Money Management

If you’re starting a small business, you’ll have to go it alone or get a partner to help you make your company a success. Here’s how to decide which to do. 

If you want to start a business, you’ll need to decide whether to move forward on your own or team up with others to try to form a company and make it successful.

About 73% of people who start companies go it alone and operate as sole proprietorships. But, while operating on your own is common, many people who move forward with small business ownership have at least one partner on board to help them get their company off the ground. In fact, around 8% of businesses are organized as partnerships.

But is this the right move for you? Here are the pros and cons of starting a company with a partner instead of moving forward on your own.

Pros of starting a business with a partner

Here are some of the biggest benefits of starting a company with a partner:

You can share the risk: Around 20% of businesses do not survive their first year, while 30% are gone by year two, and half of all companies have folded by their fifth year. If you start a business yourself, you take on the full personal and financial risks associated with business failure. If you have partners, you can share the start-up costs and share the risk so you won’t lose as much if your company doesn’t succeed.Your partner may have different strengths: Running a business requires many different skills including marketing, accounting, budgeting, future planning, and of course providing the goods or services your company was created to offer. Most people don’t have all the skills needed to be successful on their own. You can find a partner who brings skills to the table you don’t possess.You won’t have to do all the work yourself: Research shows many small business owners work 60 hours a week or more, with the majority working on some weekends and even while on vacation. Running a business takes a ton of time and dedication. If you have a partner, you have someone to share the work with so you can still have a life.

Cons of starting a business with a partner

There are also some big downsides to starting a business with a partner, including the following:

You’ll need a partnership agreement: While states typically do not require you to create a partnership agreement, you should make one anyway. This is a binding contract between you and your partner that sets forth the terms of the relationship. This way, you can get on the same page about important issues like how profits should be shared and who will be responsible for specific business tasks.You have to share the profits: If you have a partner you’re working with, they will need to receive some of the company profits as well. This can mean less money going into your personal bank account. Of course, ideally, your partner will be bringing in additional income so there should still be plenty of money to go around.Disagreements could arise: When you are working with someone else, you don’t get to make all the decisions. Conflicts could arise and you may not always get to do things the way you would prefer.

Ultimately, you will need to weigh the pros and cons and decide if you are better off going it alone or working with someone else. If you have someone else you trust who wants to work with you in a business endeavor, this can be a great option. But think carefully about whether you want your future earnings to be solely in your hands or whether having someone backing you up feels like a better choice for you.

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Some banks may limit how many savings bonds you can cash. Read on to find out more about cashing your bonds. 

Bonds offer investors an alternative way to earn interest with their money without having to open a brokerage account and buy stocks. Bonds are a relatively low-risk investment, allowing investors to earn a specific interest rate on their money. Bonds can be a good alternative to savings accounts, which don’t offer guaranteed interest rates.

There are many different types of bonds, including corporate bonds issued by companies, municipal bonds, and U.S. Treasury bonds. Corporate bonds account for the largest segment of the U.S. bonds market, followed by U.S. government bonds.

Many bond investors were hurt last year, as the Federal Reserve began hiking interest rates at a rapid pace. As interest rates rise, new bonds being issued offered much higher interest rates than in the past, which made older bonds less valuable.

Before you cash in your bonds, there are a few things you need to know. Here’s what happens if you try to cash into too many bonds at once and why you should call your bank ahead of time before trying to cash in physical bonds.

What happens if you cash too many bonds at once

For the sake of simplicity, let’s assume you’re interested in cashing in your U.S. Treasury savings bonds. One of the easiest ways to do this is through the U.S. Treasury Department’s bond website, Treasury Direct.

Treasury Direct says that it doesn’t have a limit on the number of savings bonds you can cash or the value of the bonds as long as the bonds meet the requirement for cashing. The site even has a calculator to help you determine how much your bonds are worth.

If you want to cash your physical savings bonds through your bank, you’ll need to check with them first to see what their limits are. Banks often set limits for how much money you can withdraw or deposit at any given time, and the same is true for cashing a savings bond.

You may need to contact your bank directly to find out what limits it has set or if you can cash in your savings bonds at all. Some banks, including Capital One, don’t cash savings bonds at all; others will only do so if you’ve had an account at the bank for more than 12 months.

For example, U.S. Bank doesn’t list a dollar amount limit to redeem bonds, but it does say that if you’re cashing in more than $1,000 in bonds, you should have to have the paperwork certified. This may require you to fill out extra paperwork and sign it in the presence of a notary. The U.S. Treasury stopped issuing most savings bonds in physical form at the end of 2011, so this process should continue to get easier for savings bond holders in the future.

Some banks may allow you to cash in your bonds with them without having an account, but each bank has its own rules, so check with banks beforehand to ensure you’ll be able to cash them at a local branch.

Make sure to let your bonds mature

Before you consider cashing in your bonds, you want to ensure they’ve fully matured. Cashing them in too early will often result in penalties.

For example, if you have government-issued Series I bonds, you should hold them for at least five years to avoid paying a penalty. While you’re allowed to cash them in after just 12 months, doing so before five years will result in losing the last three months of interest.

Still, bonds can be a great way to supplement your investment portfolio by accruing interest in a relatively low-risk manner. Just be sure that you know how long you’ll need to hold onto them and how your bonds may be affected by inflation.

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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.The Motley Fool has a disclosure policy.

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A personal loan can be a great borrowing option, but you might regret it later. Discover why a personal loan may not always be a good idea. 

A personal loan can be a good borrowing option in certain circumstances. If you need to finance something you can’t pay for out of savings, a personal loan is a flexible borrowing solution that often comes with an affordable interest rate.

But while there are good uses for personal loans, there are also circumstances where you could end up regretting using one. Here are three reasons you may find yourself wishing you hadn’t taken out this type of loan at all.

1. You’ll have to pay interest costs

Personal loans charge interest. The average interest rate on a personal loan as of May 2023 was 11.48%. When you pay interest, you make the cost of whatever you bought more expensive.

Let’s say you take out a $5,000 personal loan with a five-year repayment period at the average interest rate. At the end of five years, you’d have spent $1,594.77 in interest costs. You would have made your purchase about 32% more expensive over time.

Paying more for whatever you’re borrowing for is something you may come to regret as the entire amount of money you spend on interest is money you would be unable to do other things with.

2. You will have less income to spend in the future

When you take out a personal loan, you commit to paying it off for several years in the future. Typically, you’ll pay your loan off for a period ranging between 12 months and 60 months or more.

This is your future income you are committing to spend on something you’re buying today. That $5,000 personal loan mentioned above would come with monthly payments of $109.91. Every single month for the five years after you pay off your personal loan, you’d have to subtract $110 from your paycheck before you even got a chance to spend that money on anything, since you’d have to send that money to a lender.

When you commit future income to something you buy today, you make it harder to live within your means later on. You won’t have that $110 to spend on a nice meal out or to help cover your car payment or to invest for your future. And, if you experience an income decline or want to switch to a job you like better which pays less, you’d still have that $110 you had to pay. This could leave you more stressed out about money, or make you feel like you can’t afford the pay cut.

Before you move forward with a personal loan, think about whether you really want to make a promise to a lender your future self must keep.

3. You could spend years paying off something you no longer benefit from

Finally, when you take out a personal loan, you could find yourself paying for something long after you stop enjoying it.

Say you take out a personal loan to go on vacation. Your vacation will be over in a week or two, but you’ll be paying for it years from now. In four years, when you make that monthly payment, will the memories of your vacation still sustain you so you are still happy to write the check? Or will you have forgotten the trip, but still be stuck shelling out funds to your lender for it?

In some cases, you will find that it’s worth it to pay extra interest, give up future income, and keep writing the check for your personal loan long after you no longer use the item(s) you bought with the money. In many cases, though, you may end up wishing you’d just not borrowed and instead waited to save up money to pay cash for whatever it was your loan proceeds went to.

Before rushing into a personal loan, take the time to truly think about whether you’ll be happy to pay it in a few years or whether you’ll be left with regrets.

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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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When looking for work, some people have a preferred minimum salary in mind. Learn about salary requirements for American workers here. 

While most workers don’t get to decide their salary, many people have a preferred amount of money that they hope to make to afford to live comfortably. Some people are looking to transition to a new job, but it turns out that how much a job pays is a significant deciding factor for whether some will start a position with a new employer. A recent survey found that job seekers seek a minimum salary of around $79,000.

Workers looking to transition have wage expectations

The Federal Reserve Bank of New York recently published its July 2023 SCE Labor Market Survey. The survey examines consumers’ experiences and expectations regarding the labor market. It turns out that Americans who are looking for work have an ideal salary in mind.

The survey found that the average reservation wage — the lowest wage one would be willing to accept when taking a new job — continues to climb. The July 2023 study found the average reservation wage to be $78,645. The average reservation wage in July 2022 was $72,873.

The good news is the average wage for full-time job offers has increased in the last year. The same study found that the average wage for a full-time job offer rose from $60,764 to $69,475. That’s great news for workers’ bank accounts.

These stats show that wages are important to job seekers, and some aren’t willing to take a job if it doesn’t meet their preferred salary conditions. Rising living costs may be a significant factor for why workers are set on a new job meeting specific salary requirements.

What to look for in a job offer

Whether you’re out of work or are looking to transition to a new role with a different company, it’s important to carefully consider any job offer that comes your way before accepting. Not every job offer will meet your needs, and you have to decide if it’s worth taking a less desirable offer when it comes your way — or declining and waiting for a better offer later.

Salary is one major aspect of any job offer that shouldn’t be ignored. You want to ensure you can pay your bills and continue to meet your personal finance goals. The salary should also match the responsibilities that are expected of you and your experience level.

If the salary offered feels like it may be too little, it’s a good idea to consider negotiating for more pay. You don’t want to accept a job and then spend all your time worrying about finances. Check out these salary negotiation tips if you need help asking for more money.

You’ll also want to consider the entire benefits package the company provides. Do you get health insurance? How many vacation days and sick days do you get? Is a 401(k) account offered? Being offered valuable benefits can make a difference. If you’re unhappy with a potential employer’s compensation package, here are three benefits to negotiate.

Well-paying jobs exist

If you’re searching for a new job and are feeling disappointed with the salaries you’re seeing, don’t give up. If you have the flexibility, you may want to consider moving to a lower-cost-of-living area. Some cities have lower living costs, yet average wages are high. Check out The Ascent’s research on the most affordable cities with high salaries and low living costs.

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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 may be surprised to see which generation’s credit card balances are the highest. Read on to get the scoop. 

Credit card debt is a problem for people of all ages. It can be costly due to interest charges, and it has the ability to wreck an otherwise solid credit score.

But while credit card debt is prevalent across American consumers on a whole, one generation seems to have more of it than any other, according to data from New York Life. And it’s a generation that really can’t afford to be carrying such high balances.

Gen Xers have balances that are dangerously high

Gen Xers with credit card debt report owing $9,434.42 on average, says New York Life. That’s a higher level of credit card debt than any other generation.

Here’s why that’s problematic, though. Older Gen Xers are already in their mid-50s, which means they may be within a decade of retirement. And it’s very much not a good thing to retire with credit card debt, because during that stage of life, incomes tend to decline.

Now, imagine you’re used to living on $5,000 a month. But in retirement, you only have an income of $3,000 a month between your savings and Social Security. Chances are, you’re going to have to make some lifestyle changes to account for that drop. But think about how much harder it might be to have to juggle credit card payments on top of your other bills at a time like that.

That’s why it’s so important to try to shed your credit card debt quickly if you’re a Gen Xer who has a lot of it. Granted, anyone with credit card debt should try to eliminate it quickly to save money on interest and limit credit score damage. But it’s especially important for pre-retirees to try to get out of debt while they still have a paycheck coming in.

Your game plan for shedding debt

Let’s say you’re 55 and want to retire at 65. At this point, it’s time to get serious about knocking out your credit card debt. And doing so could boil down to a combination of cutting back on spending and boosting your income with a second job.

Rest assured that side hustles aren’t just for millennials. Plenty of older people work side gigs for various reasons. In fact, AARP reports that 40% of Gen Xers have a side hustle, while 24% of baby boomers, some of whom may already be retired, have one as well.

In addition to boosting your income and cutting expenses, you can consider ways to make your credit card debt less expensive to pay off. Rolling it into a home equity or personal loan could be a wise move because you might lower the interest rate you’re paying on your balances substantially. Plus, this way, you get to benefit from fixed monthly payments that may be easier to keep track of.

Credit card debt is far from ideal no matter how old you are. But it’s something you really don’t want to be dealing with as a retiree. So if you’re creeping closer to that stage of life and still have a lingering balance, it’s best to do what you can to knock it out — even if that means having to make some sacrifices.

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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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