Money Management

Many workers have access to a 401(k). But read on to see what to do if you don’t fall into that category. 

It’s important to save money for retirement consistently during your working years. And if you’re going to do that, you might as well save in an account that offers some type of tax benefit, which isn’t a feature of a regular brokerage account.

A traditional 401(k) plan, however, gives you a tax break on your contributions. And since this year you can contribute up to $22,500 to a 401(k) if you’re under age 50 or up to $30,000 if you’re 50 and older, that gives you the opportunity to shield quite a bit of your income from the IRS.

Now, let’s be real for a second. Many of us cannot afford to part with that much money for retirement savings purposes. And that’s okay. But any amount you contribute to your 401(k) up to these limits will get you out of paying taxes on that sum.

Also, the nice thing about 401(k)s is that many employers match the contributions workers make to some degree. So if your employer offers to match $3,000 a year, by putting that much into your 401(k) out of your paycheck, you get $6,000 going into your account in total.

In a recent Schwab survey, 88% of respondents said that a 401(k) plan is a must-have benefit when seeking out a new job. But not every company offers a 401(k). So if your job doesn’t, rest assured that there’s a great alternative for retirement savings.

Look to an IRA

The great thing about IRAs is that they’re not dependent on an employer. You can open an IRA at any financial institution that offers them and manage that account yourself.

All you need is earned income to qualify for an IRA. And like 401(k)s, traditional IRA contributions go in tax-free.

One thing you should know is that the contribution limits for IRAs are considerably smaller than those of 401(k)s. This year, IRAs max out at $6,500 if you’re under age 50 and $7,500 if you’re 50 or older.

However, for many people, even maxing out an IRA is a stretch. So the fact that you’re limited to $6,500 or $7,500 may not be a problem.

Plus, IRAs offer the benefit of letting you choose individual stocks to invest in. With a 401(k), you’re generally limited to different funds that may or may not allow you to invest exactly the way you want, since you’re not in charge of deciding which assets go into those funds.

And then there are investment fees to think about. Many of the funds you’ll find in a 401(k) charge hefty fees that can eat away at your returns over time. You may find that your fees are much lower in an IRA.

Don’t stress if you don’t have access to a 401(k)

You might really want a 401(k), and it’s certainly a benefit you can look for in a new job. But if you love your current job and there’s no 401(k) available there, that’s not necessarily a reason to quit. You can easily turn to an IRA for your retirement savings.

Oh, and one final thing. Another nice aspect of 401(k)s is that your contributions are deducted straight out of your paychecks so you don’t have to think about them. But IRAs pretty much let you do the same these days. All you have to do is set up an automatic transfer from your checking account to your IRA and money will land there every month. So aside from an employer match, you’re really not missing out on much.

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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.Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool recommends Charles Schwab and recommends the following options: short September 2023 $47.50 puts on Charles Schwab. The Motley Fool has a disclosure policy.

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Some home maintenance issues are more dire than others. Keep reading to learn which repairs to prioritize, lest you find yourself out a lot of money. 

At this point, it should go without saying that homeownership isn’t cheap. When you take out a mortgage loan to buy a home, you will of course have mortgage payments that include the interest on your loan. And often, your mortgage lender will roll homeowners insurance and property tax costs into those payments, and keep the money safe in an escrow account until those bills come due.

But since you’re responsible for the home itself, its care and maintenance will fall to you — and your checking account. Here are five repair and maintenance issues you might encounter that you don’t want to put off — because the longer you wait, the more your costs to address them could be.

1. Plumbing issues

Is there a sound that strikes more fear into a homeowner’s heart than water rushing from somewhere inside a house? Plumbing problems aren’t always dramatic — a long slow period of water leaking from the back of your washing machine and soaking into the floor can cause a lot of damage, just as a pipe suddenly bursting and flooding your basement can.

Plumbing issues can bring mold, ruined insulation, and warped floors, among other issues. And they can cost money in other ways — if you have a toilet that’s not working properly and runs constantly, you’ll end up with higher water bills as a result.

2. Roof damage

Your home’s roof is, quite literally, your shelter from the storm, so it’s essential that this part of a house be solid and sound. Even something seemingly minor like missing or curling shingles can lead to problems down the road. Keep an eye on your gutters too; if you don’t keep them cleaned out, you could end up with blockages that prevent water from draining off your roof, or even ice dams that form when water collects and freezes in the winter.

Roofs wear out over time. Angi reports that the price of a new roof will run you $5,000 all the way up to $45,000 (depending on type of roof, size, and what kind of home you have).

3. Pest invasion

Most people have likely had a pest issue or two at home — often, it’s a minor spring ant problem in your kitchen, or perhaps a mouse or two who came in from cold (may I recommend getting a cat?). But if you’ve got a termite problem or a roach infestation (or that mouse decided to start a family in your walls), you need to get professional help ASAP.

Extermination of a large-scale pest problem is not something you should attempt to handle by yourself, as you could put yourself and your family at risk. And if you neglect the problem, you’ll only face more structural damage over time.

4. Foundation cracks

Just as your roof is a vital part of your home, so is your foundation. Over time, it’s normal for a foundation to settle and cracks might result. Take a look at your foundation regularly, and note any new cracks you see. Angi reports that foundation repairs range in cost from $2,165 to $7,796, and it stands to reason that the sooner you act, the less you’re likely to pay.

5. HVAC problems

The systems that heat and cool your home are of vital importance, and if one of them isn’t working right, get a professional technician out for a look. If your air conditioner is on the fritz, you’ll face not just discomfort, but higher humidity indoors that can lead to mold. And a broken or malfunctioning furnace can even lead to carbon monoxide leaks in your home — and this can be deadly.

Don’t neglect your home

It’s best to stay on top of small issues and address them before they become big problems with price tags. If you don’t take care of your home, it’ll make it much harder to sell down the road and your home’s value could be impacted.

Being aware of problems as they develop is easily your best protection. When you make an offer on a home and have it inspected during the buying process (do not skip this), walk around the house with the inspector, if you can. Taking the time to attend the home inspection will be worth it, as you’ll be able to hear from an expert about what sorts of problems might be in your home’s future.

It’s not enough to just know about the issues, though — you also need to budget for repairs. A common recommendation is to save 1% of your home’s value per year for repair and maintenance costs, and this is a good starting point. But if your home is older, you should probably save more.

If you bought your home for $300,000 and stick to that 1% figure, you’d want $3,000 available in savings per year for home repair and maintenance expenses. If you only end up spending $1,500 one year, great! That leaves you $1,500 for a more expensive year in the future. Keep your emergency home maintenance fund in a high-yield savings account, where it will grow with interest and be ready when you need it.

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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.
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Money worries can impact your outlook. Read on for some easy ways to take control of your finances. 

Money is a funny thing. When you have it, it can make your life easier. But when you don’t have it, or don’t feel like you have a handle on it, it can mess with your mental health.

In a recent survey by Self, 86% of Americans surveyed said having control over their money helps improve their mental health. So it pays to do what you can to get a handle on your money. Here’s how.

Start with a budget — if you have the patience for it

One reason so many people find themselves financially stressed is because they live paycheck to paycheck with no money in a savings account to fall back on. That’s really not a good way to function (though sometimes it unfortunately can’t be helped).

A better bet is to have a financial cushion in the form of an emergency fund. And many financial experts will tell you that your emergency fund should have enough money to pay for at least three months of essential bills, like groceries and rent.

But to get to that level of savings, you’ll need to take control of your money. And budgeting is a good way to do that — even if it’s not the most fun.

Interestingly enough, in the aforementioned survey, almost 50% of respondents said they’ve created a budgeting spreadsheet to take control of their money. Whether they kept up with those spreadsheets is a different story.

But the reality is that budgeting can be boring, annoying, and time-consuming. And, frankly, it doesn’t always work.

You might budget $400 for groceries in a given month. If, come the last few days, you’re out of essentials, are you going to not put food on the table because it’ll push your supermarket spending to $420?

Thankfully, there’s another thing you can do to take the place of budgeting, and it’s setting up automatic transfers into your savings. Figure out how much money you can afford to part with each month, and set up a recurring transfer so that sum is taken out of your checking account regularly.

The whole purpose of having a budget is to take control of your money and work toward your financial goals. Automating your savings really does the same thing, only without the hassle and extra work.

Don’t let financial stress ruin your outlook

It’s hard to feel good in general when you’re constantly worried about money. If that’s where you’re at, getting into the habit of saving money — even if it’s just a small amount at a time — could really work wonders for your outlook.

If you begin by transferring $50 into your savings account every month after your paycheck hits, after a year, you’ll have $600. That may not be a life-changing sum. But it could spell the difference between stressing over a potential car repair versus knowing you have the money to pay for something like that.

Of course, if you’re willing to set up and follow a budget, more power to you. It’s certainly not a bad thing to do. And it’s good to know exactly where your money is going month after month. But if budgeting isn’t for you, you should know that it’s not your only option for getting a handle on your finances and improving your mental health as a result.

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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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