Money Management

Going to Costco for the first time? Read on for some blunders you’ll want to avoid. 

So you’ve joined Costco and are ready to tackle your first adventure at your local warehouse club store. Woo hoo! You’ll want to wear comfortable shoes, since you may end up doing a lot of walking. And you’ll also want to be mindful of these newbie mistakes that it really pays to avoid.

1. Picking out your most perishable items first

Grocery stores are usually pretty large in their own right. But Costco is downright huge. And if you’re not familiar with your local store’s layout, you might end up spending hours walking around during your first visit.

That’s why it’s not a good idea to start in the dairy, meat, or produce section the first time you go to Costco. When you’re buying perishable grocery items in bulk, you want to keep them unrefrigerated for as little time as possible.

Now, Costco warehouses tend to have decent climate control in general. But still, you really don’t want to be walking around for 90 minutes with items like deli meat and milk in your cart if you can help it.

After all, if you’re spending the money to buy these things in bulk, you want your haul to last. So make a list of the items you need to buy and order it from non-perishable to most perishable. And then fill your cart accordingly.

2. Skipping the free samples

You may be inclined to say “no thanks” when you’re offered free samples at Costco if you’re not used to shopping there. After all, no one wants to come off as greedy.

But actually, Costco encourages members to try out its products before buying them, because if you go this route, you’ll be less likely to make a return due to not being satisfied. And sampling food items before buying them in bulk quantities could help you avoid wasting money in the course of your Costco trip.

So if you see a granola bar brand you’re not so familiar with and you’re inclined to take a chance on a pack of 40, do yourself a favor and first try the bite-sized sample to make sure you really like the taste. Otherwise, you’ve potentially just brought home 40 paperweights you didn’t need.

3. Steering clear of Kirkland products

If you’re brand new to Costco, you may not be at all familiar with Kirkland, which is the store’s signature brand. And that’s understandable. But one thing you should know is that buying Kirkland products could be a good way to free up more cash for your savings account. Don’t make the mistake of bypassing those products just because they have a more generic label on them.

For one thing, plenty of Kirkland products taste great and work well in their own right. But more so than that, if you look closely, you may find that several Kirkland products are actually made by name-brands you already know.

Take Kirkland’s Signature House Blend Coffee. All you need to do is look closely at the label, and you’ll see that it’s actually made by Starbucks.

It can take some time to get used to shopping at Costco, so don’t worry if, come the end of your first shopping trip, you’re still feeling a bit lost and overwhelmed. At the same time, it pays to do what you can to avoid these mistakes so you don’t lose out on savings during your first Costco visit.

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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Starbucks. The Motley Fool has a disclosure policy.

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Knowing what steps to take after winning the lottery is beneficial for your financial health. Here are a few tips to help you deal with newfound wealth. 

When there is a massive lottery jackpot, it’s not unusual to see long lines at lottery counters nationwide. While the chances of being struck by lightning are much greater than the odds of winning the Powerball or Mega Millions jackpot, that doesn’t stop people from trying their luck.

A lottery win could entirely alter your personal finances and improve your life greatly. But if you ever find yourself with a winning ticket, taking proper steps is essential. You’ll want to think through any financial decision carefully before taking action. If not, you could end up making expensive errors. Here are some tips to help you manage your lottery winnings.

1. Take care to protect your privacy

Protecting your privacy is essential, especially if you’ve won a major jackpot. The last thing you want to do is draw unwanted attention to yourself. If you share the news publicly, someone could try to take advantage of your recent good fortune.

Some states allow lottery winners to remain anonymous, but if that’s not the case, you may be able to claim your lottery winnings by forming a trust. This is something an attorney can advise you on. Until you claim your winnings and have a detailed plan for what you will do with your money, it’s best to keep your big news private so you don’t put your personal safety at risk.

2. Don’t be in a rush to collect your winnings

After winning the lottery, you’ll likely be eager to collect your cash. But don’t be in a rush. First, check your state’s laws to determine how long you have to claim your prize. Many states give lottery winners at least 90 days to claim their prizes. Don’t miss the deadline, but give yourself plenty of time to talk to professionals and formulate a solid financial plan before you collect your money.

3. Hire a team of professionals

When managing the money you’ve won, it’s best to avoid doing it alone. Instead, hire a team of trusted professionals to guide you so you don’t make costly mistakes. It’s worthwhile to pay experts for guidance — especially when money is involved. Consider hiring professionals like a lawyer and financial advisor. They’ll help you strategize what steps to take so you make the best choices for your lifestyle and goals.

4. Don’t agree to every single request for money

Once your family and closest friends know about your newfound wealth, they may begin to ask you for money. It can be nice to help your loved ones with their financial needs, but don’t feel pressured to say yes to everyone who asks for help. You want to make sure you feel comfortable when giving your money away and aren’t just doing it because you feel obligated.

5. Set and follow a budget

If you’ve won a significant amount of money, you may laugh at the thought of needing to budget your winnings. But it can be easy to overspend, especially when you suddenly have a large sum of money in your bank account. It’s best to establish and follow a budget so you manage your winnings responsibly and stay on track with your financial goals. If you’re new to budgeting, you can use one of the best budgeting apps to set spending limits and monitor your spending habits.

Take care with your lottery winnings

A lottery win can be life-changing. But don’t get so caught up in the excitement of winning that you don’t take the time to plan what to do with your newfound wealth. Some lottery winners who have won millions have gone broke in just a few years.

Contact qualified professionals if you’re unsure what steps to take or have questions. With proper care and planning, you can ensure that your lottery winnings go to good use and aren’t wasted.

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Are you allocating enough money for home maintenance? Read to see how much you should be setting aside. 

When my husband and I bought a newly built home about 14 years ago, we knew we’d be looking at a larger mortgage loan than for a home that was previously lived in. But we liked the idea of having a brand-new place. And we figured that what we spent on mortgage payments, we’d save by not having to spend so much on repairs, at least early on.

But even though our house was built from the ground up before our eyes, we still had to cover the cost of maintenance from the moment we moved in. And that was a tricky thing to budget for.

If you’re buying a home, you may be wondering how much to expect to spend on maintenance. There’s a general guideline, but it’s pretty broad, so you may need to do your part to narrow that number down.

The general convention

You’ll generally hear that your annual property maintenance will cost between 1% and 4% of your home’s value. So if your home is worth $300,000, you’d be looking at anywhere from $3,000 to $12,000 for annual upkeep.

That’s a huge range. And a hard one to work with. But there are steps you can take to get to a more accurate number.

How to land on the right maintenance estimate

To figure out how much to budget for maintenance, you’re going to want to consider three factors:

The age of your homeThe condition of your homeThe amount of time you’re willing and able to put in

First, let’s talk about age. Older homes generally tend to need more work than newer ones. You might have to regrout tiles or seal cracks more often due to many years of your house settling. And you might have to steam carpets more frequently if they’ve been in use for a long time and haven’t been replaced.

Of course, some home maintenance tasks don’t hinge on age. If you have a yard, your grass needs to be mowed as it grows. It doesn’t matter if your home is 12 years old or 100 years old — grass is grass, and its growth will probably hinge on the weather more so than anything else. But otherwise, assume that if your home is older, your maintenance costs will be higher than with a newer home.

Next, consider the condition of your home when you moved in. If it was well maintained, you may not have to spend as much. But if there are a lot of things in disarray from neglected maintenance, you might end up spending more.

Don’t forget to consider your schedule

Finally, consider how much time you have in your schedule. If your workload tends to be light and you know you have time to mow your own lawn, remove your own snow, and paint your own deck every year, you might reap some savings compared to having to outsource those tasks.

But it’s important to be honest with yourself about your willingness and ability to perform maintenance yourself. If you know your time is limited, then expect to spend more.

All told, there’s no single formula for determining what home maintenance will cost you. But if you have an older home that’s not in the best shape and you have zero time for upkeep, estimate 4% for maintenance. If you have an older home but it’s in good shape and you’re willing to do the work, 2% may be a more accurate estimate.

Either way, do your best to be flexible. And make sure to have extra funds in your savings account in case your maintenance costs come in higher than expected.

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It’s important to save for the holidays ahead of time. Read on for advice on what to do if you haven’t. 

Many of us have only recently gotten to embrace fall in all of its cool-weather glory (thanks, 80-degree streak that came on way too late in the year). But while you might still be in full-fledged pumpkin-spice-latte and leaf-peeping mode, the reality is that the holidays will be here before we know it. In the coming weeks, you might end up with a much larger credit card tab in the course of buying things like gifts and decorations.

There’s also holiday travel to think about. Airfare can be costly from late November through late December. And if you’re on a tight schedule, you might have to pay up to fly out when you need to. So it’s important to have cash reserves on hand by, well, now to cover your costs.

In a recent Sitecore report, 43% of Americans say they’ve already started saving for the holidays. But if you’ve yet to save money for your year-end spending, that window is closing. After all, you might have to book your flight home in late October to make sure you get a seat. And you may have to do a lot of shopping in November because that’s when the deals start to hit. So if you haven’t yet begun to save for the holidays, there’s an important alternative to explore.

When there’s no more time to cut back on spending

Some people begin saving for the holidays at the start of the year. And when you’re going that route, you can take the approach of just cutting back on spending since you have many months to make progress.

But at this stage of the game, it’s late October. You may only have a week or two to sock money away before you start incurring expenses. So since it’s a bit late to start cutting spending, a better bet may be to get yourself a side hustle.

The good news is that now’s a great time to look for extra work. Businesses tend to need more help during the holidays. If you walk around town or check out your town’s social media page, you might learn of multiple opportunities that don’t require much of a drive.

You can also take on an independent gig to drum up money for the holidays. People are always looking for unique holiday gifts for loved ones. If you’re crafty, you might do well selling handmade jewelry or handbags. And if you’re a great cook, guess what? Some people do not enjoy meal prep at all. If you moonlight as a personal chef for holiday parties, you might bring home a nice amount of cash.

Aim for a better head start next year

If you truly have no money saved for the 2023 holiday season, then getting a side hustle could be your ticket to avoiding debt. But also, learn from your circumstances by pledging to get a better jumpstart on holiday savings in 2024.

Once the new year rolls around, set up an automatic transfer to an account earmarked for holiday purchases. If you send $20 a week into that account, by next October, you’ll have a decent chunk of cash to work with. And going into next year’s holiday season with savings might make it more enjoyable for you all 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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Are you worried that rising mortgage rates and down payments will prevent you from becoming a homeowner? Find out why they shouldn’t. 

Nearly one out of every five millennials — 18% — believe they will never own a home, according to a Redfin survey, with a lack of affordability and lack of ability to save for a down payment as the most common reasons given. This is especially disturbing since the millennial generation is reaching its peak household-forming years.

Despite a common perception that homeownership is out of reach, a down payment and higher mortgage rates shouldn’t necessarily stand in your way. Here’s why.

The down payment could be more manageable than you think

It’s a common misconception that you need 20% down to buy a home. To be sure, it certainly makes it easier and more affordable on an ongoing basis with a higher down payment. By putting 20% down, you’re not only reducing the amount of money you need to borrow, but you’ll avoid paying for mortgage insurance, which is typically required with lower down payments.

However, there are several excellent options when it comes to mortgages with a low down payment.

Conventional mortgages (also known as conforming mortgages) can be made with down payments as low as 3%, which would be $15,000 on a $500,000 home, and the rules say that this can come from a gift from a relative.FHA mortgages have relatively low credit score requirements and can be obtained with as little as 3.5% down ($17,500 on a $500,000 home).VA mortgages provide 0% down payment financing without mortgage insurance to qualified veterans and current military personnel. Note that there is a funding fee that most VA loan buyers have to pay.USDA mortgages allow people to buy homes in rural areas with 0% down, although they do have a mortgage insurance requirement.

In addition, several top mortgage lenders have their own proprietary lending programs designed to help people become homeowners. For example, a few banks offer 0% down payment financing with no mortgage insurance requirement to first-time borrowers with excellent credit.

It’s also worth noting that in many cases (such as with FHA loans), you can roll some or all of your closing costs into the loan, which can help keep your out-of-pocket expenses low.

Plenty of assistance programs

In addition to the numerous low-down-payment options available, there are also plenty of programs that are designed to provide down payment assistance. Many of these are offered by state and local governments, so that’s a smart place to start your search. For example, my state (South Carolina) offers “Forgivable Down Payment Assistance,” which is essentially a second mortgage loan that is interest-free, requires no monthly payments, and is forgiven completely if you live in the home for its entire 15-year term.

Many mortgage lenders offer valuable resources when it comes to down payment assistance programs, such as a database of current offers. It can also be a smart idea to ask your lender to help point you in the right direction.

Why you shouldn’t let high mortgage rates keep you on the sidelines

While buying a home with little or no money down can certainly help you become a homeowner, it’s also important to address the fact that mortgage rates have risen from about 3% for a 30-year fixed mortgage at the start of 2022 to an APR of nearly 8% for the same loan today.

To put this in perspective, the principal and interest payment on a typical $500,000 home loan has increased from $2,108 to $3,669. And even if would-be home buyers don’t have down payment issues, this is undoubtedly keeping many of them on the sidelines.

However, assuming you can afford the monthly mortgage payments, you shouldn’t necessarily let higher mortgage rates prevent you from buying a home. For one thing, it isn’t as if rent has stayed cheap while mortgage rates have risen — your housing costs are likely significantly higher than they were a couple years ago regardless of whether you own or rent.

More importantly, keep in mind that a 30-year mortgage isn’t necessarily going to cost you the same amount of money every month for three decades. If rates fall, mortgages are fairly easy to refinance so homeowners can take advantage of lower rates if they arrive. And history tells us that rates will be significantly lower than they are today at some point during a 30-year mortgage term. As Warren Buffett said, mortgage rates are a “one-way renegotiation” that clearly favors the home buyer.

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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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Costco can be a great source of savings, but a membership isn’t right for everyone. Read on to learn more. 

A Costco membership won’t necessarily break the bank. For $60 a year, you can get a basic membership that gives you access to a vast network of warehouse club stores. And for $120 per year, you can upgrade to an Executive membership, which gives you 2% cash back on your Costco purchases.

But while many Costco members enjoy their fair share of savings regularly, joining may not be the best move for you. Here are four reasons you may not want to get a Costco membership.

1. You have zero storage space at home

One major benefit of joining Costco is getting to save on grocery purchases and household essentials by buying those items in bulk quantities. But if you live in a studio apartment with a small fridge, little freezer space, and a tiny closet that’s already overflowing, then you may not want to shop at a store where your only option for buying granola bars is to take home 60 of them at a time.

A better bet may be to shop at discount grocers in your area, like Aldi. This especially holds true if you’re someone who isn’t very picky about brands.

2. You don’t cook

Maybe you have a giant pantry and a large fridge in your kitchen. That’s all fine and good. But if you’re someone who never cooks, then you may not get a lot of value out of a Costco membership.

Of course, food isn’t the only thing you can buy at Costco. And if you think you’ll make back your membership fee and then some by purchasing your household cleaners or other products there, then by all means, join.

But don’t kid yourself into thinking you’ll suddenly be spending five nights a week at the stove after joining Costco when at present, you’re lucky if you cook once a quarter. If you’re someone who just doesn’t cook, own that. And if anything, take the money you’d spend on a membership and use it to sign up for a meal kit service.

3. You don’t have a Costco nearby

You might easily save yourself $10 to $20 a week by purchasing groceries at Costco. But if you’re also spending an extra $10 to $20 in gas to get there, you’re really not doing yourself any favors. Plus, in addition to spending the money on fuel, you’re spending time on the road that you may not have.

Of course, you could always join Costco and mostly limit your purchases to Costco.com so you don’t have to make that trek. But you should know that warehouse club prices tend to be cheaper than the prices you’ll see online. So if you’re not going to be able to enjoy the maximum savings you can get in the store, then it may not pay to join — especially since you can order many Costco items from the website without having a membership.

4. You live near a Costco, but don’t have a car

There may be a Costco warehouse calling your name a mile or so down the road. But if you don’t have a car, then shopping there is going to be a challenge, so much so that it may not pay to join.

You could decide that you’ll take a rideshare to and from Costco to benefit from the store’s lower prices. But let’s say it costs you $10 per ride to get there, or $20 per visit. You might reap that amount of savings or more, depending on your specific haul. But you’re also taking a chance there. So if you know you’ll have to pay for a rideshare every time you want to do a Costco run, you may be better off skipping the membership and instead asking to tag along with a friend who has a vehicle and has already joined.

A Costco membership makes sense in many situations, and shopping there might help you free up more money for your savings account. But in these scenarios, it pays to at least think twice before signing up.

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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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