Money Management

Rest assured, a higher-cost car doesn’t always cost more to insure. Find out why drivers may be in for a pleasant surprise after upgrading a vehicle. [[{“value”:”

Buying a new car can come with big financial changes. For those who take out a car loan, for example, more money could end up coming out of the bank account each month for payments to the lender. There’s also auto insurance to consider.

When purchasing a costlier vehicle, it’s natural for drivers to assume their insurance premiums will skyrocket. After all, if a car costs more to purchase, then an insurer would have to pay out a lot more money if the vehicle was stolen or declared a total loss. Plus, a more expensive car seems as if it may be a more attractive target for thieves, which could increase the risk of a claim.

However, drivers who believe their costly new car will be a lot more expensive to insure could actually be in for a pleasant surprise. Here’s why.

An expensive new car may not raise insurance premiums by as much as expected

The good news for those upgrading their vehicle is that purchasing a car with a significantly higher price tag may not send premiums skyrocketing.

I found this out myself not too long ago when I bought a new car that cost three times what my old one had (I needed a much bigger vehicle to accommodate my growing family). Despite the fact my car cost so much more, my auto insurance premiums increased by only $81 a year.

There’s a very simple reason why auto insurance premiums aren’t always going to jump up by huge amounts after buying a more expensive car. Insurers don’t just consider the price of the vehicle when they decide how much to charge to insure it. They take the big picture into account, including the likelihood they will have to pay a claim.

More expensive cars have better safety and security features

Often, expensive cars come with features that actually reduce the chances of a crash or a theft. The car may come with advanced safety features (like back-up camera or lane assist technology) and extra anti-theft protections. Those added features reduce the likelihood the insurer is going to have to pay out anything at all.

Insurers often provide hefty discounts due to these additional protections. For example, an anti-theft system could reduce premiums by around 23%. And simply having a new vehicle instead of an old one can also earn drivers a discount of around 15%.

Collectively, these discounts can mean premiums don’t go up much, or even at all, despite upgrading to a vehicle that has a higher market value.

Always get insurance quotes before buying a new car

While costly cars with advanced safety technologies may not come with big insurance premiums, it’s not necessarily the case that every expensive new car is going to be cheap to insure. Some may have a big price, but not many insurance-friendly features.

Drivers who want to be certain their premiums will remain affordable after upgrading their vehicle will want to compare insurance quotes before buying a car. Car insurers give price estimates based on vehicle make and model, so get some quotes with different vehicles under consideration to find out what insurance will cost.

Discovering that one preferred model costs a lot less to insure than others is an important fact to know before making a commitment to buy.

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At this point, you can’t afford to feel like you’re unprepared for tax season. Make these moves ASAP if you’re in that boat. [[{“value”:”

Whether you’re filing an individual return or a business return, taxes are due this year on April 15. But if you’re a small business owner, you may, at this point, feel like you’re in over your head. Data from Adobe finds that only 1 in 3 small business owners feels prepared for tax season. More specifically, 19% of small business owners feel completely lost and unsure where to start on the tax-filing front.

But at this point, there’s only about a month left to file your taxes on time. So if you’re feeling overwhelmed, do these things ASAP.

1. Line up tax help

Maybe you thought you could tackle your small business taxes alone because you’re good at navigating tax software and your company doesn’t have so many accounts and expenses. But while going it alone could save you some money, it could also result in not just a very stressful experience for you but also a major mistake that either costs you money or gets your tax return audited.

At this point, it may not be too late to find tax help for the season. But go out and find that help immediately. One thing you may want to do is talk to fellow business owners in your area and see if they can recommend a professional with small business experience.

Remember, the nuances of filing a small business tax return differ from those of an individual tax return. So you definitely need to work with someone who knows how to file small business taxes specifically.

2. Get your paperwork in order

A tax professional may be able to take over the filing process so you’re not forced to tackle your return solo. But that professional won’t be able to do their job if they don’t have access to the right documents and files.

So in the coming days, take the time to gather paperwork like bank account statements, credit card statements, and other documents pertaining to money that flows in or out of your business. The more organized you can get yourself, the easier it will be for the person you hire to complete your return by the April 15 deadline.

3. Consider a tax extension

There can be serious penalties for failing to file a tax return by April 15. If you don’t think you’ll be able to get your small business return done on time, ask for an extension by April 15. It will automatically give you six extra months, which gives you added time to line up help.

That said, a tax extension won’t give you more time to pay your tax bill. If you underpaid your taxes in 2023, you could be penalized on any sum you owe and don’t pay in full by April 15. You’ll also rack up interest on that sum. So if anything, you may want to see if a tax professional can at least do a preliminary review of your taxes and suggest an estimated payment to send in by April 15.

It’s easy to see why the process of filing taxes can be overwhelming for people who own their own businesses. But make these moves ASAP so you don’t end up botching your tax return or incurring penalties in the course of filing it.

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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 recommends Flow. The Motley Fool has a disclosure policy.

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Inflation rose last month, which could push back the interest rate cuts many consumers are hoping for. Read on to learn more. [[{“value”:”

Inflation has been wreaking havoc on consumers’ personal finances since 2021. To combat it, the Federal Reserve spent much of 2022 and 2023 implementing interest rate hikes. By making it more expensive to borrow money, the Fed’s goal was to drive consumers to curb their spending, thereby narrowing the gap between supply and demand that caused inflation to surge.

Thankfully, inflation has been cooling — so much so that the Fed seems to be done with interest rate hikes, at least for the time being. In fact, the Fed has signaled that interest rate cuts could be in store for 2024.

But the latest inflation data could result in a delay in those interest rate cuts. And that means that consumers may be grappling with higher borrowing costs for longer than they want to.

February’s inflation data came in hot

In February, the Consumer Price Index, which measures changes in the cost of consumer goods and services, rose 3.2% on an annual basis. That’s not such a large jump from January, but the problem is that the Fed wants to see inflation inch down toward the 2% mark before it starts cutting interest rates. And in light of this data, the central bank may decide to delay those rate cuts to the end of 2024.

Why is this a problem? Though the Fed doesn’t directly set borrowing rates for consumer products like auto loans and personal loans, when it raises its benchmark interest rate, the cost of borrowing tends to rise. And when the Fed cuts rates, individual lenders tend to follow suit.

Many consumers have put off borrowing money for the past year or so to avoid getting stuck with a hefty interest rate on a loan. And many are waiting for the Fed to cut rates so they can jump at the opportunity to borrow for less. But now, they may have to wait longer.

The one silver lining

While a lot of consumers are eager to see the Fed lower interest rates, one benefit of rates holding steady is that banks are still paying more interest on products like savings accounts and certificates of deposit (CDs). So if the Fed decides to wait on lowering interest rates, it gives savers the opportunity to earn more on their money.

RELATED: What Is a Certificate of Deposit (CD)?

In fact, at this point, it’s pretty unlikely that the Fed will cut rates during the first half of 2024. That could be considered a good thing, though, because taxes are due April 15, and many Americans may receive their refunds in the weeks that follow. If the Fed delays its rate cuts, it gives refund recipients more time to put their money into savings or certificates of deposit while rates are higher.

To be clear, February’s inflation report isn’t all that shocking, nor is it terrible. That 3.2% annual inflation reading is basically in line with recent readings, give or take a notch. But the Fed may be holding out for a reading of under 3% to move forward with rate cuts, so February’s report tells us that for the time being, consumers may have to sit tight.

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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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Nearly half of Gen Z says financial compatibility is more important than physical compatibility. Read on to learn how to get on the same page with your partner. [[{“value”:”

Romance isn’t dead, but it may be on its way out. Younger generations view financial compatibility as nearly as important as physical compatibility, according to a recent survey by Northwestern Mutual.

The investment firm found that 49% of Gen Z said financial compatibility is more important than physical compatibility in a romantic partner. That percentage is surprisingly high, and it may result from some Gen Zers entering the workforce with high inflation and a housing shortage.

Here’s how other generations view financial compatibility, and a few suggestions on how to get on the same personal finance page with your partner.

Financial compatibility is less important to other generations

Gen Z is the most adamant that their partners’ finances align with theirs, and over time that idea appears to fade.

Here’s what percentage of other generations think partners should align financially:

Millennials: 40%Gen X: 35%Baby boomers: 30%

If there’s one thing that nearly every generation agrees on, it’s that money conversations should happen before the relationship gets serious. More than 7 in 10 Americans believe those conversations should happen “well ahead of marriage or living together,” according to the survey.

Financial disagreements get better with time

Gen Z isn’t wrong to be concerned about potential financial disagreements. Couples frequently disagree about money. An Orion survey released last year said that 27% of couples have money disagreements weekly or monthly.

The biggest money disagreements fall into a few categories:

Fears about market risk and the economyWhether to spend or save moneyHow important money is to their livesHow to communicate about money

On the positive side, couples tend to have fewer disagreements about money over time. Gen Z partners are about six-times more likely to blame their partner for a poor financial decision than baby boomers. And over a five-year span, couples report being far more likely to report being more financially compatible.

How to get on the same financial page

The good news is that you can get on the same financial page as your partner before your golden years. Making a few changes to how you communicate can help right now. Here’s how.

1. Talk about money

Unsurprisingly, talking about financial decisions — and listening — is essential to having fewer disagreements about money. This might include talking about the debt you have if your relationship is relatively new or, if you’ve been together a while, talking about large purchases you’re going to make before you make them.

If you’re having difficulty doing this, it can be helpful to talk to a financial advisor so both of you understand saving, investing, debt, and other financial topics.

2. Create shared goals

You don’t have to agree on everything, but creating some shared goals will help eliminate potential disagreements. For example, this could be setting a goal for a shared emergency fund or a college fund for your kids.

Having shared long-term goals can help couples get on the same page in the short term. One way to do this is by using a budgeting app to create goals and keep track of your progress.

3. Find what works best for both of you

I know couples who merge their finances entirely and others who share overlapping expenses — like groceries and housing — but split other expenses. These different approaches work for them because they’ve communicated about their finances and agreed on a plan.

There are many ways to do this, including having different investment accounts but sharing a joint checking and savings account. Talk with your partner about what you prefer to share, and then work together to sign up for financial accounts that help you both reach your goals.

Come up with a plan

Finances can be stressful even when another person isn’t involved. Adding another person to the mix with their goals and personal views about money makes things even more complicated. But it’s important to remember that communicating and listening are the best ways to get on the same page and avoid major financial disagreements.

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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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