Money Management

A health savings account can be a great way to reduce taxes and pay for healthcare, but not everyone qualifies. See how to get an HSA this year. [[{“value”:”

If you want a better way to pay for out-of-pocket healthcare costs while saving money on taxes, opening a health savings account (HSA) is a great strategy. But not everyone is allowed to open an HSA. To qualify for a health savings account, you need to have the right kind of health insurance, known as a high-deductible health plan (HDHP).

If you have an HDHP and have not yet opened an HSA, you should really consider opening an account in 2024. A health savings account can be a great way to reduce your taxable income, save money for healthcare, and even invest extra money for retirement.

Let’s look at a few reasons why a health savings account is such a valuable tax benefit, and why you should open an HSA (if you qualify) in 2024.

Why a health savings account (HSA) can save you money on taxes

Here’s why the health savings account is so valuable: It lets you deduct thousands of extra dollars from your taxes. The HSA is an “above the line” tax deduction, like traditional IRA contributions. An HSA is an extra place to put money that reduces your taxes, even if you’re already maxing out your IRA and 401(k). No wonder some people envy HSA owners.

In 2024, here’s how much you can put into an HSA (and deduct from your income on your tax return) based on whether you’re single or have family health insurance coverage:

Single: $4,150Family: $8,300

And if you’re going to be 55 or older in 2024, you can put an extra $1,000 into your HSA — or an extra $1,000 for each spouse over 55 in a married couple with family coverage.

How to qualify for an HSA

There are no limits on income for opening an HSA and getting the full amount of tax deductions. However, if you want a health savings account, you need to have the right kind of health insurance. Only high-deductible health plans qualify for health savings accounts. In 2024, according to IRS rules, here’s what your insurance plan needs to look like to get an HSA:

Not all health insurance plans qualify for an HSA. Some insurance plans might have coverage that’s “too good” to qualify for an HSA (with low or zero deductibles). Others might have an annual out-of-pocket max that is “too high” for an HSA.

If you get pretty comprehensive, generous health insurance from your job, you might not be able to use an HSA. Or if you choose a lower-premium health insurance plan that covers catastrophic healthcare expenses, but asks you to pay for most of your own routine healthcare costs, your plan’s deductible might be too high to qualify for an HSA.

Qualifying HDHPs that are HSA-eligible will usually advertise this in brochures, websites, or other materials given to you during annual enrollment at work. If you buy health insurance for yourself or your small business through an insurance agent, ask to see your options for HSA-eligible plans.

HealthCare.gov also offers a filter option to see HSA-eligible plans in your search results when looking for health insurance. Not all health insurance plans on HealthCare.gov qualify for an HSA, but you can find HSA-eligible plans at the Gold, Silver, or Bronze levels.

Is it too late to open an HSA in 2024?

Annual open enrollment for 2024 has already ended, as of Jan. 16, 2024. But if you have an HDHP for 2024, you can open a health savings account anytime. Don’t ignore this great tax benefit for 2024. You can put money into your HSA for 2024 anytime between now and the April 2025 tax deadline — just like an IRA, you can make “prior year” contributions to a health savings account. Start planning now to make the most of your HSA in 2024.

What if your current health insurance plan is not HSA-eligible?

If you get a new job in 2024, you can try to get an HSA-eligible insurance plan through your new employer. Or if you have other big life changes in your family in 2024 (like a marriage, divorce, moving to a new home in another ZIP code, and a few others), you can qualify for a special enrollment period and switch to a different insurance plan that will let you get a health savings account.

Bottom line

Using a health savings account (HSA) is an excellent strategy for your personal finances because it lets you pay for healthcare costs and increase your tax deductions. Check to see if your insurance plan is HSA-eligible — if so, open an HSA in 2024 and try to put in the maximum amount that you’re allowed.

If your insurance plan is not HSA-eligible, you might want to consider switching to an HDHP. Plan ahead for the next open enrollment period in Nov. 2024–Jan. 2025.

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While a higher credit score can make buying a home easier, you still have options without one. Read on to see what to do. [[{“value”:”

It might not be the best time to buy a home (see: the average rate on a 30-year fixed-rate mortgage as of this writing, which is 6.6% according to Freddie Mac), but a lot of people are still hankering to get on the property ladder.

Your credit score is a pretty darn important part of your financial profile, but if it’s seen better days, you might be worried about your ability to qualify for a mortgage. Here are a few options for buying a home with a lower score.

1. See if you qualify for a government-backed mortgage

There are so many different types of mortgages out there, so don’t assume that a conventional mortgage is your only option. Conventional loans can be more difficult to qualify for, and they generally require a FICO® Score of at least 620. But if you’re a first-time buyer, you might be able to qualify for an FHA mortgage — these are available to you with a 3.5% down payment if your credit score is 580 or better. If it’s at least 500, you might still qualify with a 10% down payment.

If you’re active-duty military or a veteran, a VA loan might be just the ticket — and there is no official credit score requirement for these (the lenders offering them decide). Live in a qualifying rural area and have a lower income? A USDA loan could help you become a homeowner, but again, your lender sets the credit score requirement.

2. Make a larger down payment, if you can

This move is not possible for everybody, but if you have a decent income and can afford to save up a larger down payment (or can get family assistance in the form of a down payment gift), this might help. The reason mortgage lenders are more reluctant to work with buyers who have lower credit scores is because that score might indicate you are a riskier borrower — and perhaps less likely to make payments on the loan. Fair or unfair, lenders are happier to offer mortgages to those they view as less risky.

Putting more money down for a home purchase can lower your risk, because you’ll have more “skin in the game” right from the start. If you can only make a 5% down payment on a mortgage and must finance 95% of the home’s purchase price, that might make a lender sweat. Put down 20% or more? You’ll likely do everything you can to make your payments, so you’re not out the equity in the home. A higher down payment could be your ticket to mortgage approval.

3. Consider a non-qualified mortgage

Traditional mortgages have a list of buyer requirements regarding not just credit score, but also debt, income amount/type, loan terms, and more. If you can’t qualify for one based on your financial profile, another option you have is a non-qualified mortgage, or non-QM.

Non-QMs are not backed by any government agency, and have more flexible requirements, while still being about the same level of difficulty to apply for as a standard mortgage. Explore your options with a lender that specializes in bad credit (more on them below), or inquire at a local credit union (especially if you already happen to be a member in good standing).

4. Target the right mortgage lenders

Finally, it’s a good idea to lean on the power of options when you’re trying to secure a mortgage with a lower credit score. You have so many choices of lender — you can borrow from an online or local lender, different lenders focus on different mortgage types, and some even work best for first-time buyers.

The Ascent maintains a list of the best mortgage lenders for bad credit, and this is a good place to start your search. Also, talk to friends and family who’ve bought houses recently — if you can be honest about your credit score concerns, you may find someone who was in the same boat and willing to recommend the lender they worked with.

If you’re aching to buy a home and your credit score is threatening to hold you back, don’t lose hope. Consider these tips and see if homeownership is in your future.

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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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Gig workers get to be their own boss and embrace flexibility. Keep reading for ways to find success as a gig worker. [[{“value”:”

Gig work is more popular than ever — according to Statista, there are 57.3 million freelancers in the U.S. As I write this, it’s been just about a year since I jumped into the gig economy on a full-time basis, as a freelance writer and editor.

Before quitting my W-2 job, I had ramped up my freelance work, and by the time I was ready to turn in my letter of resignation, I knew that I could make a living in the gig economy and I had built myself some runway for financial security. Here are a few tips you can use to do the same and thrive in 2024’s gig economy.

Prioritize your savings

You might not have the luxury of saving money before becoming a gig worker if you are currently out of work. But I highly recommend ensuring you have money saved if you intend to do what I did and say sayonara to your regular job.

Unfortunately, many Americans are on the razor’s edge when it comes to their savings accounts. The Ascent’s research team found that the median savings account balance was just $1,200 as of July 2023. Life is expensive, and low wages and the pressure of unplanned bills can make it difficult to save.

The great thing about becoming part of the gig economy is that you will no longer be limited to a set salary (or number of hours, if you had a full-time hourly job). This could make it easier to build up savings for emergencies, future goals, or investing — not to mention sleep better at night.

Create routines

As a gig worker, you’ll no longer be beholden to an employer’s schedule or directives. But if you want to succeed at being your own boss, it’s important to make your own routines and determine a schedule that works for you. This will depend on the particular type of work you’re interested in. If you want to drive for a ride-hailing service like Lyft or Uber, you’ll want to figure out when and where the busiest times for rides are in your city, and prioritize being available to work then.

If your gig work is more self-directed like mine, you can design your own schedule based on your needs. Got young kids? You might want to arrange your work days so you’re free when they come home from school. Early riser? Personally, I do some of my day’s work before the sun even comes up.

Don’t forget to also plan for time off — remember, just because you can work all the time, doesn’t mean you should. Gig workers don’t get paid vacation time, but this doesn’t mean you can’t give yourself that gift. At the end of 2023, I created a small pool of “paid time off” for myself. I haven’t had to dip into that money yet, but it’s comforting to know that if I have a day where I can’t work, I can cover my shortfall from it.

Build new skills

The gig economy is dynamic and always changing. If you’re hoping to thrive, you have to be ready to grow and change with it. To that end, it’s worthwhile to add to your skillset as you progress. For example, if you’re a freelance graphic designer, stay up to date on the latest and greatest software programs, and consider adding copywriting to your skills, to become a more well-rounded marketing professional.

Artificial intelligence is increasingly becoming part of the working world, so if you’re in a field that will be particularly impacted by it (such as data analysis and entry, web development, and tax preparation, according to Pew Research), gear up now. Investigate the AI tools available to you and get familiar with them (or at least size up your competition and find ways you can stand out to an employer as a human worker).

Don’t neglect taxes

Finally, if you’re hoping to thrive in the gig economy, there is a major piece of business you need to attend to: taxes. If you used to be a W-2 employee, you probably didn’t think about taxes all that often before — perhaps just at the end of January, when you’d receive a W-2 in the mail, and then again when you file your tax return.

But gig workers are often small business owners, and taxes are a much bigger part of our world. You might need to pay quarterly estimated taxes four times a year (January, April, June, September) and if you neglect to do this, you can be penalized by the IRS.

The whole tax thing made me nervous when I started freelancing, so I sought out a tax professional to work with, but the best tax software for small businesses can also help you figure out what you owe. And don’t forget about deductions! As a gig worker, you’ll get to take deductions W-2 employees can’t, such as for your home office and any supplies you purchase, like a new computer if you’re a writer or graphic designer.

The gig economy has brought a revolution in the who, what, why, where, and when of Americans working. If you intend to jump into it yourself this year, I hope these tips help.

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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 positions in and recommends Uber Technologies. The Motley Fool has a disclosure policy.

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When it comes to joining Costco, you have choices. Read on to see what yours entail. [[{“value”:”

Joining Costco could be one of the best financial decisions you’ll make in 2024. A Costco membership could make it possible to reap a world of savings on the products you buy all the time, from groceries to cleaning supplies to paper goods. You can even stock up on things like clothing and housewares at Costco at competitive prices.

If you’re convinced you’re going to join Costco in 2024, the question then becomes: Which membership should you get? You have two options.

Costco’s basic membership costs $60 a year. An Executive membership costs $120, but for that $60 upgrade, you get 2% cash back on Costco purchases. If you’re not sure which one is right for you, ask yourself these questions.

1. How often do I think I’ll shop at Costco?

Some people are willing to drive longer distances to get to Costco. If your closest store is 30 minutes away, it could still make sense to go once a month to stock up on essentials. But if you don’t expect to shop at Costco more often than that, then you may be better off with a basic membership.

On the other hand, if you have a Costco less than 10 minutes away, you may find yourself buying groceries there regularly. If so, an Executive membership could really pay off.

2. What’s my storage situation at home?

You don’t need to live in a 3,000-square-foot home with 10 closets to benefit from the bulk-buying opportunities Costco offers. If you have a decent-sized hall closet and pantry, it may be easy enough to store the bulk purchases you make.

But if your home is truly tiny, then you may be limited in your ability to take advantage of your Costco membership. Sure, you might be able to bring home a single bulk pack of tissues or toilet paper. But can you fit a mega-pack of tissues, toilet paper, paper towels, and paper plates at the same time? Maybe not.

If you don’t have much room for storage, it could lead to less Costco spending. And if that’s something you’re anticipating, then a basic membership may be your better choice.

3. Am I planning any larger purchases this year?

It takes $3,000 in annual Costco spending to cover the cost of an Executive membership upgrade. That’s because you’ll pay $60 for it, and 2% of $3,000 is $60. Once you spend $3,001 at Costco in a single year, the Executive membership makes it so you’ve come out ahead financially.

You may not think you’ll spend $3,000 or more at Costco on food and household essentials this year. But if you’re planning to make one or two larger purchases, and you decide to get them at Costco, that could push you over that threshold.

Let’s say you’ve been saving up for a new living room TV. That alone could be a $1,000 purchase. If you’re also expecting to buy a new laptop this year, that could easily be another $500. So that $1,500 combined is halfway to the $3,000 you need to break even on your Executive membership upgrade.

Remember, too, that vacations booked through Costco are eligible for cash back through an Executive membership. And a family trip alone could cost more than $3,000.

A decision you may not have to lose sleep over

You may be struggling with your Costco membership decision. But one thing you should know is that if you sign up for an Executive membership and don’t spend enough in a year to earn $60 cash back, Costco will let you downgrade to a basic membership and refund you enough to make back your $60 in full.

So, let’s say you buy the Executive membership and only spend $1,500 in a year. That’s just $30 back you’re earning.

If you downgrade your membership after a year, Costco will actually give you $30 back at the time. So for the most part, an Executive membership is actually a no-risk proposition. If you’re on the fence about getting it, you might as well go for 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 has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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