Money Management

Is the time right for you to start a business this year? Here’s how to know. 

Starting a small business has the potential to be an extremely rewarding experience. And if it’s a move you’ve been considering, you may be looking to finally make it happen in 2024. But before you finalize that decision, run through these essential questions.

1. Have I really thought through my business idea?

No matter the nature of your business, it’s important to think about every aspect of what it will look like. How will your product or service stand out from the competition? How will you sell and market your product or service? And how much help will you need?

You might have a truly innovative idea you’re eager to bring to life. But think through the logistics and details before deciding you’re ready to quit your day job. If there’s an aspect of starting your business you haven’t quite figured out, it may be better to wait and keep earning a paycheck while you get things sorted.

2. Does my business need funding, and do I know where to get it?

It can take money — and a fair amount, at that — to get a business off the ground. If you know you’ll need funding to start your business, now’s the time to figure out where it will come from.

Maybe you’ll apply for a personal loan to finance your start-up costs. If so, check your credit score first to make sure it’s in good shape. The higher your score, the more likely you are to get approved for a loan, and at a favorable interest rate.

3. Do I have enough savings to cover a couple of years’ worth of bills?

New businesses take an average of two to three years to become profitable, says FreshBooks. It’s not unreasonable to save enough to cover at least 24 months of basic expenses before starting a business.

Now, if you have a spouse and they work as well, you may be able to get away with a lot less savings. But either way, operate under the assumption that it will take quite a while to start making money from your venture. If things happen sooner, you’ll be pleasantly surprised and have that much more money in the bank to fall back on.

4. Am I expecting major life changes this year?

Running a business requires a commitment. And you may find that you’re putting in a lot of time in your first year to get that business set up and running smoothly. So if you’re expecting a major shake-up in your personal life this year, it may not be the best time to take on the workload and responsibility of a business you own.

Let’s say you’re currently child free but your spouse is expecting in June. You might think having a baby shouldn’t stop you from starting a business. But even if you have a child care plan in place that allows you to work full-time, you’d be surprised at how months of sleepless nights render you ineffective on the job. In a situation like this, holding off a year to start a business could make sense.

You may be really eager to become a business owner sooner rather than later. But run through these essential questions to make sure that starting a business in 2024 is the right call.

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Your need for life insurance hinges more on your circumstances than age. Read on to learn more. 

When you’re on the younger side and are trying to set financial priorities, buying life insurance may not immediately top your list. At that stage of life, you may be doing your best to build an emergency fund, pay off college, and get rid of lingering credit card debt.

Recent data from Edward Jones reveals that only 27% of Americans ages 18 to 34 have life insurance. And that’s not totally surprising.

But it begs the question: Do you need life insurance if you fall into that age range? And the answer is, it depends.

Do you have people in your life who depend on you financially?

If you’re not sure whether to get life insurance, there’s really only one question you need to ask yourself: Are there people in my life who depend on me financially, or who might struggle financially in my absence?

If the answer is yes, then it really doesn’t matter how old you are. In that case, there’s a reason to buy life insurance. It’s that simple.

Perhaps you’re 45 years old, single, and child free. You may also not have any family members you’re supporting financially or providing care or assistance to. In that case, you can probably save yourself the money life insurance would cost.

On the other hand, you could be 25 years old with a spouse and a child. In that situation, life insurance makes sense despite your young age.

What’s more, it pays to consider life insurance even if you don’t work but care for people in your life. Let’s say you’re a stay-at-home parent to two young children. You might assume you don’t need life insurance because you don’t have earned income to replace. But if something were to happen to you, it would take money to pay for your kids’ care so their surviving parent or designated caregiver could work. So even in that situation, you can make the case for life insurance.

Applying at a young age could result in savings

Generally speaking, younger Americans may be less likely to have dependents than those who are older. So that could explain why such a small percentage of Americans aged 18 to 34 have life insurance. But if your family could benefit from a policy, then it pays to shop around with different life insurance companies and see what rates you’re quoted.

One benefit of buying life insurance when you’re young is that you may be in a position to snag a more competitive premium rate. This isn’t a given, because it’s possible to have a health condition at age 22 that reads as a higher risk in the eyes of an insurer. But generally speaking, the younger you are when you apply for life insurance, the less you might pay for it.

When choosing a policy, you have options. Term life insurance protects you for a limited period but is commonly far less expensive than whole life insurance, which protects you on a permanent basis. With term life insurance, you can choose whether you want 10 years of coverage, 20 years of coverage, or more.

Similarly, you’ll need to land on the right amount of coverage. A good rule of thumb is to take your salary, multiply it by 10, and then add any joint debts you might have with a would-be beneficiary of your policy. If you’re married, earn $75,000 a year, and have an outstanding $250,000 mortgage loan jointly with a spouse, then a $1 million policy could make sense.

Take some time to think about the type of life insurance that’s best for you and how much coverage to buy. But don’t assume you don’t need that coverage just because you’re young.

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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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Smart thermostats can be a pricey upgrade. Here’s how they can be worth the cost. 

To paraphrase the infamous quote, sometimes you need to spend money to save money. In this case, I’m talking about upgrading to a smart thermostat.

A long way from the manual thermostats of yesteryear, smart thermostats are wifi-enabled, AI-powered, talking digital thermostats that can slash your energy bill. Here’s how.

1. More efficient use of energy

My old manual thermostat meant that every time I left the house, I needed to remember to turn the thermostat down (in the winter, up in the summer) so I wasn’t heating a house I wasn’t even in.

Any guesses to how often I forgot? Yep, at least that often.

Sure, a simple programmable thermostat can help. But they’re not only a pain to program (just setting the time is annoying, let alone actually programming them), but they also are limited in how many temperature changes you can program.

My smart thermostat lets me fine tune my settings so it exactly matches my needs. It also learns; if I wind up turning it down around the same time every Thursday, for instance, it will learn this habit and start adjusting on its own (provided you enable this feature).

Additionally, smart thermostats come with mobile apps. This means I can adjust my thermostat from anywhere. Out to dinner and forgot to turn it up/down? Handled. Coming home early and want a warm welcome? Done!

2. Smart energy incentives from your power company

Many large power companies have introduced various smart energy programs. Essentially, when you opt into these programs, you give the power company permission to adjust your thermostat settings before and during high-demand events.

For instance, energy use tends to spike in the evening when most people get home from work and turn their HVAC on. If your area is expecting a drop in temperature, that power use can get even worse. During these high-demand events, the power company may pre-cool your home an hour before demand rises, then boost your thermostat a few degrees for a few hours.

Since many power companies charge more money for power used during high-demand periods, this action alone can save you money on your power bill. But that’s not all. You’ll also be eligible for a sign-up bonus, typically $50 to $75, plus an annual incentive — usually $20 to $40 a year — for being enrolled.

3. Early detection of HVAC or moisture problems

“An ounce of prevention is worth a pound of cure.”

Pretty much any problem with your home is 100% easier to solve when you catch it early. The longer it goes on, the worse the damage gets — and the more expensive it is to fix.

(FYI: Your homeowners insurance will cover damage from sudden and catastrophic problems, like a pipe that bursts. However, it won’t cover ongoing leaks or problems from wear and tear.)

Smart thermostats are opening up a wide world of diagnostic capabilities. For instance, my thermostat itself includes both a carbon dioxide monitor and a humidity sensor. It also has external sensors I can put around my house to get temperature and humidity readings from every floor.

If there is a sudden increase in humidity, drop in temperature, or spike in carbon dioxide levels, it will send me an alert on my phone. I can then address the problem right away.

Saving on smart thermostats

Although smart thermostats can definitely be a sound investment in energy savings, that investment can be costly. New smart thermostats can easily reach up to $200 for top-of-the-line units (and the extra sensors can add up quickly, too).

If you’re of a mind to upgrade, be sure to check with your power company first. Even if it doesn’t offer a smart energy incentive program, most power companies have some sort of discount or rebate for the actual smart thermostat purchase. This could knock $50 or more off the price.

You should also choose your payment method wisely. Select the best rewards credit card for your purchase. For instance, if you’re buying from the hardware store, choose a card with bonus rewards on those purchases. If nothing else, choose a 2% cash back card that will offer good rewards no matter where you buy.

Keeping energy costs down can do wonders for your personal finances. While a smart thermostat isn’t for everyone, it can be a great way to save money for many folks.

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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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The stability of homeownership can alleviate financial stress. But there’s a flipside you should know about, too. Read on to learn what it is. 

These days, many people are experiencing their fair share of financial stress. After all, inflation is still a problem, and higher borrowing costs are making life difficult for consumers. Throw in the generally high cost of housing, and it’s not shocking to learn that 74% of Americans are stressed about their personal finances, with 37% describing themselves as “very stressed,” according to a CNBC survey from late 2023.

That same survey, meanwhile, found that homeowners feel significantly less financial stress than those who do not own a home. But while it’s easy to see why that may be, the reality is that owning a home is not necessarily less stressful than renting. If anything, it has the potential to be a much larger strain on your personal finances.

There’s a benefit to homeownership — but also a downside

When you rent a home, you’re really only guaranteed housing for the duration of your lease. Once that lease expires, your landlord could decide to sell their property, forcing you to move. Or, your landlord might raise your rent to a large enough degree that you have no choice but to seek out a different housing situation.

When you own a home, there’s more stability. The only person who can decide to sell that home is you, unless you stop making payments on your mortgage. In that case, your mortgage lender could eventually force the sale of your home via foreclosure, but that’s a pretty extreme situation.

However, being a homeowner does not in any way mean locking in predictable housing costs. Many homeowner expenses have the potential to rise over time.

If you have a fixed-rate mortgage, your mortgage payments themselves are locked in for the life of your loan. But your property tax bill could rise from one year to another. Your homeowners insurance premiums could also increase — whether or not you file claims against your policy. And you could have a year when a major system in your home, like your heat, breaks completely, forcing you to shell out thousands of dollars for a repair.

One can argue that from a financial perspective, renting is a less stressful option. That’s because your housing costs are locked in for the duration of your lease.

If you sign a 24-month lease where you agree to pay $1,500 a month for your apartment, that home isn’t going to cost you more during those two years. As a homeowner, you could face a world of financial surprises during a similar time frame.

Should you own, or should you rent?

Ultimately, owning a home or renting one has the potential to be stressful. If you’re not sure which is the best option for you, think about your general life situation.

If you’re in a steady job and are getting ready to settle down with a partner and start a family, then you may feel like you’re ready for homeownership. If you’re new to your career and aren’t sure of your next professional move, and you’re romantically unattached, then you may want to rent so you can keep your options open.

Also, consider the work involved in owning a home outside of the cost. That alone can be stressful. When you own a home and snow falls, you have to remove it — quickly. As a renter, that’s generally going to be your landlord’s problem. You’ll need to think about your schedule and the capacity you have for home maintenance.

There’s no definitive way to determine whether owning a home is more stressful than renting or vice versa. It may simply be that in the above survey, homeowners happened to have less financial stress. So think about which type of housing situation is best for you — and which one is likely to lead to more financial stability.

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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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