Money Management

Becoming a gig worker could be the best thing you ever do for your finances. Learn how to avoid the pitfalls that come with this work style. [[{“value”:”

Gig work is becoming more and more common as the cost of living rises and Americans want more flexibility with their employment situation. According to Statista, there are 57.3 million freelance workers in this country — and many of them aren’t full-time freelancers, but people who do some gig work alongside another job.

If you’re hoping to join the gig economy yourself this year, welcome to the fold. I became a full-time freelancer a year ago, and making this move has helped my finances, improved my well-being, and increased my happiness overall.

Unfortunately, gig working is not without potential pitfalls. Here are three of them to steer clear of so you can succeed in the gig economy in 2024.

1. Ignoring professional development

Working for yourself means advocating for yourself and focusing on your own professional development in a way you might not have when you were someone’s employee. So it’s not a good idea to get comfortable with the status quo when you’re a gig worker. Instead, focus on building your existing skills and adding new ones.

For example, if you’re a freelance writer who tends to stick to the same subject matter, consider branching out and looking for assignments in different subjects. You can add to your income this way as well.

Keep networking, too — if you have friends in the same line of work, share ideas and speak up for each other. If you’re not already on LinkedIn, create a profile and keep it updated as you add those new skills and clients. Artificial intelligence is becoming a bigger part of our world, and if you’re worried about losing your job to AI, becoming a well-rounded professional may help you stay employed and relevant for longer.

2. Never taking time off

If you’re coming to gig work from a more traditional employment situation where you were limited in how much money you could earn (and it was never enough), it’s easy to fall into the trap of working all the time. (Yes, I am speaking from experience.) But if you never take time off, your work will suffer — and your health could, too. It’s hard to go from having paid vacation time to not, but there are ways to cope.

I decided at the end of 2023 that I wanted to give myself “paid time off” in 2024. So I set a goal to save a reasonable amount of money that I could use to “pay” myself if I had a day where I couldn’t work, or just didn’t want to. I recommend doing the same — don’t be afraid to take time for yourself as a gig worker, even if you’re tempted to do nothing but work.

3. Forgetting about taxes

As a gig worker, you may actually be a small business owner (congratulations!), so taxes will be a much larger part of your world than they are for W-2 employees. Since your earnings won’t be taxed, you’ll likely need to pay quarterly estimated taxes four times a year (January, April, June, and September), and if you neglect to do this, you can be penalized by the IRS.

Before you panic, know that the best tax software for small businesses can help you stay on top of what you owe. Working with a tax professional can also give you peace of mind. Just don’t forget to keep track of all your income — when you receive a 1099 form from a client during tax season, the IRS gets a copy, too, so it will know if you’re underreporting your income.

And hey, it’s not all bad news when it comes to taxes — you’ll likely pay more taxes (since you’re taxed as both employee and employer), but you also get to take different and often more deductions than standard employees can. For example, if you buy a new computer for your graphic design work, you can write off the cost of it and lower your taxable income.

Gig work can help you pay off debt, pad your savings account, and even create a new life of freedom and work-life balance for yourself. Now that you know some common mistakes to watch out for, you’re ready to find success as a gig worker.

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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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Looking to grow your cash reserves? Read on for some fairly painless tips. [[{“value”:”

You need money available in an emergency fund at all times. You never know when you might lose a job, get stuck with a huge medical bill, or face a car repair your regular paycheck can’t cover.

Recent SecureSave data finds that 63% of Americans can’t cover an unplanned $500 expense by dipping into their savings. So if you have a cool $1,000 sitting in your savings account, consider yourself to be in better shape than the typical U.S. adult.

However, an ideal emergency fund is one that has enough money to cover three months of essential expenses. Chances are, $1,000 isn’t enough to do that unless you happen to have extremely low expenses (maybe you’re a recent college grad who lives at home).

Getting from a $1,000 emergency fund to having enough savings for three months of bills can be challenging. And it may have to be a multi-year process. But it may be possible to grow your $1,000 emergency fund to $3,000 in 2024 alone — especially if you make these moves.

1. Cut one small expense and send that sum into savings automatically

To save $2,000 during the year, you basically need to bank $167 a month. You can probably do that if you cut out all of the fun things in your budget, but that’s really no way to live. So instead, cut one expense. And you don’t even have to cut it completely — just somewhat.

Let’s say you cancel one streaming service but keep a second one you have. If that move saves you $16 a month, so be it. That’s almost $200 in savings, or 10% of your goal.

However, don’t just cut an expense and call it a day. Set up an automatic transfer so that specific amount leaves your checking account at the start of the month and lands in your savings. You don’t want to accidentally take your $16 or so in Netflix savings and blow it at Starbucks by popping in a couple of times a month.

2. Join the gig economy

Working a second job may be a tall order for you if your main job is demanding and you have a lot of obligations outside of the office, like caring for young children or pets. But perhaps it’s feasible to earn an extra $100 to $200 a month doing gig work, which could put you at your savings goal for the year.

One thing you may want to focus on is a job that allows you to set your own hours, like driving for a ride-hailing service. That way, you can take advantage of slower periods at work or in your personal life and work more hours then, but scale back when things are busy.

3. Take a less expensive vacation

Pacaso says that in 2023, the average vacation cost $1,919 per week, per person. As such, it’s conceivable that skipping out on a 2024 vacation entirely might basically get you to your $2,000 savings goal.

But let’s be real — we all deserve a getaway that allows us to recharge and experience new things. So a more realistic approach may be to see if you can spend more like $1,000 on a 2024 vacation if you’d normally be inclined to spend double. You can then put the sum you aren’t spending on things like airfare and lodging in the bank.

Another thing to consider is a staycation. The upside there is that you still get a break from work and you still get new experiences. But not paying to get places (other than perhaps some gas or train fare) or for lodging could save you a lot.

Tripling your emergency fund could put you in a much better position by the end of the year. Make these moves to give your savings a boost — and to enjoy the peace of mind that comes with 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.The Motley Fool has a disclosure policy.

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Looking to become a homeowner this winter? Read on for some big pitfalls to avoid. [[{“value”:”

So you’ve crunched the numbers to see how much house you can afford and have gotten a mortgage lender to issue you a pre-approval letter. Great! Now all you need to do is team up with a real estate agent and start seeing some available homes in your neighborhood.

House hunting can be a challenging thing to do at any time, though. And there are certain hiccups you might run into during the winter months in particular. So if you intend to look heavily in the coming weeks, make a point to avoid these mistakes.

1. Not checking the air conditioning system

When you’re house hunting in winter, you’re sure to be mindful of things like how well the heat works and whether a home is drafty or not. But don’t forget that you’ll be living in that home year round. So make sure summertime components like air conditioning are running well.

In fact, your best bet is really to hire a home inspector once you’ve made an offer on a home to ensure there are no hidden issues. But the air conditioning system is something you’ll want to ask about and check up on before even getting to the offer stage.

2. Writing off a home due to a lack of curb appeal

Many otherwise nice-looking homes come off as a kind of drab in the winter. That’s something you may want to try to look past as a buyer.

A smart seller will have spring and summertime photos of their home available that show off the property in all of its glory. That’s what you should pay attention to.

Remember, too, that curb appeal is something you can improve upon. You can plant flowers and shrubs at a relatively affordable price if you’re willing to do the work yourself to spruce up your home’s exterior. So even if the “before” pictures aren’t looking so great, don’t write off a home due to a lack of curb appeal when that’s something that can be addressed.

3. Assuming you’ll get a great deal

Winter isn’t usually a popular time to buy a home. The weather can be far from cooperative, and many people simply don’t want to trek to different neighborhoods when it’s cold and snowy out. As such, you might think you’ll have extra bargaining power as a buyer this winter. But that line of thinking may not serve you well.

It’s true that there tend to be fewer buyers in winter. But right now, the U.S. housing market lacks inventory in a very serious way. The National Association of Realtors reports that as of late December, there was only a 3.2-month supply of available homes. That’s well below the six-month supply it often takes to meet buyer demand in full.

Because many markets lack inventory right now, sellers are aware that they can get away with charging a certain price. So don’t expect a discount.

If homes in your preferred area have been selling for $350,000 in recent months, and you can only afford to spend $300,000, prepare to look elsewhere. You may not be able to talk a seller down to the tune of $50,000.

Remember, now is not a good time to stretch your home buying budget. Mortgage rates have come down a bit in recent weeks. But mortgages are still expensive to sign, so you may not have much leeway as far as home prices go.

House hunting during the winter is by no means guaranteed to be a disastrous experience. But make a point to avoid these mistakes to help things go more smoothly.

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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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Savings accounts are banking 101 — but it’s not impossible to lose money in one. Read on to learn how it could happen. [[{“value”:”

If you got your first bank account as a kid, it was likely to have been a savings account. A basic savings account is a great way to teach kids about money — the earlier they learn that money can be saved for the future and will earn interest in the process, the more likely it is that they’ll take the lesson to heart.

As adults, savings accounts are still a cornerstone of personal finances — having a safe place for your saved cash is crucial. And savings accounts are often the best place for your emergency fund, too. Unfortunately, savings accounts are not entirely without risk. Here are a few ways you could lose money in one — as well as the steps to take to keep this from happening to you.

1. Bank failure

The banking industry had a couple of big shake-ups in 2023, in the form of multiple bank failures. The collapse of Silicon Valley Bank in March was the biggest bank failure since 2008, and it was soon followed by the failure of First Republic Bank. Naturally, this led to a lot of worry about whether banks were a safe place to keep your cash — or if it was a better idea to withdraw your life’s savings and stick it under your mattress (no, not a good idea).

Thankfully, there was no financial loss to customers of these banks, thanks to the Federal Deposit Insurance Corporation, or FDIC. Many American banks are insured by the FDIC, which means your money is safe in the event of a bank failure — up to $250,000 of it (or $500,000 if you co-own your account with someone else).

If you’re worried whether your bank is insured, it’s easy to check. Chances are, it’ll have the FDIC logo featured prominently on its website, or failing that, pop its name into the FDIC’s BankFind Suite tool to check. This way to lose money in a savings account only applies to you if your bank isn’t insured — and if it’s not, find a new bank ASAP.

2. Maintenance fees

The second way you can lose money in your savings account is via maintenance fees. That’s right, some banks charge you for the privilege of keeping your cash in an account.

I lost $50 to savings account fees in 2022, and I’m still a little bitter about it. But I did some digging to find that I could avoid the fee if I kept my account balance above a certain level, and I’ve been doing that ever since. Many banks offer ways to waive a fee, including maintaining a minimum balance, receiving a certain number of deposits every month, or falling into a special group (such as being a student or a senior).

I also encourage everyone to choose a bank that doesn’t charge fees, regardless of your balance — the online-only bank I joined in 2022 is fee free, and I’ve been so happy with my account there. (Incidentally, you’re more likely to find free accounts offered by online banks, as they don’t have the overhead costs to maintain physical branches, like brick-and-mortar banks do.)

3. A low APY

Finally, beware of low APYs (annual percentage yields — the amount of interest you’d earn in a year) on savings accounts. According to the Consumer Price Index, the most recent data showed an inflation rate of 3.4% between December 2022 and December 2023. In plain terms, if you’ve got a savings account paying a lower APY than 3.4%, your money is actively being eaten away by inflation.

What’s worse, according to savings research from The Ascent, just 31% of us have a savings account paying at least 4% APY. The average APY on a savings account is just 0.47%, according to data from the FDIC — but some big banks pay much less than this. My big bank savings account gives me just 0.01%, which is why I only keep the account minimally funded to avoid that monthly fee.

Luckily, losing saved cash to inflation is easily avoided. Take a gander at The Ascent’s list of the best high-yield savings accounts, and you’ll find accounts paying as much as 5.32% as of this writing. Opening a high-yield savings account can help you beat inflation and grow your money — a fantastic thing in an uncertain world.

By and large, savings accounts are pretty great. Just be sure to check that your bank is covered by FDIC insurance, and if you don’t already have one, seek out a high-yield savings account with a solid APY and no fees. You’ll most likely find the best one for you offered by an online bank.

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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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You may have more time than you realize to file a tax return. Read on to learn more. [[{“value”:”

Filing taxes is something everyone is supposed to do. And it can be in your best financial interest to file a tax return, since often, it means scoring a tax refund. That’s extra money in the bank for you.

But what if you never got around to filing your 2022 tax return in 2023? Maybe life got busy — you had a medical issue to deal with, or had a string of sick kids as the mid-April deadline approached. Or maybe you were having a hard time in your personal life and just couldn’t focus on taxes.

If you never filed a 2022 tax return last year, you’re not out of luck. You actually get three years from a given return’s filing deadline to submit it and claim a refund.

Since 2022 returns were due in April 2023, you get until April 2026 to submit yours and snag any money you’re due. But make sure you’re filing your return carefully. It could pay to enlist the help of a tax professional if your situation is complex.

There’s time to act, but it pays to do so quickly

You technically have a couple more years to file last year’s tax return and claim your refund. But you may want to get moving sooner rather than later. The longer you wait, the longer you delay your money.

And if you’re worried about being penalized for a late filing, in this situation, you don’t have to worry.

Mark Steber, Chief Tax Information Officer at Jackson Hewitt Tax Services, says, “Just because you missed the deadline doesn’t mean the IRS will punish you by completely removing the opportunity to collect a refund. In fact, every year the IRS announces how much money is still ‘left’ in unclaimed tax refunds from the closing year — and it has been averaging over a billion dollars each year for the last few years.”

Now, that said, Steber does warn, “Some states might have late-filing penalties, even if you are due a federal refund. Additionally, taxpayers who missed past tax deadlines might face federal penalties and interest, especially if they owe the IRS and don’t have a refund coming their way. This includes the failure-to-file penalty and the failure-to-pay penalty. There is also generally interest that accrues on any unpaid tax from the due date until the payment is made in full.”

In other words, the IRS will not penalize you for being late with a tax return if you’re due a refund, because all that means is that it got to hang onto your money longer. But if you owe the IRS money and were supposed to have paid your tax bill by last April, you can expect interest and various penalties for being late. The longer you wait, the more all of those can rack up against you — so all the more reason to get started on that old tax return ASAP.

It could pay to get tax help

If your tax situation is straightforward, then you may be just fine to submit your return on your own. But if you’re itemizing deductions or own a small business, you may want to hire a professional.

There can be a lot of different rules to know in those situations. So having a professional take care of your filing could potentially result in a higher refund or prevent you from making a costly mistake.

Steber says, “I almost always recommend people work with a tax professional rather than risk filing a tax return by themselves.”

However, since we’re already heading into the heart of the 2024 tax-filing season, if you intend to secure help in filing an old return, act now. The longer you wait, the harder it might be to find a great tax professional with availability.

Plus, if you’re in a position where you never filed your tax return in 2023, you may not want a repeat in 2024. So the sooner you line up help, the sooner you can get assistance with last year’s return as well as this year’s.

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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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What’s in store for home buyers and sellers next month? Read on to find out. [[{“value”:”

If you’ve been struggling to buy a home for more months than you can count, you’re not alone. The housing market has been extremely challenging for buyers over the past year. The combination of higher mortgage rates and limited inventory has backed buyers into a corner.

And sellers haven’t had it easy, either. Sure, you can argue that they’ve had the upper hand. But many sellers today want to list their homes but can’t due to not being able to afford a replacement home.

Will things get better in 2024? Maybe, as the year goes on. But here’s a preview of what to expect in February. And spoiler alert: It’s not necessarily great news.

1. Mortgage rates might drop — but only modestly

In late 2023, mortgage rates were still sitting above 7%. Since the start of 2024, they’ve been edging downward, and as of mid-January, they were at 6.6% for a 30-year loan.

There’s talk that the Federal Reserve will seek to cut interest rates in 2024. Once that happens, mortgage lenders might lower their rates. But for now, we shouldn’t expect a notable drop in borrowing rates for home buyers in February. Rates could fall lower in the 6% range, but sub-6% mortgages are unlikely next month.

2. Inventory is likely to remain sluggish

As of late December, there were only 1 million available homes on the market, according to the National Association of Realtors (NAR). That might seem like a lot, but it represents a 3.2-month supply of available properties.

It can commonly take a six-month supply of homes to meet buyer demand in full. And because winter isn’t a very popular time to list a home, if we were at a 3.2-month supply going into January, we’re unlikely to see a large uptick in February.

Plus, let’s remember that the main reason people aren’t selling homes right now is to hang onto the competitive mortgage rates they locked in a few years ago. Until those come down, inventory is unlikely to increase very much.

3. Home prices will likely remain elevated

The NAR reported in January that as of December, the median existing U.S. home was selling for $389,800. Since real estate inventory is unlikely to budge, we’re likely to see elevated home prices continue into February.

That might seem like good news for sellers. But it’s not necessarily a positive thing. When sellers sell, they need a place to go. If they can’t afford a new place, they’ll be stuck in the same situation as buyers.

Don’t be shocked if a February home purchase doesn’t work out

You may be really eager to become a homeowner in February, especially if you’ve been house-hunting for a while. But unfortunately, February isn’t exactly shaping up to be a great month to buy a home. And it’s not necessarily a great time to sell one, either.

So what should you do? One option is to sit tight and wait until spring. Historically, it’s when listings tend to reach their highest level of the year.

We shouldn’t expect a huge burst of spring inventory this April or May due to the whole mortgage-rate issue mentioned earlier. But if rates continue to creep downward, that plus a modest influx of homes hitting the market could set a different stage for buyers later on in the year. So it’s important to keep tabs on your local real estate market and not give up hope.

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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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