Money Management

A side hustle can help you boost your income, but the wrong opportunity can cost you. Learn about three side hustles that often leave workers in the red. 

A side hustle can help you keep up with soaring living costs and speed up your progress if you’re trying to achieve a big financial goal. According to Side Hustle Nation, about 39% of adults in the U.S. report having a side hustle.

But not all side hustles are created equal. The wrong gig could actually end up costing you money. Here are three side hustles that could cost you more than you earn.

1. MLMs

Do you have a friend who constantly brags on social media that they make five figures a month selling hair products or supplements? They’re probably working for a multilevel marketing company, or MLM.

MLMs are businesses that use independent contractors working on commission to sell products directly to their friends and family. Sometimes, the business model is referred to as network marketing. But the real money comes when you recruit others to the business to work as your “downline,” since you get a portion of their commission, plus a part of the commission of anyone else they recruit.

Since the business model relies on a constant stream of new recruits, you’ll see a lot of outlandish claims about how much you can earn in an MLM. But a 2018 AARP study found that nearly half (47%) of MLM participants lost money, usually because MLMs often require contractors to buy inventory upfront. Only a quarter earned a profit. Of those who did profit, most earned less than $5,000 the entire time; only 3% of MLMers reported making $25,000 or more.

Put another way, if you earned $5,000, you’d be more successful than 88% of other MLM participants. The average MLM participant reported working 13.3 hours a week. If you earn $5,000 working 13.3 hours in 50 weeks out of the year, you’d make about $7.52 an hour, which is only slightly more than the federal minimum wage.

2. Mystery shopping

Some companies use mystery shoppers to buy products and relay feedback about their experience. You’re paid a fee per assignment, but it isn’t much — often $20 or less. You’ll typically pay upfront for the purchase, then file a detailed report about your experience. Many companies require you to complete the report within 24 hours. You get your fee and reimbursement once your report is accepted.

But if you miss the deadline by just a couple of minutes or your report is rejected for some reason, the company can refuse to pay you. In that case, you’re not just getting stiffed for your services. You’ve lost the money you spent making the purchase.

Even when you’re paid as agreed, many mystery shopping gigs simply aren’t worth the time. Mystery shoppers often report that the gigs are far apart, and you’re not reimbursed for gas. Many assignments require you to read extensive instructions, and then fill out several pages’ worth of paperwork.

And while legitimate mystery shopping companies exist, many are outright scams. One big red flag: If the company wants you to send it money for any reason, it’s not a legitimate opportunity.

3. Day trading

Day trading surged in popularity during COVID-19 lockdowns and in early 2021, during the peak of the meme stock craze. While day trading may be profitable in the short term, several studies have shown that the overwhelming majority of day traders lose money over time.

For example, a study of nearly 1,600 Brazilian day traders found that 97% of day traders who persisted for 300 days or longer lost money. Only 1.1% earned above the Brazilian minimum wage.

The few who do succeed at day trading aren’t doing it as a side hustle. They’re often highly skilled professionals who use high-frequency trading technologies that retail investors don’t have access to. For most people, a buy-and-hold strategy is the best way to build wealth over time.

Tips for finding the right side hustle

If you’re trying to earn extra money through a side hustle, follow these tips:

Seek out a side gig with low barriers to entry, meaning you can get started without a huge money or time investment.Don’t be swayed by get-rich-quick promises. It takes time to build a lucrative side hustle. Be skeptical when anyone claims you’ll make enough to quit your day job overnight.Look at your hourly earnings. Once you get started, keep track of how much time you’re spending, as well as your earnings and expenses. If you’re not making the equivalent of a living hourly wage, seeking out a traditional part-time job may be a better bet.

A side hustle can provide you with a lot more financial freedom. But if you don’t choose your side gig carefully, it can also cost you and damage your personal finances.

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Costco has great deals, and its perks extend beyond its warehouses. Read on to find out more about the company’s great home and auto insurance benefits. 

Insurance prices for both home and auto have skyrocketed over the past couple of years. Home insurance prices are up 21% on average in the last year alone.

That’s led many people to try to improve their personal finances by shopping around for insurance, including at Costco. While the company is known for its bulk food at discounted prices, Costco also offers home and automobile insurance — both with some unexpected benefits.

Here are some home and auto insurance perks that Costco members get that you may not know about.

1. Lifetime auto insurance renewability

Most of the time, your automobile insurance renews automatically each year, but sometimes, an auto insurer won’t renew the policy if you have too many traffic violations or accidents. Insurance companies don’t have to renew your policy, and if they think you’re a high-risk customer, they won’t give you the option to renew.

But for Costco Executive Members, the company offers a lifetime renewability benefit. This can be a great perk for people who have either been dropped from an auto insurance policy or are having trouble finding a company to insure them.

2. Zero deductible windshield repair

Nearly all of us have experienced it: You’re driving down the highway, and suddenly, a rock gets flung out from under another vehicle’s tires and smacks into your windshield, leaving a huge crack.

That’s why Costco includes a glass repair deductible waiver at no additional cost to members — you don’t even have to be an Executive Member to use this perk. The company says if your windshield can be repaired rather than replaced, it will waive the policy deductible.

3. Accident travel expense coverage

This benefit can give you lots of peace of mind when you’re traveling away from home. Through American Family Insurance, Costco’s auto insurance will cover food and lodging if you’re involved in a car accident more than 100 miles from your home.

As someone who takes long road trips often, this unexpected benefit looks pretty enticing.

4. Home lockout assistance

If you’re prone to frantically leaving the house without your key (guilty!), this benefit is for you. Costco Executive Members who sign up for homeowners insurance through American Family Insurance automatically receive free home lockout assistance.

This perk covers the cost — up to $100 per occurrence — of having a locksmith come out to your home if you happen to lock yourself out. Keep in mind that you can only use this benefit two times per year.

5. Spoiled food assistance

I had never even heard about a benefit like this until I saw it on Costco’s website. If you sign up for homeowners insurance through the company — and are an Executive Member — you may be able to get money for spoiled food when your power goes out.

The benefit covers up to $500 in spoiled food due to a storm, equipment failure, or a construction accident. The only downside to this benefit is that it’s unavailable for homeowners in Texas or Florida.

How to find the best insurance for you

Buying homeowners or auto insurance through Costco offers some great benefits, but there are also plenty of great insurance options out there. Here are a few ways to find the best insurance for you.

1. Compare benefits and perks

Now that you know some unique benefits that Costco’s insurance offers, compare them with what other insurance companies offer. Whichever offers the perks you’re looking for at the best price might be the affordable insurance company for you.

2. Consider deductible and premium amounts

Not all insurance companies will charge you the same prices. For example, shopping around and getting quotes from multiple homeowners insurance providers can help you get the best deal.

3. Keep an eye on restrictions

Some insurance companies are leaving markets that are unprofitable. For example, some homeowners insurance companies are leaving California and Florida because there’s too much environmental risk. Companies that remain in high-risk areas may have restrictions on what they cover, so read the fine print before you sign up for coverage.

Shopping for home and auto insurance isn’t as fun as walking down Costco aisles hunting for free samples, but looking at all the available insurance options could help you save enough money to cover your next Costco run.

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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.Chris Neiger 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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A home inventory is a detailed summary of the personal property in a home. Here’s why it’s so important to have one. 

Property owners need to have homeowners insurance coverage to protect their investment in their property. Mortgage lenders require liability insurance, but property owners will typically also want to buy coverage for their personal property. This includes belongings like furniture or electronics and all of the other possessions in a house that would be expensive to replace.

When buying personal property coverage, it’s important for homeowners to create a home inventory. This could be a written list or a digital inventory with photographs. It should include a list of all possessions in the home, ranging from electronics to jewelry to clothing and toys.

While it’s a lot of work to create a home inventory, there are two big reasons why doing so is important. Here’s what they are.

A home inventory can help property owners determine how much coverage they need

One of the most important reasons to create a home inventory is to determine an appropriate amount of personal property protection.

Typically, home insurers provide coverage for property equal to a percentage of the dwelling’s value. For example, an insurer may set a default coverage limit equal to 50% of the value of the home, so a property owner with a $500,000 home would have $250,000 in personal property coverage.

However, it’s important to make sure the coverage is sufficient to replace all personal property. And making an inventory can make that easier. By making a list of all of the items kept in the home, including furniture, electronics, jewelry, clothes, and more, homeowners can get an accurate estimate of what their items are worth. This can help them ensure their coverage limits are high enough.

There are also some specific limitations on certain types of property. For example, insurers usually cap coverage for jewelry, furs, and art at $2,500. A home inventory can help property owners discover if they are likely to exceed these smaller limits, so they can get an add-on policy to cover these specialized valuable items.

A home inventory can expedite an insurance claim if covered losses occur

A home inventory is also very important in case something goes wrong with the property.

When making a claim to replace personal items, homeowners need to prove what they owned, what was damaged, and how much it was worth. When many items are destroyed, such as a house full of possessions by a fire, it can be hard to document this after the fact. Having the inventory prepared ahead of time helps the insurer see what items were in the home and covered by the policy.

The good news is, many insurers provide resources such as apps or checklists for making a home inventory. And even walking through the home and taking photos and videos of all of the items along with a description of them could be sufficient.

Don’t go another day without creating this important document as no one can predict when tragedy will strike and when they will need coverage.

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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Christy Bieber has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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It can be expensive to put gas in an RV. Keep reading for ways to save money on fuel. 

Our family has an RV that we travel in regularly. It’s a Class C, which means it’s one of the RVs that you drive and it’s not huge like the big bus-style campers, but it is still around 30 feet long.

Unsurprisingly, this RV does not get great gas mileage. Taking trips isn’t very checking account–friendly, as we spend hundreds of dollars to fill up the vehicle when we head off on adventures. The good news is, we have found a few ways to keep gas costs down so we don’t get stuck charging quite so much on our credit cards on each trip.

1. We keep our speed limit low

Driving too fast can significantly reduce the fuel economy of a vehicle as a result of air resistance and tire-rolling assistance. In fact, for every five miles you go above 50 MPH in light-duty vehicles, you effectively increase the cost of gas by $0.30 per gallon.

While I don’t have a light-duty vehicle, I still realize that driving too fast does make my RV less fuel-efficient, and there’s no reason to do that. Of course, it’s safer to drive slower in such a large vehicle as well.

2. Our tires are kept to the optimum pressure

Tire pressure also impacts fuel efficiency. You can get an average of 0.6% improvement in gas mileage simply by keeping your tires properly inflated. Keeping the tires at the proper pressure also makes driving the vehicle safer, which is obviously important to us when we have our kids and pets in the car.

3. We don’t carry unnecessary items

Avoiding carrying unnecessary items is another key way that we keep our camper as fuel-efficient as possible. The more weight you carry, the worse your gas mileage. We check our camper each time we come home for items we haven’t used on the trip and take them out so we aren’t paying to haul unnecessary gear.

4. We use an app to find the lowest gas prices while traveling

Finally, one of the best things we did was start using GasBuddy to find the cheapest gas stations near where we were traveling at any given time. The GasBuddy app allows us to input our location and specify what kind of fuel we want and how far we’re willing to go to get it, and we can immediately see a list of prices from nearby stations so we can pick the one that charges the least.

We’ve noticed there’s a surprising amount of variation in how much gas actually costs at different stations that are relatively close to each other. Sometimes we can find gas for as much as $0.10 or even $0.20 less per gallon just by being strategic about which station we stop at after using the app.

We also joined Pay with GasBuddy, which saves us up to $0.25 per gallon as long as we pay for our fuel with a prepaid card.

All of these actions have made a big difference in our big vehicle’s fuel efficiency. Whether you have a camper or a car, they could work to help you get better gas mileage as well. So offload unnecessary stuff, keep your tires inflated and your speed down, and consider trying out apps to help you save on gas.

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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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I bought a lot to build on, but decided not to move forward. Although I sold at a profit, here’s why I wouldn’t do it again. 

Several years ago, I bought land to build a house on. At the time, I couldn’t find a house to buy, and I wanted to customize my own property. I paid cash for the land without getting a mortgage, and I waited to find the perfect builder.

Circumstances changed, though, and I decided to move into a different neighborhood because it turned out the location where I had bought the land was in the middle of a traffic nightmare. I listed it for sale and I ended up making a pretty decent profit, selling it for tens of thousands of dollars more than I had paid just a few years after buying it.

Despite making a good profit on the deal, I wouldn’t do this again. Here’s why.

It’s hard to sell vacant land, and it takes a long time

One of the biggest issues that would prevent me from trying to invest in vacant land and hoping to resell it for a profit is that the land market is a tough one.

When I told my real estate agent I wanted to sell, she warned me that I was likely going to be waiting months or even years for a buyer. The reality is, there’s generally less demand for vacant land compared with houses that are already built. Since the market is a lot less active, it can take a much longer time to find someone who wants your particular piece of property.

It can also be harder to market the property. After all, with a house, there are a lot of different features that could attract a potential buyer, like a pretty kitchen or a nice layout. With a plot of land, there’s much less differentiating one vacant space from another.

It did end up taking several months to find a buyer for our lot. We were lucky because our lot did happen to have a small private pond on it that set it apart from others, which opened the door to finding a buyer faster than we otherwise would have experienced.

I wouldn’t want to go through this stressful waiting period again, or be left sitting around hoping I could find someone interested. If you’re thinking about investing in vacant land, you should also be aware you may have to hold it for quite a while before you find someone interested. You can research the average time it takes lots to sell in your area to get an idea of what delay you might face when you’re ready to cash in on your investment.

There’s a lot of upkeep and effort involved in investing in land

There was another issue as well: Taking care of land takes time and effort. Our lot was wooded, so we didn’t have to do too much mowing or upkeep, but we did have to do some. And if you buy a plot of land that isn’t covered with trees, you’ll typically have to keep it mowed and looking nice — both so it’s attractive to buyers and so you don’t get into trouble with the county for violating any ordinances.

Unless you want a hands-on investment that you have to take care of, you may want to think twice about buying vacant land. There are easier things to invest in, including simply putting your cash into a brokerage account and choosing a completely hands-off index fund that you never have to think about.

Ultimately, you’ll need to decide what types of investments are right for your personal finances. But as someone who accidentally made a successful land investment, I think it’s important to be realistic about what this kind of investing entails before you jump in.

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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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You need money saved for retirement to supplement Social Security. Here’s how to get started. 

If you’ve worked for at least 10 years and earned a sufficient number of work credits, you are going to get Social Security benefits when you retire. These benefits will be deposited into your checking account and will help you afford the costs of living as a senior once you no longer have a paycheck from a job coming in.

Since you’ll be getting Social Security, do you really need money in your brokerage account to help support you in your later years? The answer is an unequivocal yes. Here’s why.

Investing in a brokerage account matters a lot

It’s critical to have money in a retirement account (like an IRA) either held at a brokerage firm or held by your employer’s 401(k) plan administrator.

You need money invested because Social Security can’t be your sole support source if you want to maintain a reasonable living standard. Social Security benefits are intended to only replace about 40% of pre-retirement income. This is because they are intended to support you alongside a pension and money you have saved.

Without a pension or sufficient retirement investment money, you would be left trying to live on only around 40% of the money made before quitting work. Even though you won’t have to save for retirement or commute to a job when you retire, you are probably going to find it difficult or impossible to take a 60% pay cut.

Saving for your retirement is one thing you have direct control over. You can’t easily increase your Social Security benefits by a substantial amount, nor can you force an employer to provide you with a pension. If you want a secure retirement, you need to get serious about investing and not rely solely on Social Security.

How much should you be investing for your retirement?

There are many ways to determine how much to invest for retirement, but one of the simplest is to aim to save 10 times your final annual income. If you’re years away from actually retiring, you can assume you’ll get an average 2% annual raise to estimate what you’ll be earning when you finally quit work, and then multiply that number by 10.

If you’re able to save a nest egg of this size, you should ideally have a comfortable retirement when you combine your Social Security benefits with the money you can safely withdraw from your investment accounts. Make sure you’re investing consistently, though, so you can hit your target.

Investor.gov has calculators that can show you exactly how much to invest to be on track to save 10 times your final salary. The specific amount will be based on how long you have until retirement as well as what return on investment you are able to earn on the money you put into the market.

Calculate your desired amount of retirement savings today so you can begin investing for your future. You’ll be very glad you did when you see just how low your Social Security checks are when you get to retirement age.

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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.Christy Bieber 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.

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