Money Management

Buying an EV can help you get up to $7,500 in federal tax credits — but there are hidden costs, too. Make sure you understand the real costs of EV ownership. 

Many Americans are thinking about buying an EV in 2024. And it might be a good time to buy: EV prices are getting cheaper, and there are generous federal EV tax credits of up to $7,500 when you buy an electric vehicle.

However, before getting your heart set on a new electric vehicle, it’s important to understand the total cost of EV ownership. There are a few misunderstandings and mistaken assumptions that people tend to have about what it really takes to afford all the costs of buying an EV.

Let’s look at the most common mistakes when calculating EV costs and see how much money an EV can really help you save.

Mistake No. 1: Assuming that EV fuel costs will be “zero”

It’s true that electric vehicles don’t burn gas. But that doesn’t mean EV fuel costs are $0. You still have to pay some money to cover the costs of the electricity to fuel your car, whether that’s a higher monthly electric bill from plugging in the car to your house, or the costs of using public charging stations. (Some charging stations are free, but you can often get faster charging by paying a fee.)

If you’re charging your EV at home, it’s not “free” — it’s adding to your total monthly electric bill. For example, according to data from Kelley Blue Book, if you drive the average miles per month and pay the average U.S. price for electricity, it will probably cost about $60 per month to charge your EV at home. However, when you compare that cost of charging an EV to the average amount of money that Americans spend on gas each year, the EV savings become clear.

According to research from The Ascent, the average American spends $2,148 on gas annually, or $179 per month. What if you could replace all of that spending on gas with $60 per month on recharging your EV? In that case, buying an EV could help you save $119 per month on fuel costs — or $1,428 per year.

The lesson is: Buying an EV won’t save you every single dollar that you used to spend on gas. But the savings are still significant!

Mistake No. 2: Thinking that EV car insurance is cheaper

Another big cost of owning an EV is car insurance. Unfortunately, unless you buy the smallest, cheapest EV on the market, your cost of car insurance for an EV is likely to be higher than you would pay for a similar-size gas-powered car.

Here are a few reasons why EV car insurance is more expensive:

EVs are more expensive: The higher the price of a car, the higher the price of car insurance — and electric vehicles are more expensive than gas-burning cars. According to Kelley Blue Book research, as of July 2023, the average sale price of an electric vehicle was $53,469, and the average gas-powered vehicle was only $48,334. In the past few years of high inflation and supply chain problems, many people have felt the pain of rising prices for cars. But electric vehicles are even more expensive: $5,135 more, on average, than conventional cars.EVs cost more to repair: In case your EV gets in a crash, it’s going to cost more money to get it out of the body shop. EVs often have special parts that are more expensive than conventional auto parts, and not every mechanic is certified in EV repairs, which can drive up costs.EV batteries are expensive to replace: The most important part of an EV is the battery. If your EV battery gets damaged, even in a relatively harmless-looking fender bender, it can cost $5,000-$15,000 to replace. Damage to the battery can even cause your EV to get totaled, even if the rest of the vehicle looks fine. All of this means that car insurance companies have to charge extra for EV insurance to cover the risk of those losses.

For all these reasons, be prepared to pay extra for insurance on your electric vehicle.

Mistake No. 3: Forgetting about the extra costs of EV ownership

Buying an electric vehicle, depending on where you live, will bring a few extra fees, taxes, and costs into your personal finances. Some states charge extra taxes, registration fees, or road usage fees to EV owners, instead of the gas tax (which EV owners don’t have to pay, because they never buy gas).

For example, in my home state of Iowa, EV owners have to pay an extra $130 annual fee as part of renewing their vehicle registrations. The state of Iowa also charges an alternative fuel tax of $0.026 per kilowatt-hour for charging an EV at charging stations.

These extra fees and taxes won’t drain your bank account, ideally. And they shouldn’t make a big enough difference to undo the savings you get on gas (and on the lower maintenance costs of owning an EV). But it’s important to be aware that there are some extra costs of being an electric vehicle owner, along with those sweet EV tax credits.

Bottom line: Buying an EV can help you save significant money on gas and car maintenance, but don’t assume that an electric vehicle will be an automatic “win” for your personal finances. There are some extra costs, fees, and taxes involved with owning an electric vehicle. To avoid buyer’s remorse, make sure you understand the cost of EV car insurance before you go shopping for electric vehicles.

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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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When I upgraded my phone recently, I was told I had to buy a specific accessory. Here’s how you can avoid wasting your hard-earned money. 

Recently, I bought a new cellphone because my current phone was getting pretty outdated and it did not have very good battery life anymore.

I was happy to find out that I could get a good deal on a new phone by trading my old one in, and I spent quite a long time going through the purchasing process with my sales representative. It always seems to take a while for the rep to check out the deals and enter the information in the computer.

When I was just about to check out, after being in the store for much longer than I wanted to be, something unexpected — and very unpleasant — happened. Here’s what occurred.

My phone salesperson tried to scam me into buying an overpriced accessory

After I’d spent about 45 minutes going through the purchasing process, it was finally time for me to pull out my credit card and buy the phone. And that’s when it happened. The salesperson brought over a case and a charger and asked me which accessory I would be buying.

When I told him “neither one,” he insisted that I had to buy an accessory in order to purchase the phone. I explained to him that I’d be getting my own custom photo case and that I already had a charger and I absolutely was not going to purchase either item.

I once again said no, he told me he was going to ask his manager, and he came back and said the manager also agreed that the policy was I must buy an accessory. Unfortunately for him, I had checked the internet while he was “asking” his manager and I found this is a common scam. Rumors online suggest that the sales reps are required to push accessories to get their full commission and essentially lying to customers and claiming phones are only sold as part of a bundle is the way some go about it. This is extremely dishonest, and falling for this scam can have a negative impact on your personal finances.

Based on some advice from Reddit, I told him I wanted to speak to the manager directly and I then informed the manager I’d be calling the corporate office immediately to ask about this requirement. All of a sudden, the manager told me I’d “misunderstood” and that I didn’t “have” to buy the accessory, they just “wanted” me to have a case and charger “for my own good.”

This was directly contrary to what I had just been told, so obviously they changed their tune because they knew they were violating policy by trying to bully me into buying an accessory. Of course, I could have just walked away, but it would have been a ton of wasted time and I just wanted my new phone.

Understand your rights as a consumer

As I paid for my phone, I saw other sales representatives pull the same scam with several other customers who were buying phones of their own. I would have intervened and informed them they didn’t have to buy the item, but unfortunately there was a language barrier so I couldn’t — and I saw the other customers shaking their heads but then getting stuck with the accessories in the end.

The sad reality is, sometimes high pressure sales tactics can cause you to waste money from your bank account and it is up to you to know your rights as a consumer. If you visit a phone store and the sales rep tries to force you to buy an accessory, know that you do not have to do so, and consider threatening a call to corporate if they try to tell you otherwise.

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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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Want to buy an electric vehicle in 2024? Make sure you understand the full picture of EV ownership costs. Here’s what you should know. 

If you’re worried about climate change and enthusiastic about electric vehicle technology, you’re probably eager to buy an EV. With massive federal subsidies, new EV charging infrastructure, and the world’s leading car companies launching new all-electric models, EVs look like the future of the auto industry.

But not everyone is on board with EVs. A 2023 Pew Research survey found that 50% of U.S. adults are “not too likely” or “not at all likely” to buy an electric vehicle for their next car. “Range anxiety” is a common concern among people who are hesitant to buy an EV — this means fear of running out of battery far from home. Other people worry about finding enough public charging stations.

But one of the biggest questions is: Will an EV save you money compared to a conventional gas-powered car?

Let’s look at a few misunderstandings about electric vehicle ownership costs — and how you can save money when buying an EV and driving it for years to come.

Misunderstanding No. 1: EVs have zero fuel costs

One of the biggest selling points of electric vehicles is that they don’t need gas. When you buy an EV, your gas budget goes to $0. However, EVs still need fuel in the form of electricity — and unless your home is entirely powered by solar panels that you own, electricity isn’t free. You’ll still have some costs involved in powering your electric vehicle.

But even though electric vehicle fuel costs are not “zero,” they still represent a big savings compared to gas-powered cars. According to Chase Auto, the costs of powering an electric vehicle are about half the costs of fueling a gasoline-burning car. Americans spend an average of $2,148 per year on gasoline (according to research from The Ascent), so if you cut that cost in half with an EV, you’d save $1,074 per year on gas by switching to an electric vehicle.

Misunderstanding No. 2: EVs don’t need maintenance

It’s true that, because they don’t have an internal combustion engine, electric vehicles have simpler maintenance. EVs don’t need oil changes, transmission service, cooling system flushes, or replacements for spark plugs and drive belts. EV engines don’t have as many moving parts as a gas-powered car. Electric vehicle brakes and brake pads also tend to last a lot longer than on a conventional car, because of EV regenerative braking.

But just like fuel costs, your EV maintenance costs will not be “zero.” Electric vehicles still need maintenance, and for some things, the costs might be more expensive than a gas-powered car. For example, EVs need more frequent tire rotations, and the tires might need to be replaced more often (due to the higher weight of the car — batteries are heavy).

But on the whole, according to research cited by Chase Auto, EV maintenance could cost about $600 less per year ($3,000 over five years) compared to a gas-powered car.

Misunderstanding No. 3: EV car insurance costs the same as regular cars

One of the ongoing costs of owning a car is paying for car insurance. If you’ve been struggling with high prices for car insurance, you might want to think twice before you buy an EV. Depending on which EV you buy, your car insurance costs might be more expensive than for a similarly-priced gas-powered car.

Here’s why: Although electric vehicles are cheaper to maintain, if you get in a crash, they’re often more expensive to repair — and auto insurers realize this and charge more for insurance. Electric vehicle parts can be harder to get, and not every mechanic or body shop is certified to fix electric vehicles. As EVs become more widespread, these extra EV repair costs should come down. But in the meantime, if you buy an EV, you might need to be prepared to pay a “premium” for your car insurance premiums.

Bottom line: EV ownership costs can be expensive, even if you get the full $7,500 EV tax credit for buying a new electric vehicle. But don’t let that hold you back from getting an EV. With all the money you save on gas and maintenance, EV ownership costs can be competitive with a gas-powered car — or even less.

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.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

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There is no such thing as “breakfast food.” Here’s how breaking out of that mindset can save you money on groceries. 

Millions of people are living with a horrible breakfast burden. But they don’t have to. I’m here to share a breakfast secret with you that could very well change your life and your personal finances:

There is no such thing as breakfast food.

Alright, so hear me out. Here in the U.S., many of us have been raised to believe in this idea that there are certain “breakfast foods,” and that your first meal of the day has to be drawn from that list.

But guess what? That’s nonsense. You don’t have to eat eggs and oatmeal just because it’s morning. You can actually eat whatever you want. And making peace with this idea can save you time and money.

A brief history of breakfast

When colonizers first settled in the U.S., breakfast wasn’t much different from any other meal. You ate what you had. If you were well-off enough to have leftovers after dinner, that was breakfast. If not, you ate whatever was on hand; often, that was porridge because it was cheap and filling.

Either way, you didn’t say, “Oh man, it’s not a Complete Breakfast if it doesn’t include an animated mascot and maple sap.” No, that came later, generally attributed to a wacky health guru during America’s industrialization.

Will Keith Kellogg was a big fan of healthy bowel movements. And his invention — Corn Flakes — was inspired by his desire to help others have many, many movements each day.

Americans, who increasingly worked long hours in factory jobs, wanted healthy and convenient foods. So they were ripe for the picking when Kellogg pumped massive amounts of money into advertising his “healthy” breakfast cereal. (As did his rival, C.W. Post, who produced “healthy” Grape-Nuts. And their rivals, and so on.)

Soon, Americans were convinced that cereal was an essential “Part of a Complete Breakfast.” (It didn’t hurt that it was cheap and easy.) Now, five generations have grown up in the advertising shadow of Big Breakfast such that most of us can barely imagine a morning meal that doesn’t include something from Kellogg’s or Post.

How changing your mindset can boost your budget

When breakfast cereal first hit the market, it very well may have been cheap and healthy. Today…not so much. A box of brand-name cereal at my local grocer costs upward of $5 a box. We’re not even talking about family-size! (And I won’t even get into how much sugar is in that box.)

No wonder the breakfast food industry is expected to grow by $125 billion by 2027.

You don’t need to contribute to the overflowing pockets of Big Breakfast. Once you break out of the idea that breakfast has to contain certain foods, you open up a literal world of possibilities.

Eat like our forebearers did and enjoy dinner leftovers at breakfast. (And no, I don’t mean cold pizza like you ate in college — unless you’re into that. No judgment.) Leftovers that may not seem like enough to save for the next night could actually make a perfect small breakfast on your way out the door.

Pro tip: You can wrap almost anything in a tortilla for a great to-go meal.

Or if you have an industrious day off, you can batch-prep breakfasts (and lunches) out of cheap and easy ingredients. Rice and beans can be made in large quantities, and they combine into a complete protein that’s nutritious and filling — and about as affordable as meals get. Make use of veggies (store-brand frozen are usually inexpensive), herbs, and spices to change up the flavors.

Additional ways to battle rising grocery prices

Beyond changing how you approach breakfast, there are tons of ways to cut costs at the grocery store. Here are a few of my go-to tips:

Meal plan around specials: I don’t plan meals and then shop. I browse the sales flyers and plan my meals around what I can get for a good price. Sometimes, that even changes when I’m at the store if I find a particularly good Manager’s Special in the meat or veggie department.Make use of digital coupons and store apps: Most major grocery chains offer a mobile app full of digital coupons. Some may also offer a rewards program based on how much you spend. Even better, these typically stack.Maximize credit card rewards: The best grocery rewards cards can slash 6% (or more) off your grocery bill in rewards. (They also tend to have other useful bonus categories, like offering restaurant or gas rewards.)Consider wholesale clubs: Larger families mean larger grocery bills. Depending on the size of your family — or just your appetites — shopping for groceries in bulk at a wholesale club, like Costco or Sam’s Club, could save you a lot on groceries and household goods alike.

Keeping up with rising grocery costs is hard enough when you don’t have to worry about social constructs limiting your options. Break out of the breakfast food bonds that bind you. It will open up your food horizons, and, hopefully, open up your budget, too.

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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.Brittney Myers 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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Before you buy an EV, make sure you understand its financial impact. You’ll save money on gas, but here’s how you could pay more in other ways. 

Many people are curious about buying an EV because they think it will help them save money on gas while saving the planet from climate change. But the full picture of an EV’s effects on your personal finances can be complicated. If you want to buy an EV, there’s some good news and bad news for your bank account.

Let’s start with the bad news first — and show you a few examples of how buying an EV can help save money on the total costs of car ownership.

Bad news: EVs are more expensive than regular cars

EV prices have been coming down in recent months, but they’re still more expensive than “regular” gas-powered cars. Survey data from Kelley Blue Book shows that, as of July 2023, electric vehicles had an average sale price of $53,469, or $5,135 more than the average price of a gas-powered vehicle ($48,334). This makes the average price of an electric vehicle about 10.6% more expensive than a gas-burning car.

But you can make up for that extra sticker price in no time, by saving big bucks on gasoline, right?

Good news: You’ll save money on gas and maintenance

It’s true: EVs really do save you a lot of money on gas. According to data from Chase Auto, it costs about half as much to power an EV (by plugging it into your home outlet in your garage, or paying for public charging stations) as it does to pay for gas in a conventional car. And Americans spend an average of $2,148 per year on gasoline (according to The Ascent’s research). This means an EV can save you $1,074 per year on gas (take the average annual gas spending of $2,148 x 0.50 = $1,074).

After five years of owning an EV, you’d save $5,370 compared to what you used to spend on gas. These fuel savings alone can help you more than recoup the average price difference between an EV and a gas car ($5,135).

Electric vehicles can also help you save money on car maintenance. EV engines have fewer moving parts that can break and leak and ooze. Chase Auto estimates that the average EV’s lower-cost maintenance will save you another $3,000 in the first five years (about $600 per year).

Bad news: Insuring an EV might be more expensive

Because EVs are more expensive (on average) than gas-powered cars, they’re also more expensive to repair — and more costly to insure. Exact car insurance prices for EVs are hard to estimate. Your EV car insurance price will depend on where you live, which model you own, your driving record, and other factors. But be prepared to pay extra to a car insurance company. Shop around for car insurance quotes before you get your heart set on shopping for a new EV.

Good news: You can get state tax credits and utility rebates

Want to take some of the sting out of those car insurance prices? One last bit of good news: Depending on where you live, you can get some sweet state tax credits and local utility rebates for buying an EV. (These state and local tax credits and rebates are in addition to the federal EV tax credit of up to $7,500 for buying a new EV, or up to $4,000 for buying a used EV.)

For example, if you live in Colorado, you can get a state tax credit of $2,000 for buying a light-duty EV. Xcel Energy customers with qualifying incomes can get a rebate of $5,500 for buying or leasing a new EV, or $3,000 for buying or leasing a used EV. There are also incentives from utility companies for installing EV chargers at your home, such as Xcel Energy’s rebate of $500 (or more, for customers with lower incomes).

RELATED READING: Complete Guide to Electric Vehicle Tax Credits, Rebates, and EV Charger Incentives

Bottom line: Even with more expensive EV car insurance premiums, buying an EV can help you save thousands of dollars on gas and maintenance over the life of the vehicle. EV prices are likely to get more cost-effective in the near future, as battery prices get cheaper, and more car companies launch new mass-market models of EVs in the U.S. EV car insurance prices might get more cost-competitive, too — as EV parts get cheaper and EV repairs become more widely available.

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.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

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Many Americans will spend more than $1,000 over the winter months to stay warm. Here are some tips on how to lower your heating bill. 

Winter weather is already in full swing where I live in the South, with temperatures regularly dipping below freezing overnight. My heating bill is higher than it usually is this time of the year, and some Americans may be experiencing the same thing.

Last year’s high energy costs chilled Americans’ personal finances as residential gas prices reached their highest in over a decade.

Thankfully, there might be some relief this year. The U.S. Energy Information Administration estimates heating costs will be lower this winter than last. But that doesn’t mean heating your home will be cheap.

Here’s the estimate for total winter heating costs for November 2023 through March 2024 and their change compared to the previous winter:

Natural gas heating total cost: $611 (down 20%)Electricity heating total cost: $1,072 (down 1%)Propane heating total cost: $1,328 (down 4%)Oil heating total cost: $1,722 (no change)

Of course, your heating bill will vary depending on what you set your thermostat to, the local energy costs where you live, the energy efficiency of your home, and many other factors.

While you can’t control the temperature outside, you can do a few things to lower your monthly heating bill.

1. Lower the temperature on your thermostat

Cost savings: 1% to 3% for every degree

Turning down the thermostat is the simplest and cheapest way to lower your monthly heating bill. Turning the heat down may not seem like it will save you much money, but you could save 1% to 3% on your heating bill for every degree you lower your thermostat.

One of the best times to do this is at night when you’re less likely to notice when the heat is coming on. Using a programmable thermostat to automatically lower the temperature at night or while you’re away can also help you reduce your energy usage.

2. Seal leaks and add insulation

Cost savings: Up to 15% on heating costs

Another easy and inexpensive fix for high heating bills is to seal your home and add additional insulation. The Environmental Protection Agency (EPA) estimates that doing these two things could save you up to 15% on your heating bill and save you on your cooling costs in the summer.

Sealing up your home can involve covering any area where air leaks, including around doors, windows, and pipes. According to the EPA, the best places to add additional insulation are attics, floors over crawl spaces, and basements.

3. Replace inefficient older appliances

Cost savings: Up to 30% on energy bill

Replacing older appliances, like a heat pump or gas furnace, can be rough on your credit card bill, but the long-term cost-savings of lowering your energy bill by up to 30% will help offset the cost. The home repair website Angi says the cost to replace a mid-range gas furnace is between $1,000 to $3,500.

Even if you can’t replace your furnace or heat pump, you can still make your existing system work more efficiently by servicing it regularly and replacing your air filters every three months.

Sometimes, making minor changes to help with heating costs may not be enough to lower your bill. If that’s the case, some government programs may be able to help, including the Low Income Home Energy Assistance Program (LIHEAP) and the Weatherization Assistance Program (WAP). You can find out more information about both programs on the USA.gov website.

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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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