Money Management

Insuring an older car may not be as costly as expected. Keep reading for steps you can take to save even more. [[{“value”:”

There are benefits and drawbacks to owning an older vehicle. On the plus side, there’s familiarity. You know your vehicle’s quirks and are comfortable getting behind the wheel.

On the other hand, driving an older vehicle could mean missing out on certain features that not only make your trips more pleasant, but in some cases, safer.

Many newer cars, for example, offer lane departure and brake warnings. And while it can easily be argued that the age-old practice of paying attention on the road is a reasonable substitute for these features, they’re ones you might eventually want to have.

But since car prices are so high right now, and it’s an expensive time to sign an auto loan, you may decide to drive your older vehicle into the ground. That’s not a bad financial decision. And it could save you a bundle on auto insurance.

You might pay a lot less to insure an older car

Because older cars tend to lack certain features, including safety features that newer cars have, you may be inclined to assume that insuring an older vehicle will be a costly endeavor. But usually, it’s cheaper to insure an older car than a newer one for one big reason — it’s not worth as much money.

Multiple factors go into calculating your auto insurance rates. Some of those factors pertain to the type of driver you are. If you’re a younger driver, or if you have a history of moving violations, you might pay more for insurance than someone with more experience and no moving violations on their record.

Your location will also help determine what you pay for car insurance. If you’re in a city with a higher crime rate, you could pay more than someone who lives in a quiet suburb.

Similarly, the age and condition of your vehicle will play a role in calculating your auto insurance premium costs. If your vehicle is older, it’s apt to be worth a lot less than a new vehicle. This means that if your vehicle were to get totaled in an accident, your auto insurance company would likely have to pay out a lot less than for a newer vehicle worth more money. So because of that, you may find that insuring an older car isn’t as costly.

Additional ways to save on auto insurance

The age of your vehicle is something you can’t control. Fortunately, you might reap some savings on auto insurance by having an older vehicle. But beyond that, there may be additional moves you can make to save on your premium costs.

First, shop around and compare rates. You may be surprised at how one insurer’s offer can be far more competitive than another’s.

Next, see if it’s possible to snag a low-mileage discount if your car doesn’t get a lot of use. The less your car is driven, the less likely you are to get into an accident, and that’s something your insurer might reward you for. You can also see if it makes sense to sign up for a pay-per-mile insurance plan, where you pay a base amount but are then, as the name implies, charged for the specific mileage you clock.

An older vehicle may be a lot less expensive to buy insurance for than a newer one. So if you’re able to keep driving an older vehicle, so be it. And if you’re buying your first car and see an older one for sale, don’t write it off. As long as it checks out at an auto shop, you may find that you don’t end up missing the fancy features a newer model might offer you.

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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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Are you thinking of becoming a freelancer? 64 million Americans freelanced in 2023. Find out what financial considerations to make before starting to freelance. [[{“value”:”

Many workers seek ways to make a living while maintaining flexible schedules. That isn’t always possible when working a traditional job. Freelance work is one solution that has become more popular over the years.

A recent study by Upwork, a freelancing platform, found that 64 million Americans performed freelance work last year. Read on for a few notable stats from this study and to see whether it may be worthwhile to try freelancing.

An additional 4 million U.S. professionals freelanced in 2023

Upwork is a freelancing platform that connects independent contractors and clients. The company conducted its Freelance Forward 2023 study to examine the current state of freelancing in the U.S. Freelancing continues to be a significant part of the U.S. labor market and economy. In 2023, freelance workers contributed $1.27 trillion to the U.S. economy.

In 2023, 64 million Americans did freelance work. That’s up 4 million from 60 million in 2022. Based on the results of the 2023 study, 38% of the U.S. workforce freelanced last year.

What generation of workers are more likely to freelance? Here’s a breakdown of the stats:

45% of freelancers are millennials27% of freelancers are Gen X15% of freelancers are Gen Z9% of freelancers are baby boomers4% of freelancers are the Silent Generation

When looking at the entire U.S. workforce, Gen Z and millennials are more likely to freelance. 52% of all Gen Z workers performed freelance work in 2023, while 44% of millennials freelanced in 2023.

Regardless of their generation, most freelancers feel optimistic about the future of freelancing — 85% of study participants said the best days are ahead for freelancing. This stat paints a positive picture overall of the future of freelance work.

Should you give freelancing a try?

The freelancing lifestyle works for many people. It’s important to remember that there are no guarantees regarding work opportunities and income potential. You’ll need to put in a lot of work as a freelancer, and unlike a traditional job, you likely won’t earn consistent pay.

However, many workers prefer this type of work solution because they have more flexibility over their schedules, the work and projects they take on, and their income. Setting your own business and income goals can be empowering — especially if you have lofty financial goals.

Whether you’re considering doing freelance work while continuing to work full-time to boost your income or want to switch to a fully freelance work setup, you’ll want to consider how your finances will change before you dive into the freelance lifestyle.

Three financial considerations to make as a freelancer

Want to prepare financially before becoming a freelancer? Here are some costs to consider.

1. Emergency savings

It can take time to build a successful freelance business. Building a solid emergency fund before you move to freelance work is wise. Having extra money set aside in a high-yield savings account is a great way to protect yourself financially so you can continue to pay your bills while you grow your business.

2. Taxes

Your tax situation will be different as a freelancer. As a self-employed worker, you’re responsible for paying your taxes directly. Unlike a full-time employer, your clients won’t deduct taxes from your pay. The IRS requires workers to pay taxes as they earn money.

Because of this, you’ll want to make quarterly estimated tax payments throughout the year. Doing this can allow you to avoid penalties. Ensure you know how your taxes will change when you shift to freelance work. If you need guidance, contact an accountant.

3. The cost of benefits

You should also consider how you will fund benefits that are typically provided to employees. For example, if you previously worked for a traditional employer, you may have had health insurance coverage provided at an affordable price. As a self-employed worker, you should prepare for how you will fund any previously provided benefits like this.

Freelancing could be a good move

Freelancing isn’t for everyone, but it’s a career move that could improve your life. But ensure you take the proper financial steps before transitioning into this work.

Are you looking to start your own small business in 2024? Check out our small business resources to learn about the tools that can help you as a business owner.

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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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I could earn 5% APY or higher on my savings, but I’m sticking with my current high-yield savings account. Discover why switching banks isn’t always worth it. [[{“value”:”

We like savings accounts a lot here at The Ascent, and with good reason. Having cash savings can help you fund big purchases as well as sleep better at night, as building an emergency fund is one of the best things you can do for your personal finances. Plus, the best savings accounts available as of this writing are paying upward of 5% APY (annual percentage yield — how much money you can earn from interest in a year). That’s pretty great, especially when you consider that the average APY on a savings account is currently just 0.46%.

My own high-yield savings account is currently paying me 4.35% on my saved cash. I could switch accounts (it’s pretty easy to do so) and earn a higher APY — but I’m not interested. Here’s why.

1. I really like my account’s features

It’s probably silly to feel affection for a financial product, but I think I’m among friends here. So I’ll say it: I really, really like my savings account. It’s with an online-only bank, and these banks come with some pretty sweet features. Since they don’t have physical branches, they have lower overhead costs, which makes those higher APYs possible. It also means that online banks can invest more in their web-based spaces, such as their web-banking portals and mobile apps.

My bank’s mobile app is clear and easy to use, and even creates graphs showing my savings growth over time. I can deposit checks, transfer money, and check out my account statements in the app. But my favorite feature of this account is far and away the 30 sub-accounts I can create to further section out my savings.

I have one devoted to my quarterly tax payments (boring but necessary, since I’m a freelancer), but others where I’m saving to buy a home this year, travel, and even cover costs for a big dental procedure I have coming up. I can set goals for individual funds, and I even get congratulatory emails from the bank when I meet a savings goal. Getting this kind of positive reinforcement makes saving more fun.

2. Savings account rates are variable

So here’s the dirty little secret of these high APYs on savings accounts: They aren’t forever. Savings account interest rates are variable and subject to change at any time. This means they’re generally tied to the whims of the economy at large, and specifically whether we’re in a low or high interest rate environment.

We are currently in the latter, thanks to a series of 11 Federal Reserve rate hikes intended to deal with skyrocketing inflation in the wake of COVID-19. According to the most recent Consumer Price Index Summary report, we are currently sitting at 3.1% inflation year over year, a far cry from the 9.1% we saw in June 2022. So we can surmise that the rate hikes have had their intended effect.

It’s important to note that the Federal Reserve doesn’t set consumer rates — those are set by banks and other lenders. But when the federal funds rate (the rate at which banks lend each other money) is higher, it’s usually a sure bet that consumer rates will rise, too. Currently, it’s more expensive to borrow money (such as in the form of a personal loan), but if you’ve got money in savings, you can earn a higher rate on it — for now.

Since the APY I’m currently earning on my savings account isn’t permanent, it would be silly for me to keep jumping ship in search of a higher rate that is just going to come back down. Rate cuts are predicted for 2024, and when it happens, I’ll likely see my APY drop. But since I like the account anyway, I’m planning to keep it open and look back wistfully on the salad days of earning 4.35% on my saved cash.

If you’re like the 31% of Americans (according to research from The Ascent) currently earning a savings account APY of 4% or better, enjoy it while it lasts. There’s never been a better time to optimize your savings this way, so if you’re instead part of the 69% who don’t have this kind of account — what are you waiting 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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This writer isn’t just a Costco customer. She’s also an investor. Read on to see why. [[{“value”:”

I’ve been a Costco member for about 18 years now. But shopping at the store on a regular basis wasn’t always a habit of mine.

Before I had kids, I would visit Costco once a month or so to load up on household essentials and snacks. Since having kids, the need to replenish my fridge contents is pretty constant. I tend to do a weekly Costco run where I buy everything from fresh fruit to milk to school lunch supplies.

Meanwhile, years ago, I decided to take my love of Costco to the next level by buying shares of the company’s stock. It’s a move you may want to emulate, only perhaps in a different context.

When you invest in a business you understand

As a Costco customer and big time fan, I understand very well how Costco’s business model works. Costco makes a lot of its money from membership fees. It then uses those fees to offset its costs so it can offer competitively priced products to shoppers.

It’s not exactly a traditional business model in the context of retail. Most chains don’t charge a membership fee and make more of their money on the products they sell. So Costco does things a bit differently.

But Costco’s system seems to work quite well. Over the past five years, Costco’s stock price has climbed about 240%. That’s been a nice thing to see as an investor.

But back when I bought the stock, I couldn’t see into the future and know it would do well. Rather, I bought the stock because I understood Costco’s business model and had confidence in it.

It’s OK to invest in the companies you know

As a general rule, it’s a good idea to invest money in businesses whose models you understand. If you’re interested in adding a given company to your brokerage account but you aren’t sure how it makes money, you may want to pass (either that, or try to further educate yourself).

Now, this doesn’t mean that buying shares of Costco stock is a smart move for you. But you may want to think about the businesses and services you use regularly. That gives you a baseline understanding of how they work. From there, it’s a matter of research.

Of course, my decision to buy shares of Costco stock wasn’t solely based on the fact that I understood its business model, nor was it solely based on my love for the store’s delicious muffins (because those are outstanding). Costco also happened to fit nicely into my portfolio.

Another savvy thing it pays to do as an investor is to maintain a diversified portfolio. At the time I bought shares of Costco, I didn’t own many retail stocks. So adding Costco made sense from that perspective, too.

I’ll be the first person to tell you that you might save serious money by shopping at Costco. But I’ll also be the first person to tell you that shopping there doesn’t automatically mean you should buy the stock. You’ll need to do your own research and assess your portfolio to see if that makes sense.

My point, though, is that investing in businesses you understand is a good approach to building a portfolio. And it’s a strategy I’ve used many times over in the context of businesses I frequent a lot less often than Costco.

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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 positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Online banks have their benefits. But read on for some drawbacks you need to know about. [[{“value”:”

A 2022 survey by J.D. Power found that 27% of Americans use an online-only bank. And there’s a good reason for that.

Because online banks don’t tend to have the same overhead as physical banks, they can often offer more competitive rates for products like savings accounts and CDs. But while you may be inclined to do your banking online, there are certain pitfalls you might encounter along the way. Here are a few to be aware of.

1. Depositing cash might be a struggle

Most online banks allow you to deposit checks via an app by taking a picture and submitting some information electronically. But when you’re given a pile of cash you want to deposit, things get trickier. You can’t just take a picture of various bills and expect your online bank to credit your account for the total.

Now, this doesn’t mean you don’t have options for depositing cash. But usually, what you’ll need to do is link your online bank account to a physical bank, deposit the money at your physical bank, and then do a transfer.

This process can be time-consuming, though, because you may have to wait a few days for your initial deposit at your physical bank to clear before you then do your online transfer. You might then have to wait even longer for that second transaction to clear.

2. An outage can leave you in the lurch

If you have a physical bank whose website or app goes down for a period, you may be able to visit a local branch and get access to your money, or to whatever services you need. If your online bank has a similar outage, you may have no choice but to sit tight until it resolves.

You may, in some cases, be able to get a customer service person to assist you. But they, too, may be limited in how helpful they can be during an outage.

3. You may not have many (or any) borrowing options

Many physical banks offer more than just checking accounts, savings accounts, and CDs. You may be able to apply for a personal loan or line of credit through your bank. But while some online banks offer a range of borrowing products, many do not. And while you could always apply for a loan elsewhere when you need one, you might prefer to do so at a bank where you’re already an established customer.

4. You might pay a fee every time you need money

Just as depositing cash can be difficult when you use an online bank, so too could accessing cash be a challenge. If your bank doesn’t have branches, it probably doesn’t have ATMs. So you may end up incurring fees for cash withdrawals.

That said, some online banks offer ATM fee reimbursement to some degree. Do some digging to see if there’s a no-cost option for taking out money when you need it.

Opting for an online bank could be a good move if you’re looking to score a favorable interest rate on your savings. But it could pay to maintain a separate account at a brick-and-mortar establishment. That way, you have plenty of options for accessing and depositing cash, and you may have access to more services, whether it’s borrowing money or getting important financial documents notarized.

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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