Money Management

It’s easy to overspend on your business finances. Here are a few simple ways to cut back. 

Small business owners spend an average of $40,000 in their first year of business, according to Shopify. Covering rent, payroll, inventory, marketing, and small business loan payments is challenging.

That’s why it’s a good idea to regularly assess what your business is spending money on and look for potential areas to scale back. Below are just a few suggestions, though there are plenty of other ways to improve your business’s finances, depending on your industry.

Still, here are three easy ways to save at least $1,000 annually by making financial adjustments.

1. Use the right accounting software

The U.S. Small Business Administration says that 38% of small businesses use specialized software. That’s not all that surprising, considering that many businesses need help keeping track of expenses, inventory, and payroll.

However, a surprising amount of businesses don’t fully utilize all the features of the software they have. A Forbes article noted that most small businesses only use 20% of the accounting software they’re paying for. The top level of QuickBooks costs $200 per month, while the next tier down costs just $90. If your business can scale back to the lower tier, you could save $1,320 annually by scaling back your accounting software.

2. Assess your marketing expenses

A recent report showed that many small businesses spend up to $1,000 per month on email marketing. Depending on your business size and how you need to communicate with customers, this could be a reasonable amount of money to spend.

But many small businesses don’t need to spend anywhere near that for their email marketing software. The best way to reduce this expense is to compare different email software and find the right one for your business. Finding a cheaper option could save one month’s worth of email marketing costs, keeping an extra $1,000 in the bank.

3. Open up accounts that have good offers

Part of streamlining your business’s finances means having access to capital and finding the best bank accounts to meet your needs. There are a lot of factors to consider when choosing both, but if you’re on the lookout for some extra cash, you may be interested in what some banks are offering.

For example, some business credit cards will give you a welcome bonus worth $1,000 or more if you spend a specific amount in the first few months of using the card. Similarly, it may be a good idea to shop around for business checking accounts, which can sometimes have monetary welcome offers for opening a new account and depositing a certain amount.

Finding the right financial partners when growing your business is extremely important, so do your homework before opening new accounts.

Get serious about your expense management

While it may not be the most fun part of running your business, tracking expenses can be one of the most important things you do to keep your business financially healthy. Even if you can’t find ways to cut back on spending, knowing exactly where your money is going and what’s coming in will give you a clear picture of where your business is headed.

Fortunately, there are some excellent expense management apps that easily help you stay on top of costs. Most software companies will give you a free trial before you make your purchase, so spend some time comparing features to find the best option for you.

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Store credit cards can seem appealing. Read on to see why you’re generally better off passing on those offers. 

We’ve reached the time of the year when many people will no doubt be hitting the stores in an effort to finish tackling their holiday shopping lists. When you’re making your way through the mall, you’re apt to come across some offers for a store credit card.

As the name implies, a store credit card is often one you can only use at a specific retailer (these are referred to as closed-loop cards). By contrast, usually, when you apply for a credit card backed by a major financial institution like Chase or Citibank, you can swipe it almost anywhere — the grocery store, restaurants, and more.

Opening a store credit card can be tempting, since it’ll often come with an attractive one-time discount as well as ongoing perks. But here’s why you may want to say no instead.

Don’t get too hung up on those benefits

Let’s say you’re spending $300 at a given retailer because it’s where you’ve found a large number of holiday gifts. You may, when you go to checkout, be offered a store credit card with a one-time offer of 10% off your initial purchase. That could result in a cool $30 in savings, so it’s easy to see why you may be tempted to say yes to that card offer.

And that’s not the only benefit you might reap with a store credit card. You might also get the option to rack up credit card rewards on future purchases that you can redeem for store cash.

But one thing you should know about store credit cards in particular is that not paying your balance in full can be very costly. Experian says that store credit cards tend to have higher APRs than regular, general purpose credit cards. So carrying a balance could mean losing a lot of money to interest.

Let’s say you’re forced to pay off a $300 balance on a store credit card over one year. If your card charges 27% interest, you’ll lose about $46. A regular credit card might charge 17% interest, resulting in about $28 in interest instead. That’s an $18 difference — which may be a lot if you’re someone who needs 12 months to pay off a $300 credit card charge.

Also, this is just one example. It’s conceivable that you might run up a $1,000 balance on a store credit card. The difference in interest charges there compared to a regular credit card could be even more significant.

Plus, any time you apply for a new credit card, a hard inquiry is done on your credit report, which tends to lower your credit score slightly. That may not be a big deal — unless, of course, you’re planning to apply for a large loan, like a mortgage, early in 2024. If that’s the case, then you might compromise your ability to get the financing you want — even if you have no trouble paying off your store credit card when your bill comes due.

Proceed with caution

Store credit cards aren’t disastrous for everyone. If you’re someone who’s never carried a credit card balance before, then it could pay to sign up for a store card this season to reap a lot of savings on a big purchase and benefit from ongoing rewards.

But only open one of these cards if you’re absolutely certain you can pay off your balance in full in the near term and the long term. Otherwise, you’re probably better off saying thanks, but no.

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Saving $1 million is an impressive achievement. See the surprising data on how quickly you could become a millionaire. 

For most people, becoming a millionaire is a lofty goal. The median net worth across the country is $192,900, according to the latest Survey of Consumer Finances. So, if you’re a long way from $1 million, you’re not alone.

Because this is a big goal, some people also believe that it’s unrealistic. That couldn’t be further from the truth. If you manage your personal finances well throughout your career, it’s entirely possible to become a millionaire. And it may happen sooner than you think.

How long it takes to become a millionaire

There are two key factors impacting how long it takes to become a millionaire:

How much you saveThe return you get on your money

The first is self-explanatory. Everything else being equal, you’ll have $1 million sooner if you’re setting aside $1,000 per month compared to $500.

The return you get on your money is even more important. This is what turbocharges your savings. Let’s say you’re able to save $1,000 per month. If you aren’t getting any sort of return on your money, it will take you 1,000 months to save $1 million. That’s over 83 years, longer than the average person lives.

Now, let’s say you invest your money. The stock market’s average return is about 10% per year. But you may put some of your money in more conservative investments, too. We’ll play it safe and assume you get an annual return of 8%. If you invest $1,000 per month, you’ll have $1 million in 25.5 years.

Depending on your income, you may be able to invest more or less than that. Here’s a look at how long it takes to become a millionaire based on how much you invest per month:

Getting on track for $1 million

As you saw, it’s a lot easier to save $1 million if you have plenty of time to do it. If you’re starting at age 25, you could be a millionaire when you retire by investing about $250 per month. If you’re starting at 45, you’ll need to invest about $1,500 per month. It’s still doable, but the faster you want to do it, the more money you need to invest.

If you haven’t done so already, start investing right away. Set aside a portion of every paycheck. It can be any amount that works for you. What’s important is that you make it a habit. Here are a few of the best ways to invest your money:

Set up a 401(k) plan at work: If your employer offers this, it’s well worth taking advantage. You can have contributions taken out of your paycheck, and you’re able to invest with pre-tax income. Many employers also match 401(k) contributions up to a certain amount, which is essentially free money!Open an individual retirement account (IRA): You can open this type of account yourself through a stock broker and contribute to it with pre-tax income, just like a 401(k). Another option is a Roth IRA, where you pay normal income taxes on contributions, but withdrawals in retirement are tax free.Open a brokerage account: Unlike 401(k)s and IRAs, you don’t save on taxes with a regular brokerage account. But there also aren’t any annual contribution limits or early withdrawal penalties with brokerage accounts, like there are with retirement accounts.

You can invest in stocks with any of these accounts. They all offer investment funds, as well, that save you time by investing your money for you. Target-date funds are a popular option, because they invest your money based on the retirement year you choose.

Becoming a millionaire isn’t an overnight process. It takes a lot of discipline to set aside money and invest consistently. If you put in the work, the reward is well worth it. You’ll be able to build wealth and eventually have not just security, but financial freedom.

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A trip to a local fast food spot shouldn’t leave you feeling broke. Learn the strategies that could help you save money on fast food. 

Stopping at a nearby fast food eatery once was an affordable option. But like food costs at the grocery store and sit-down restaurants, fast food menu prices have continued to climb in recent years. The good news is there are still ways to get a deal when pulling up to the drive-thru of your favorite local fast food spot. Read on, as I outline a few tips that may help you find affordable, fast food options despite higher-than-usual menu prices.

1. Don’t ignore loyalty programs

Many top fast food chains have free loyalty programs that customers can join. You’ll earn rewards when you spend money with the brand, which you can redeem for discounts on future orders or free food and drinks. Some fast food loyalty programs also offer members-only discounts and deals that could help you keep more money in your bank account. Ensure you use programs like this to avoid spending more than necessary on fast food.

2. Pay attention to daily deals

Some fast food and fast casual food chains have daily deals that could help you save money. For example, Burger King promotes its Whopper Wednesday in its mobile app. By activating the deal, you can get a Whopper for $3.

Prices vary nationwide, but at the time of writing, the regular menu price for a Whopper is $5.69 in the Chicago area. There may be other discount opportunities like this, so review the offers from your favorite eateries so you don’t miss a good deal.

3. Use in-app coupons to save big

Most fast food brands have mobile apps. You can easily order your food using these apps to save time in the drive-thru line. But these apps also have coupons and deals that could help you make your next fast food trip cheaper. Here are some examples of recent deals I’ve seen:

$2 breakfast sandwich at McDonald’sBOGO Original Chicken Sandwich at Burger King$3 off any purchase of $15 or more at Wendy’s

Deals like this prove you don’t have to pay the standard menu price to enjoy fast food.

Even if you don’t see a deal that you love, there may be other ways to save using coupon codes. Subway is one fast food spot with coupon offers for discounted sandwiches. You can get a footlong sub that would usually cost you $9.99 for $5.99 with the right coupon code. You can use one of the best coupon apps to find active coupon codes to get the best deals.

4. Don’t overlook meal deals

Before rushing through the drive-thru to order your food, consider whether you can order more strategically to get a filling meal without spending a significant amount of money. Instead of ordering individual items, a meal deal may make the most sense for your wallet.

Taco Bell offers a Build Your Own Craving Box in its mobile app for $5.99. You’ll get multiple food items and a drink for a low price. Another example is Wendy’s $5 Biggie Bag Meal Deal. With this deal, you’ll get a sandwich, four-piece chicken nuggets, a jr. fry, and a small soft drink.

Some fast food restaurants also offer family meal deals, which could help you feed your entire crew for less. Don’t overlook these deals if you’re trying to keep your spending in check. The last thing you want to deal with is a costly credit card bill due to overspending on fast food.

5. Skip delivery

Fast food is convenient, but if you’re getting it delivered, it likely won’t arrive as fast as you’d like. Plus, you’ll be paying more for the added convenience. You can avoid extra delivery and service fees by picking up your fast food instead of getting it delivered to your home. It may take a bit more work to drive to your favorite spot and place your order, but it’ll cost you a lot less money.

Avoid paying full price for fast food

It can be nice to treat yourself to fast food occasionally. But make sure you’re not paying more than necessary. If the fast food prices you’re seeing scare you, consider using one of the above tips to get a better deal when you order. If you can avoid paying full price for your next fast food order, it can be a win for your personal finances.

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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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New businesses spend an average of $40,000 in their first year. Here’s why you need to know where all the money is going. 

Creating a financial plan for your new small business may seem like a task you can tackle after you’ve been in business for a few years. After all, isn’t it more important to just jump in and get started than to plan out financial liabilities and goals?

While it may seem natural to put financial planning off, you could be overlooking some significant benefits that come with it. Consider that you’re going to have to deal with managing payroll, inventory, expenses, sales projections, profits, and losses anyway — you might as well have a plan to address them.

Here are a few perks of developing a smart financial plan at the start of your new endeavor.

1. It helps you understand your business better

You might already have a clear idea of your new business and why you’re starting it, but do you know the details of how it will make money and when your company will be profitable?

Mapping out your sales projections and estimated costs ahead of time will help you understand your business in a new way — beyond your product or services — and see it from a financial angle.

It’s important not to think of this as hindering your motivation to start the business. After all, if you end up loving your new business but don’t understand how to make money from it, you won’t be able to do it for long.

2. It can give you access to more capital

This may be the best perk of creating a financial plan. The average small business spends $40,000 in expenses in the first year. If you don’t have that amount sitting around in your bank account, then you’ll likely need to borrow it from a bank, tap credit cards, or get it from investors.

While using a business credit card will likely be necessary for covering some expenses, it’s not the cheapest route. Taking out a loan or convincing investors to put money toward your business could be your best option for lower repayment rates.

But they will likely want some financial projections before they open their checkbooks. Creating a clear financial plan for your business can go a long way in convincing them that you know exactly when you’ll break even, how much money you need, what you’ll use it for, and how they’ll be paid back.

3. It keeps you focused on long-term goals

Many small business owners are focused on their business’s day-to-day operations. There’s nothing wrong with that, of course, but sometimes, the intense focus on keeping the business running every day comes at the cost of considering long-term goals.

Creating a financial roadmap to follow when you start your business will help you assess whether your daily hard work is helping you meet your long-term goals. With it, you will have a metric to decide whether your current business strategy is paying off.

4. It can help you launch new products and services

You may want to launch new products or services at some point, which will probably cost your business more time and money. But you will only have a clear picture of whether your new ideas will help or hurt your business if you have a financial plan in place.

For example, if you know exactly which year your new business will be profitable because you created a clear financial plan, you’ll know when you might have extra cash to spend on expanding your business.

5. It helps you plan for risks

Knowing what’s coming around the corner for your new business is impossible, but you can help yourself prepare for it with a financial plan. Understanding your business’ finances inside and out will help you manage your money when unplanned expenses arise.

You don’t have to figure it out all by yourself

Fortunately, there’s a lot of great small business software out there that can help you keep track of expenses, manage payroll, track inventory spending, and do your taxes. Taking advantage of this will help you see in real time whether you’re meeting your financial goals and give you data for where and how to make adjustments.

Starting a new business can be a fun and exciting adventure. Think of your financial plan as a compass to help guide you. It won’t tell you exactly where to go, but it will help steer you in the right direction.

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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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This writer needs her daily coffee. But read on to see what she does to save money in the process. 

Some people will tell you that one of the easiest things you can do to boost your savings account balance is to stop buying coffee out and make it at home instead. And they’re definitely right.

I spend about $3 a day on a large Dunkin’ coffee. If I were to make my own at home in my Keurig, I’d probably spend about $0.50 a day instead.

So all told, if I buy my coffee 25 out of 30 days of the month (I sometimes skip my Dunkin’ run on weekends), I’m spending an extra $62.50 in the process. Multiply that by 12 months, and that’s a $750 credit card tab, which even I can admit is pretty steep.

Now, one thing I will say is that because I’m able to still save a nice amount of money — in my emergency fund as well as retirement account — I don’t feel particularly guilty about spending all that money on coffee. If anything, I consider it an investment in my productivity, because having a nice, strong cup of coffee definitely helps me power through the workday as a perpetually tired mom.

But still, I try my best to eke out savings on my Dunkin’ habit. Here are the tactics I employ.

1. I take advantage of promotions

When you sign up for the Dunkin’ app (a smart thing to do if you buy coffee there often), you get a list of promotions that pop up automatically at the start of each month. You do need to activate those promotions. But that only takes about five seconds, and from there, you can save big.

Sometimes, for example, you’ll see a promotion where you get a free coffee with any purchase. So what I’ll do is purchase two coffees on the same trip, get one for free, drink one, and save the other for the next day.

Another thing you can do is buy a less expensive item to get a free coffee. Let’s say that like me, you typically buy a large and that it costs about $3. A donut might only cost $1 and change. So if the offer is free coffee with any purchase, just buy something cheap from the menu and get your more expensive coffee for free.

I don’t happen to really like Dunkin’ donuts. But when this promotion is available, I’ll sometimes buy a donut to get my free coffee and just save it for my kids to share.

2. I order ahead when bonus points are available on the Dunkin’ app

When you use the Dunkin’ app to order your coffee (or any other item sold there), you earn 10 points per $1 spent. But there are certain days of the month where Dunkin’ will throw 100 bonus points your way just for ordering ahead (as opposed to walking in and ordering your drink on the spot).

That’s an offer I always try to take advantage of, since I often order ahead anyway and it doesn’t cost me a thing. And those extra points really add up. Plus, if your local Dunkin’ tends to be crowded, ordering ahead could save you a lot of time.

Also, when you visit Dunkin’ 12 times or more in the same month, you get boosted status for three months afterward. And that gives you 12 points per $1 spent instead of 10 points. Since I go to Dunkin’ so often, it’s easy for me to get those extra points, which translate into more free coffees for me during the year.

3. I’m nice to the people who work at my local store

I try to be nice to people in general. But I especially make a point to be nice to the Dunkin’ employees at my local store because I see them almost every day and they tend to offer me great service.

Sometimes, for example, if I happen to show up when there’s a long line, one of the employees will make my coffee and motion for me to just pay through the app so I don’t have to wait. And on occasion, they’ll throw a free coffee my way — such as if I come in with my kids to order a box of Munchkins.

I’ll be the first person to acknowledge that buying coffee at Dunkin’ almost every day is the not most cost-effective way to stay adequately caffeinated. But it’s basically my one indulgence, so to me, it’s worth the money. And thankfully, there are different steps I’m able to take to make my coffee habit less expensive. You might want to lean on these tips, too, as they can help you save on your daily caffeine fix.

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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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