Money Management

Do you need pet insurance if your savings are robust? Read on to find out. 

When you adopt a pet, you commit to caring for a living creature for what could be many years. And like it or not, your pet could put a big strain on your finances, between paying for food, supplies, and healthcare.

You’ll often hear that having pet insurance is essential to cover the latter. Without pet insurance, you might conceivably have to shell out thousands of dollars if your pet is injured or falls ill and needs extensive treatment.

But what if you have a lot of money in your savings account? Can your emergency fund take the place of a pet insurance policy?

Having coverage could benefit you even if you have money in the bank

The purpose of having pet insurance is to help ensure that you’re able to cover your pet’s medical needs without resorting to debt — that, and to make sure that you’re not forced to forgo life-saving treatment for your pet due to a lack of funds. So if you’re sitting on a really robust emergency fund, you might assume that you can skip getting pet insurance.

Let’s imagine your pet ends up needing a $7,000 surgery. Seeing as how 63% of Americans don’t have the cash reserves to cover an unplanned $500 expense, according to recent SecureSave data, the typical pet owner might end up in a serious jam in that situation without insurance in place.

But what if you happen to have a $15,000 emergency fund? You could, in that case, dip in to cover that surgery and still have about half of your savings left over.

Now, it’s true that if you have a nice amount of savings, you may technically be able to get away with not having pet insurance. But one thing you should realize is that your pet might encounter several expensive issues in a relatively short period. And without insurance, you risk depleting your savings, thereby leaving yourself with inadequate funds to cover a non-pet-related emergency.

So going back to our example, let’s say your pet needs a $7,000 surgery, and then six months later falls ill and winds up in the hospital with a $5,000 bill. Suddenly, your $15,000 emergency fund is whittled down to $3,000. If you then, shortly thereafter, have to replace your home’s heater for $5,000, you won’t have enough funds to cover it.

It pays to shop around for pet insurance

Even if you buy pet insurance, it’s still important to have a nice savings cushion to cover the cost of your pet’s care. A policy generally won’t pick up 100% of the tab when you face medical bills — pet insurance works by partially reimbursing pet owners after they pay for care (depending on your coverage). So you might have to shell out the money yourself and wait to be paid back.

But don’t just fall back on your savings in the absence of pet insurance when a policy may end up being more affordable than expected. Progressive says the average cost of pet insurance covering accidents and illnesses for a dog is $508 per year. For a cat, it’s $302.

This isn’t to say that your costs won’t be higher. But they might be lower. If you shop around, you can compare rates with the best pet insurance companies and see which policy makes the most sense for you.

All told, it’s good to have savings when you have a pet. Heck, it’s good to have savings in general. But don’t assume that having savings means you don’t need pet insurance.

You no doubt worked hard to build up those cash reserves. And you shouldn’t leave yourself vulnerable to having them wiped out when coverage for your pet may be more affordable than you’d think.

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Many people need life insurance. Read on to see why having coverage is important, and why it may be easier to get than you think. 

There are certain expenses many of us learn to accept and fit into our budgets. Healthcare bills, for example, tend to be unavoidable, so it’s important to save for them. And for the most part, it’s easy to make the argument that having a cellphone is essential. So that, too, is something you may want to pay for.

Similarly, life insurance might fit the category of an expense you need to pay. And if you’ve shied away from buying it in the past, it may be because you were falling victim to certain misconceptions. But you definitely don’t want to let the following myths stop you from getting life insurance.

Myth No. 1: You can’t get coverage if you smoke

Being a smoker might make it harder to get life insurance. And you can expect to spend more on premiums than someone who doesn’t smoke. But plenty of life insurance companies write policies for people who smoke — they just charge more to account for the added risk.

Forbes reports that a 30-year-old non-smoking male seeking a $500,000 term life insurance policy is looking at an average annual rate of $303 for 20 years of coverage. An applicant who’s the same age seeking that same coverage and who smokes is looking at paying $828. That’s 2.7 times the cost of the non-smoker’s policy.

Unfortunately, it’s hard to get around the added cost of being a smoker. But that doesn’t mean buying a life insurance policy is off the table.

Myth No. 2: You don’t need life insurance if you’re young

You might assume that if you’re just starting out, you don’t need life insurance. But your family circumstances should play a role in that decision more so than your age.

Some people who are 40 years old have no children, no spouse, and don’t financially support anyone else. But you might be 23 years old with a spouse, a child, and another baby on the way. So rather than use your age as a main factor in your decision to get life insurance or not, think of your family situation — and the extent to which your loved ones might suffer financially without your income.

Myth No. 3: You only need life insurance if you have kids

Having children indeed is what drives a good number of applicants to buy life insurance. But it’s easy to make the argument that you might need life insurance even if you’re childfree.

Let’s say you and your spouse share a home that requires both of your incomes to pay for. If you were to pass away and your income were to disappear, your spouse might be uprooted. A life insurance policy could potentially prevent that.

It’s easy to write off the idea of life insurance as unnecessary or unattainable. But rather than assume you don’t need coverage due to your age or childfree lifestyle, think about the people in your life who depend on your income.

And if you smoke and can’t quit, shop around with different insurers. You may find that you’re able to compare different offers and walk away with reasonably affordable coverage, even if you are paying more than someone who’s not a smoker.

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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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Buffett’s favorite gift shouldn’t surprise you too much. But here’s how you can incorporate it into your gift-giving. 

Warren Buffett is one of the most successful investors who ever lived, so it shouldn’t be surprising that he is rather generous when it comes to gift giving. For example, Buffett is a signer of the Giving Pledge and plans to give away virtually all of his wealth to charitable organizations — in fact, he donates billions per year and has done so for a long time.

He is also reportedly a generous gift-giver when the holiday season rolls around. For many years, Buffett’s typical Christmas gift to family members was $10,000 in hundred-dollar bills. However, Buffett reportedly made a change a few years ago and started giving stock instead. In short, Buffett’s relatives would reportedly rush home and quickly spend the cash, which is quite the opposite of how Buffett intended the gift — so he started giving shares of stock in his favorite businesses.

Buffett would tell the recipient that they could either keep the shares or sell them, but this helped make his intentions clearer. Plus, his relatives were essentially getting a free stock tip from one of the greatest investors of all time, and according to Buffett’s former daughter-in-law, she would buy even more shares of whatever stock he gave.

Of course, not everyone is Warren Buffett and can give a five-figure sum to everyone on their shopping list. But if you often give cash or gift cards as holiday gifts, there are ways you can use those dollars to help your loved ones build their financial future instead.

Giving stock for the holidays

Giving stock to other people is quick and easy in most cases, and the procedure depends if they are a minor or an adult.

If you’re giving stock to a minor, you can open a custodial account to invest on their behalf. Most major brokers offer these, and you’ll see them referred to as UGMA or UTMA accounts. The minor will take control of the account once they turn 18 or 21, depending on the state they live in.

If you’re giving stock to an adult, they’ll need to have (or open) a brokerage account. Many brokerage platforms have easy-to-use features to gift shares of stock you already own, or you can simply call your broker to get the process started.

College savings

If you have any younger people on your gift list, making a contribution to a 529 savings plan on their behalf (or starting one if they don’t have one yet) can also be a great way to give the gift of investing.

A 529 savings plan works in much the same way as the typical 401(k) plan. You contribute money with a named beneficiary, and there is usually a menu of various investment options. Some might be specific funds, while others will be labeled as “aggressive growth” or another investment style. While in the account, assets in a 529 plan can grow and compound on a tax-deferred basis, and any withdrawals for qualifying educational expenses are tax free, regardless of how much the investments have grown.

This could even be a way to get a tax break for your gift giving. 529 plans are run by individual states, and while contributions can never be deducted on your federal taxes, many states allow 529 contributions to be deducted on state tax returns in the year they were made.

The gift that keeps giving

Not only is giving stock or other investments a more productive use of your money than buying toys, games, or other items your friends and relatives might use a few times, but it can also help encourage smart financial habits. If you gift stock to a friend and they need to open a brokerage account to accept it, they may start to build a portfolio. If you start a 529 savings plan for your niece or nephew, it could encourage their parents to start putting money in it.

This year, you may want to consider using some of your holiday gift-giving budget to help set up the people you care about for future financial success. You might be surprised by how much they enjoy their gifts.

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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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Fast food can be costly due to food price increases. But you can use loyalty programs to save big. Here are four ways to use these programs to save money. 

If you’ve stopped for fast food sometime within the last few months, you’ve probably noticed a difference in menu prices. Fast food used to be a convenient and affordable way to get a quick meal when you were short on time. But it now costs more to satisfy your fast food cravings, and the cost of a quick meal can add up fast.

While menu prices have increased, there are still ways to get a good deal. Here’s how you can use food loyalty programs to combat price hikes.

1. Earn rewards and redeem them for free food and drinks

If you’re not yet using fast food loyalty programs, you’re missing out on the opportunity to earn free food and drink rewards. Who doesn’t like free food? As you spend money, you’ll earn rewards. While the specifics of each program vary, you can generally expect to earn points every time you place an order with your favorite fast food brand. Once you have enough points, you can redeem them for free food and drinks, making a future fast food trip less costly.

2. Access members-only deals that save you more money

Some fast food loyalty programs have deals that are exclusive to program members. If you order through the drive-thru and choose items on the regular menu, you may spend more than some members pay by taking advantage of in-app discounts and deals. One example is Burger King. Members can order a $3 Whopper on Wednesdays through the mobile app. This sandwich costs well over $5 in most parts of the country, so this is a notable discount. It’s worthwhile to join these programs if you’re trying to keep more money in your bank account.

3. Use in-app coupons to score additional discounts

Many fast food loyalty programs also offer coupons in their mobile apps. These coupons can unlock additional discounts that make your next fast food order much cheaper. While I generally try to limit my fast food intake, I can’t seem to give up my love of McDonald’s breakfast. Every few months, I treat myself to a breakfast sandwich. Since I’m a loyalty member and use the app to place my orders, I take advantage of an in-app coupon and only pay $2 per sandwich. Many fan-favorite McDonald’s breakfast sandwiches cost over $4, so this is a solid deal.

4. Get birthday discounts and freebies

Another way you can save money on the cost of fast food by using loyalty programs is by taking advantage of birthday discounts and freebies. Some programs offer discounts, bonus rewards, or freebies to loyalty members as a birthday gift. All you have to do is enter your birthdate when you sign up for the program, and when your birthday rolls around, you’ll benefit. Every discount adds up and makes a difference, so don’t miss out on this easy way to save money.

Do this to earn more rewards when you buy fast food

Don’t ignore fast food loyalty programs if you’re working hard to improve your personal finances. In addition to earning rewards through your favorite fast food eatery’s loyalty program, you can earn rewards using rewards credit cards. If you’re already using credit cards, ensure you’re not missing out on the chance to earn valuable rewards like cash back. Check out our list of the best cash back credit cards to find one that meets your needs.

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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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Getting a store credit card isn’t always a good idea. Read on to see why I’d consider one, though. 

During your holiday shopping, you may be offered an opportunity to open a store credit card. And for the most part, I’d tell you to say thanks, but no thanks.

Unlike traditional credit cards, store credit cards can only be used at the retail establishments that issue them. That’s not necessarily so problematic. What is problematic, though, is that store credit cards are notorious for charging high interest rates — higher than traditional cards. So you could really end up in a serious hole by racking up and carrying a balance.

For the most part, I’ve always held firm on saying no to store credit cards. But I do think there’s one specific scenario where I would consider opening one.

When the savings are really substantial

Store credit cards tend to draw consumers in by offering a big discount on an initial purchase. For example, you might save 10%, 15%, or 20% on your initial card purchase, whether it’s $200 or $500, when you open a store credit card.

I wouldn’t open one of these cards to save 10% on a $60 purchase. But in the coming weeks, like many of my fellow consumers, I expect to be doing some holiday shopping. And it’s conceivable that I might end up spending several hundred dollars at the same store.

If I can save, say, 20% on a $300 purchase, that’s $60 off — which is a lot of money. So in that case, I may be hard-pressed to say no to a store credit card offer.

The potential dangers of store credit cards

To be clear, though, I’d only open a store credit card if the offer was generous and if I didn’t have plans to apply for a large loan, like a mortgage or auto loan, in the near term. See, each time you apply for a new credit card, a hard inquiry is done on your credit report.

Experian says that a hard inquiry will generally lower your credit score by less than five points. But you never know when a modest drop in your credit score will have you paying more interest on a large sum of money you’re borrowing.

Maybe the mortgage lender you’re working with offers its best rates to borrowers with a credit score of 780 and above, and opening a store credit card (or any credit card) will drop your score of 782 down to 778. In that case, you might actually end up with a higher interest rate on a very long-term loan.

I don’t normally worry about minor credit score drops and I don’t let them stop me from opening new credit cards. But that assumes I don’t have a major loan application coming up.

Also, getting back to the issue of high interest rates on store cards, I’m someone who has never carried a credit card balance forward. Since opening my first credit card, I’ve always paid my balance in full. So for that reason, I’m more okay with the idea of opening a store credit card. But if you frequently carry a balance, then you may want to avoid store credit cards due to the potential cost of interest involved.

Consider those offers carefully

It can be tempting to open a store credit card when you stand to save a lot on a big purchase. But do be mindful of the high interest rates these cards tend to charge. And if you don’t think you’ll be able to pay your balance in full, don’t open one.

Not only can opening a new credit card account cause a minor ding to your credit score, but carrying a larger balance on one can cause even more credit score damage. So you’ll especially want to steer clear of store credit cards this holiday season — and probably all new credit cards in general — if you’re making plans to borrow a large sum of money in 2024.

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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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