are some essential steps to take in the coming months.

1. Prioritize the tasks you need to outsource

As a new business owner, you may have a limited budget for hiring outside consultants. So before you start spending money on a marketing guru and an HR specialist and a social media expert, think about the help your business needs the most in its first year, and focus your funds there. You may be better off hiring just one consultant who makes a huge impact than hiring three who make a moderate impact.

2. Get a great accountant

If there’s one type of professional you should prioritize as a new small business owner, it’s an accountant. You need someone in your corner who can help with financial management and planning. And getting that help early on could help you avoid taking on expenses that leave your company strapped for cash.

Also, there are tax laws that small business owners need to comply with, and you may not be familiar with all of them. So you need someone who has that knowledge and can guide you accordingly.

3. Network with fellow business owners in your area

Building a local small business network could help you in more ways than one. First, you never know which nearby businesses you may be able to partner with to mutually increase your profits. But also, local business owners might know the market really well, and they may offer tips on how to make your venture more profitable.

Plus, it’s just plain nice to have the support of other people who are in a similar position. Seasoned small business owners may be able to offer advice on everything from running promotions to striking a good work-life balance.

4. Check in with your employees regularly

If you’re new to running a business, perhaps you’re also new to managing a team of employees. It’s important to check in with your hires regularly to make sure they feel supported and to make sure they’re confident they know what they’re doing.

And if you’re not sure exactly which tasks to assign your different employees, that’s OK. But it’s a good idea to try to work together to identify individual strengths so you can get the most out of your team.

When your business is in its first year, a lot has the potential to go wrong. But also, a lot has the potential to go right. And if you make these moves, you may find that your initial 12 months in operation are a glowing success.

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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.
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Want to save money on your taxes? Read on to find out which tax credits parents may qualify for. [[{“value”:”

When you’re doing your taxes, finding every deduction and claiming every applicable credit is crucial to maximizing your refund or lowering your taxable income. Thankfully for parents, there are plenty of ways to do so.

However, overlooking some significant tax opportunities can cost you thousands of dollars. Here are a few tax mistakes you should avoid to ensure you’re filing your return correctly and getting all the tax credits you deserve.

1. Not taking the Child Tax Credit

The Child Tax Credit is important for parents because it allows you to claim up to $2,000 per child in your household under the age of 17.

Married parents filing jointly can claim the total amount per eligible child if their household income isn’t more than $400,000. For single parents, the income threshold for receiving the full credit is $200,000.

The good news is that the tax credit is also partially refundable, up to $1,600 per child. So let’s assume you have one child, receive the Child Tax Credit, and owe $0 in taxes. In this scenario, you’ll receive a refund of $1,600 from the IRS.

2. Forgetting about the Child and Dependent Care Credit

If you paid for child care for any of your children or dependents while you worked or were looking for work, you may be eligible for the Child and Dependent Care Credit.

The maximum credit amount is $3,000 for one child or up to $6,000 for two children. The total amount you receive is determined by how much you spent on child care in 2023 and what your income is. For 2023, you may be able to claim between 20% and 35% of child care expenses, based on how much you earn.

For example, let’s assume you have two kids, your household income is $75,000, and you paid $5,000 in child care expenses in 2023. In this scenario, the IRS will allow you to claim up to 20% of your child care expenses, giving you a tax credit of $1,000.

3. Not claiming the Earned Income Tax Credit

The Earned Income Credit (EITC) is for low to moderate-income taxpayers, and you don’t need to have a child to qualify for it.

For parents with several kids, it’s certainly worth looking into. For 2023, a parent with three or more children may qualify for the credit if they’re single and earning less than $56,838 or married filing jointly with a household income of less than $63,698.

The amount you receive from the EITC will vary depending on your salary. For example, a married couple filing jointly with three kids and a household income of $50,000 may receive a $2,816 credit, while a single parent with an income of $50,000 and three children could receive $1,435.

You can use the IRS’s EITC assistant to determine your eligibility for the credit. The Center on Budget and Policy Priorities also has a helpful EITC calculator that can estimate how much you might receive.

The bottom line

It’s not easy being a parent and paying for all the additional expenses that come with kids, but these tax credits can help offset some of the costs. If you use tax prep software to file your taxes, many of the programs will guide you through the steps to ensure you get all the credits you qualify for.

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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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Given the speed at which auto insurance costs have increased, it’s natural to want to cut yours. Keep reading to find out how. [[{“value”:”

Did you know that an estimated 14% of all drivers in the U.S. do not carry auto insurance, and in some states, the statistics are far higher (we’re looking at you, Mississippi, Michigan, and Tennessee)? Given the rate at which auto insurance costs have increased since the beginning of the pandemic, it’s no surprise.

If you’re stuck with a rate that’s quickly draining your checking account, here are some tips for driving it down — fast.

Bundling coverage

Average savings: 10% to 14%

As mentioned, how much you pay for auto insurance depends, in part, on where you live. Some states are more expensive than others. If you live in one of the more expensive states, you’re not without hope. For example, bundling coverage can immediately save you 10% to 14%.

Say you have an auto insurance policy with Company A that costs $150 per month. However, your renters or homeowners insurance is with Company B. In addition, you have motorcycle coverage with Company C.

Bundling means having two or more policies with the same insurance company. For example, if you were to move your homeowners coverage over to Company A and bundle it with auto insurance, you would save $15 to $21 monthly or $180 to $210 per year.

You may be able to score an even bigger discount by moving your motorcycle coverage over to Company A as well.

Qualify for discounts

Average savings: 25% to 30%

Taking advantage of all available car insurance discounts is one of the easiest ways to save money on auto insurance. Most insurance companies offer an entire menu of discounts. They cover almost everything, from safe driver discounts to low-mileage discounts (a low-mileage discount applies to those who don’t spend much time on the road).

If you haven’t checked out your insurance company’s discounts lately, now would be a good time to do so. If you’re shopping for new coverage, make sure to compare the discounts you qualify for with each insurer before making a final decision.

Paid-in-full discount

Average discount: 9%

Are you aware that some insurance companies will give you a great discount just for paying your policy upfront? For example, if you receive a premium quote of $900 for a six-month policy, you could have $81 shaved off if you pay the entire premium at once rather than making payments.

Insurance companies save money when they don’t have to process regular premium payments, and this is their way of passing that savings along to you. Plus, when you pay upfront, there’s no concern that you might default on premium payments.

Go paperless

Average discount: 4%

You could save 4% at the snap of your fingers by letting your insurer know you want to go paperless. That means your insurance company will email you information about your account, premium notifications, and other correspondence instead of sending it by snail mail.

There are few easier ways to save money.

Increase your deductible

Average discount: 25% to 30%

A deductible is the amount of money you must pay if you make a claim. Let’s say you slide off the road in an ice storm, and it will cost $3,000 to repair your vehicle. If you carry a $1,000 deductible, you will pay the first $1,000, and the insurance company will pick up the rest. Your premium is based on how large (or small) your deductible is.

Typically, the lower your deductible, the higher your premium will be. The higher your deductible, the lower your premium will be. So, by raising your deductible to $1,500 or $2,000, you can expect your overall premium to drop by 25% to 30%.

Shop around

As loyal as you feel to your insurance agent or auto insurance company, you owe it to yourself to regularly shop around for new coverage. Just by making a switch, you could save hundreds of dollars per year without harming your credit score or getting hit with a penalty.

As you shop, make sure you’re looking at policies that provide you with coverage that is as good (or better) as the coverage you already have. Who knows, the best car insurance company for you may be right around the corner.

We’re all in a similar boat when it comes to auto insurance. No one wants to drive without it (and doing so is in fact illegal in most places), but we all face higher rates. Fortunately, there are things you can do to make your rates more affordable.

Our best car insurance companies for 2024

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

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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Make the most of your 30s with these key moves. You won’t regret it. [[{“value”:”

Some people dread turning 40. Others can’t wait and see getting older as a positive thing. But no matter which camp you fall into, by the time you reach the age of 40, there are certain financial moves you’ll want to have tackled. Here are three to aim for before your 40th birthday.

1. Shed your high-interest debt

It’s not unusual to carry credit card debt in your 30s. But you should also know that every dollar you’re paying your credit card company in interest is a dollar you can’t save or invest for another goal. As such, it’s a really good thing to try to be debt-free by 40.

To do that, you may have to get strategic about repaying your debt, whether by doing a balance transfer or consolidating it into a personal loan. You may also have to consider a side hustle if your debt load is pretty hefty. But not carrying costly debt into your 40s could make that decade of life a lot less financially stressful.

2. Boost your retirement plan contributions

Maybe you’ve been modestly funding an individual retirement account (IRA) or 401(k) when you can. You should know that any contribution you make to a retirement plan could come in handy later in life. But by the time you reach age 40, you may want to have three times your salary socked away, according to Fidelity.

If you’re not there yet, think about your current expenses and whether some can be shed. Or, once again, consider a side hustle to make it easier to find the funds for a retirement plan. Having a solid nest egg by age 40 will allow you to build on that sum in your 50s and beyond.

You should also know that over the past 50 years, the stock market has averaged a 10% annual return. So let’s say you earn $75,000 a year and manage to save up $225,000 by age 40. Even if you don’t contribute another dollar to your retirement account, if your money grows at a yearly 10% return, by age 65, you’ll end up with a nest egg worth over $2.4 million. Really.

3. Figure out if homeownership is right for you

Due to the tough housing market, some people aren’t able to become homeowners until their 40s. And maybe that’s a goal you’ve been desperate to save for.

But before you get your mind set on buying a home by age 40, or in your 40s, think about whether owning a place of your own is really what’s best for you. Remember, there are costs involved in owning a home that renters don’t have to deal with, like property taxes, maintenance, and repairs. Owning a home is also a lot more work, because every single thing that goes wrong is a thing you have to deal with, not a landlord.

So if you’ve been fixated on saving for a home, ask yourself why. Why is it that you want to own a home? Is it for stability? Or is it because that’s what you’ve been told is the “best” thing to do?

The moves you make in your 30s could set you up for a world of success later on. Aim to shed your high-interest debt, save nicely in a retirement plan, and make a decision on homeownership one way or another before you turn 40.

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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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It’s never too early to begin planning for retirement. Here are some of the best strategies for saving on retirement taxes. [[{“value”:”

Whether you’re planning to retire next year or 30 years from now, it’s a good idea to plan for the time when you can do what you want, kick back, and enjoy life. The fact is this: The less money you have to pay in taxes, the more money you’ll have to finance your golden years. Here are four tax strategies it’s never too soon to plan for.

1. Take every deduction available to you

The older you grow, the more perks the IRS offers. The best tax software programs can also help you discover and claim all the tax breaks you’re entitled to as a retiree. Here are a few examples:

Boosted standard deduction: Once you turn 65, the IRS allows you to take a larger deduction on your tax return. For example, for the 2023 tax year, a single 64-year-old could claim a standard deduction of $13,850. A 65-year-old’s standard deduction is boosted to $15,700, an increase of $1,850.An IRA, even if you’re not working: If you’re married and your spouse is still working, you can contribute to a spousal IRA. While there are limits on how much you contribute ($6,500 for 2023 and $7,000 for 2024), the account is all yours.Medical expenses: All those medical-related expenses you pay may be deductible if they exceed 7.5% of your adjusted gross income (AGI) and you itemize your personal deductions. Before assuming you don’t have enough expenses to take this deduction, take a look at this IRS publication listing some of the eligible expenses. It’s surprisingly extensive.

2. Keep that small business alive

If you own a small business but don’t have any employees, you can continue contributing to a Solo 401(k) for as long as you continue to work. Not only do you contribute pre-tax dollars and save on taxes, but if you’re married, your non-working spouse can take advantage of the spousal IRA.

As long as you’re healthy and enjoy what you’re doing, consider keeping your business alive.

3. Take advantage of a health savings account

Employees may groan when they learn their company has a high-deductible health plan, but there is one pretty great advantage: Access to a health savings account (HSA). Unlike other health plans, the money you contribute each year does not have to be spent. Instead you can allow it to roll over into the next year (and the next year). Better yet, like an IRA or 401(k), the funds in your HSA will continue to grow.

Here’s the tricky bit: If you spend the money in your HSA on a non-qualified medical expense the IRS considers the funds taxable and imposes a 20% penalty on the amount withdrawn. However, the 20% penalty does not apply if you’re 65 or older. Hold on to that HSA into retirement and you’re going in with a financial advantage.

4. Look at tax-efficient investments

There are less taxes owed on some investments than others. For example, municipal bonds are not taxed at the federal level and some qualified dividends are taxed at a lower capital gains rate than ordinary dividends.

You can also minimize taxes by holding onto investments over the long term. Holding investments instead of buying and (quickly) selling means you’re only taxed on realized capital gains, or when you sell the investment. At a minimum, hold onto taxable assets for at least one year so you’re not stuck paying the standard tax rate.

We may gain wrinkles as we age, but we also gain wisdom and knowledge. And we’re wise enough to put that knowledge to work by employing the tax strategies that save the most money.

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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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