Money Management

Small businesses aren’t set in stone, they’re living entities that require you to check in on them regularly. Find out what I do every January. 

Well, friends, it’s January yet again (I know, right?) and it’s quiet here in the Exciting World of Journalism. We typically have a bit of a lull between Christmas and mid-January, and I do what I can every year to take advantage of this opportunity to look over my books and make sure that I’m tracking everything I think I need to know to keep my freelancing business going smoothly.

I became a full-time freelance journalist in January 2011, days after my newsroom was cleared. A new media company had bought my small local newspaper, and fired all of us, except our managing editor, who was kept on long enough to hire replacements. It went from a thriving small newspaper of about 12 people to a newspaper with just two people overnight. And thus, my freelancing business was born.

But just because my job is making words, it doesn’t really mean that my business necessarily runs any differently from yours at the nuts and bolts level. I still have to make connections, track my expenses, and make sure I’m keeping my head above water, so I thought you might want to see what my process looks like under the hood.

I ask myself these three questions every year to assess my small business.

1. What do I want to know about last year that I can’t find out?

When tracking data for your business, there’s only so much you can really keep track of at a time. I’ve done the alarmingly large spreadsheets tracking everything, only to end up spending more time tracking than working, and I’ve done the base key performance indicators (KPIs) that everybody definitely needs to track, and over time, I’ve kind of found that there’s a bit of an ebb and flow to a truly efficient measurement process.

So, now I ask myself: What do I not know right now that I wish I did? For me, for 2023, it’s how many actual billable hours I worked. I kind of have an idea, but I don’t have any hard numbers, which makes it hard to increase my billable to non-billable ratio. If I learn that I’m actually only writing four hours a day, and doing administrative work for the other four to six, well, maybe I can find another hour in there for billable work. I could increase my productivity or maybe even recapture some time for myself.

That’s a new metric I’m tracking for the new year.

2. How useful were the metrics I did track?

This is a somewhat obvious follow-up to the first, but it’s necessary. Did the metrics I tracked for my small business even matter last year? Was I spending too much time sub-categorizing spending that didn’t need to be sub-categorized in my accounting software? Did I make my life overly complicated in new and exciting ways?

When I find metrics I’m not going to use, or that I no longer care about, I dump ’em. That’s right. I don’t nuke the old data, in case I change my mind later, but moving into the new year, I don’t track that metric anymore. I also remove metrics if I add new ones. For example, the new billable hours metric is replacing a more basic article-by-project count. You can only manage so many metrics, so you have to decide what’s most important.

3. Is my financial setup still serving me?

When you first start a new business, everyone will tell you that you need things like business checking accounts, business credit lines, and all of that — but as a solopreneur, sometimes it’s really overkill (this can also apply to a small shop). So, it’s important to take a look at what you need, not what other people think you need.

For example, you might be running a small service-oriented business that doesn’t collect sales tax. That’s pretty simple accounting, so you may be able to run it with a basic ledger by yourself and use just a business checking and savings combo. But let’s say that you add some employees this year — getting a business credit line might help if you don’t have significant savings, just so you can ensure they’ll always be paid on time. As your company grows, your needs will change, and maybe in five years you’ll want to farm out your accounting to a local accountant, or hire one part time.

Regardless of where you are now and where you want to go, looking at your accounting at least once a year is a great way to check the health of your business. If you’re not collecting money fast enough, you’ll know, or if you are having trouble with co-mingling funds, that will become apparent, and in the quiet days of January, you’ll have the time to correct the issues you find.

The only way to know your business’s health is to take its temperature

It can be tempting to never look at the moving parts of your small business, but if you don’t, you’re going to be in real trouble at some point. Take its temperature on the regular, especially during your slow season, so you have a little time to sit and think. This way, you’ll be ensuring that your small business will live on for as long as you’re having a good time doing what you do.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. This card features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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

 Read More 

Are you overpaying for auto insurance? Here are the companies with the lowest average policy premium amounts. 

What auto insurance companies have the cheapest rates? While it’s impossible to say where you will find the cheapest auto insurance rates, there is publicly available information that shows where the lowest average monthly premiums are.

With that in mind, here are 10 of the largest U.S. auto insurance companies, ranked in order from cheapest average premium to most expensive. Then, we’ll discuss some of the factors that determine how much you’ll pay for insurance, and why the cheapest insurer for you might not be the cheapest on the list.

Which auto insurance companies are the cheapest now?

According to an analysis by Policygenius, here are the average monthly costs of full-coverage auto insurance by 10 of the largest insurance companies, ranked from cheapest to most expensive:

Of course, there are more than 10 auto insurance companies that offer coverage in the United States, so this isn’t meant to be an exhaustive list. It can be a smart idea to shop around with some of the smaller companies that write policies in your state, just in case they offer a better deal for you than bigger companies.

This doesn’t mean you will find these companies the cheapest

To be sure, there is a lot of information that is used to determine what your auto insurance premium will be. Just to name a few factors, your insurance company is likely to take into consideration:

The state you live inYour ageYour marital statusThe particular year, make, and model of your vehicleWhether you buy any other insurance through the same company (bundling discounts)If you’ve taken a defensive driving courseHow long it’s been since your last ticket or accidentYour previous history of insurance claimsYour credit historyHow many miles you drive per year

This isn’t an exhaustive list, but one major takeaway is that every auto insurance company has its own underwriting methodology and may assign different weights to the factors that create your customer profile.

As a personal example, my wife and I recently decided to try and shop around for insurance and found that Geico (our current insurer) was by far the cheapest for us, even though there are others with lower average premiums. One possible explanation is our long-standing relationship with the company. We’ve been insured by Geico for 14 years and we’ve never had an accident. The point is that the insurance company where you find the cheapest coverage could be different than the cheapest listed in the table above.

The bottom line is that the only reliable way to find the cheapest auto insurance for you is to shop around. Most of the auto insurers on our radar allow you to get a quote quickly and easily, and you might be surprised at how much you might be able to save.

Our best car insurance companies for 2024

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

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.Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.

 Read More 

This Costco fan wants to reduce her spending this year. Read on to see which products will be off-limits. 

Shopping at Costco is usually good for my personal finances. My membership gives me access to a host of low-cost grocery items and household essentials. The result? More money in my savings account.

But there are certain Costco items I’ve been known to buy on a whim that I need to pledge to stop buying. Here are three products I’m telling myself I will not purchase in 2024.

1. Seasonal cheesecakes

Last year, I bought a red velvet cheesecake at Costco around Valentine’s Day and a pumpkin cheesecake in the fall. Now to be fair, the pumpkin cheesecake was purchased for my Thanksgiving dinner. And since I had a house full of people to serve dessert to, that purchase seemed reasonable. It’s not my fault only two of my guests had a slice, leaving me to consume the rest in less than a week in the absence of having freezer space.

The red velvet cheesecake, though, was bought for yours truly alone. While I pride myself on being able to take down copious amounts of sweets in a single sitting, even I had to eventually give up and toss most of that cake because it was just too much for one person.

This year, I’m banning seasonal cheesecake purchases unless there’s a really good reason for it (such as bringing one to a large gathering or meal). It’s one thing to buy packaged cookies in bulk that could last months. Cheesecake has a limited shelf life, and even if you have room for it in your freezer, it doesn’t taste the same after it’s been defrosted. And I can’t justify buying it in such large quantities knowing I’m often the only person in my household who eats it.

2. Pumpkin-flavored snacks

Notice a theme here? Costco tends to be a big source of snacks for me in general. But it’s time to stop buying pumpkin items there.

The reason? They can be hit or miss. Recently, I bought a massive bag of pumpkin spice popcorn that I found to be horrendously sweet. Everyone else in my family felt the same. I wound up tossing most of it out, which was a giant waste of money.

I love pumpkin, but I prefer to buy the snack version of it in smaller quantities. And since Trader Joe’s tends to have an awesome selection of pumpkin items in the late summer and early fall, I’d rather spend my money there.

3. Cozy Kirkland clothing I don’t actually need

Junk food isn’t the only thing I tend to impulse buy at Costco. If you look in my closet, you’ll need a variety of fleece tops and sweatshirts that were scooped up at my local warehouse club store.

It’s hard to beat the price point on Kirkland clothing in particular. And some of it looks so darn comfy it’s hard to say no, like this cozy crewneck that would be a great addition to my wardrobe.

But this year, I’m staying away from Kirkland clothing because I frankly don’t need it. As someone who works from home, I don’t require a variety of sweatshirts. I can rotate the same few items and no one would be any the wiser.

You may want to make a list of banned items, too

There may be certain Costco items that tempt you as much as the above items have tempted me in the past. But if money is tight and you’re trying to work on saving more of it, then you may want to make an actual list of off-limits items and take it with you to Costco so you’re motivated to stay on track.

This doesn’t mean you can’t buy anything fun at Costco. But if there are certain items you’re likely to be tempted by that you know you don’t need, or you know won’t be great for your stomach (red velvet cheesecake, I’m talking to you), then pledge to just say no to them. You may end up with more money — and, if you’re me, fewer tummy aches — by the end of the year.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. This card features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.

 Read More 

It’s important to put your emergency fund somewhere safe. Discover one of the best options to ensure you always have easy access to your emergency fund. 

Building an emergency fund is one of the first steps toward financial security. By having money saved for emergencies, you’ll be able to cover those surprise expenses without needing to put them on your credit cards.

When fully funded, your emergency fund will be a significant amount of money. The rule of thumb is to save enough to cover three to six months of living expenses. If living expenses are $5,000 per month for your household, your target emergency fund would be $15,000 to $30,000.

With any type of savings, it’s important to choose the right type of account. This is especially true with emergency savings, as it needs to be secure and accessible at a moment’s notice. And considering the amount you’ll be saving, getting a competitive interest rate on it would be helpful, too.

There are lots of places you could keep your emergency fund. But the only place I trust with mine is a high-yield savings account.

High-yield savings accounts are perfect for emergency funds

A high-yield savings account is a savings account with a generous APY. Most of them are available with online banks. Since these banks don’t have the overhead costs of running branches, they can pay much more interest to account holders. Some of the best high-yield savings accounts currently have rates above 5%.

Other than a higher APY, these accounts work just like any other savings account. They keep your money safe, and you can make withdrawals from them at any time. Most of them don’t include a debit card, so you can’t make withdrawals from an ATM. But you can transfer money to a checking account to use it for paying bills or cash withdrawals.

With their benefits, high-yield savings accounts have everything I want in an account for my emergency fund. Here’s a rundown of why I recommend using them:

They keep your money safe: Most high-yield savings accounts have FDIC insurance covering up to $250,000 per eligible account ($500,000 for joint accounts). You can check if a bank is FDIC-insured on its website or by contacting its customer service.You’ll have easy access to your money: You can withdraw your money at any time. Some savings accounts have monthly withdrawal limits, but not all of them, and the limit is always at least six withdrawals per month.Your savings will earn a competitive APY: If you have a $15,000 emergency fund in an account with a 5% APY, it will earn $750 per year in interest.

What about other types of accounts?

Finding the right place for an emergency fund is a frequent topic of discussion. Some people go with other bank accounts, such as certificates of deposit (CDs) or checking accounts. Those who want a higher return may even invest their emergency funds through brokerage accounts.

Here are the pros and cons of these options compared to high-yield savings accounts.

CDs

With a CD, you lock up your money for a set amount of time and get a fixed interest rate. The highest CD rates are normally a bit higher than what high-yield savings accounts offer, so you can earn more this way.

Since CDs have fixed interest rates, you’re also guaranteed that interest rate for the term of your CD. With a savings account, the rate can rise or fall at any time.

The one big drawback with CDs is that you can’t withdraw your money at any time. If you need to withdraw money before the CD’s maturity date, you’ll pay an early withdrawal penalty. That’s why I don’t recommend them for emergency savings, because you never know when you’ll need it.

Checking accounts

Some people keep all their savings in their checking account. While you can do this, it’s not optimal, and a checking account definitely isn’t the place for an emergency fund.

The top checking accounts are great for managing your money, and some of them also earn interest. But they have much lower rates than what’s available with high-yield savings accounts.

Also, it’s hard to keep your savings organized when you have it all in your checking account. The money you use to pay your bills will be mixed up with your emergency savings. That could mean you accidentally end up spending money from your emergency fund.

Brokerage accounts

Investing is one of the best ways to make your money grow. Case in point, the S&P 500 grew by 24.23% last year. When you have a lot of emergency savings, it’s tempting to put it in the market in hopes of earning more than you would with a savings account.

This is a common mistake people make with their emergency funds, and it can be a costly one. Investing in stocks has historically been a smart way to build long-term wealth. But on shorter timelines, the stock market can be highly volatile. The S&P 500 may have delivered spectacular returns in 2023, but in 2022, it lost 19.44%.

That’s fine when you’ve invested money you don’t need in the near future, because you can wait for the market to rebound. It’s a huge problem if you have an emergency, and your $10,000 emergency fund is now worth $8,000. You could be forced to sell at a loss in this situation.

It takes time and discipline to build an emergency fund. Don’t stash yours just anywhere. I use a high-yield savings account for mine, and that’s what I recommend to everyone I know, as well.

These savings accounts are FDIC insured and could earn you 10x 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 can earn you 10x 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.Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

 Read More