Money Management

You must have money set aside for repairs when you’re buying a home. But how much do you need? Read on for some guidance. 

Buying a home is a huge undertaking. In addition to paying your mortgage, you’ll also need to keep up with expenses like property taxes, insurance, and repairs. And it’s the latter that should prompt you to build up a solid emergency fund.

But how much money do you need in emergency savings as a homeowner? There’s no hard and fast rule, but there are certain guidelines you can use to land on the right number.

Make sure you’re equipped to cover surprise expenses

Home repairs can pop up at any time, and they can range in cost from a few hundred dollars to many thousands of dollars for a single job. That’s why you absolutely need to pad your savings account before purchasing a home.

Homeowners spent nearly $6,000 on home repairs and maintenance on average in 2022, according to Hippo. But that doesn’t mean you should come up with a $6,000 emergency fund and call it a day. Rather, you’ll want to think about factors such as:

The size of your homeThe age of your homeThe state of your home

It’s often (though not always) the case that the more space you have, the more potential there is for something to go wrong. Similarly, an older home is likely to have more issues arise in the near term than a newer one. And if you’re buying a home that doesn’t appear to have been maintained very well, you can bet on having to sink more money into repairs.

So where does that leave you as far as your emergency fund goes? As a starting point, you should always make sure to have enough money in savings to cover three full months of essential bills. The logic there is that if you were to lose your job, you’d be able to dip into your cash reserves to cover your expenses rather than immediately resort to borrowing money.

Also, if you have enough cash in the bank to cover three full months of bills, then chances are, it means you have enough money to cover one or two large repairs, or a series of smaller ones. So that puts you in pretty good shape.

However, if it’s possible for you to boost your emergency savings beyond three months’ worth of living expenses, then it pays to do so. And you could take a few different approaches.

You could assess your home, try to identify the things that are most likely to break first, research the cost of repairs, and add that sum to your emergency savings. Or, you could aim for a random but notable sum to add, like $5,000, which would likely go a long way toward addressing issues with your home. You could also decide to save up five, six, or seven months’ worth of living expenses rather than only three, so you have that added cushion.

Don’t let your home drive you into debt

Many homeowners land in debt when repairs arise that their savings can’t cover. And that’s not a situation you want to put yourself in. To avoid it, pad your emergency fund as needed, whether by estimating the cost of repairs and adding that sum to a baseline of three months of bills or simply settling on a large enough number to buy yourself peace of mind.

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Life is full of little fees and extra costs, and losing money to them can really add up. Read on to learn how you could be wasting money right now. 

It seems as if every day, life just gets more and more expensive. Thankfully, the punishing inflation we’ve dealt with since 2021 has fallen to a more manageable level (it’s down to just 3%, per the last Consumer Price Index Summary Report), but I’m willing to bet you still see too much money leaving your checking account every month. What can you do? Take a good hard look at this list, and take steps to stop wasting money in these areas.

1. Bank fees

Bank fees are sneaky, because they often amount to no more than a few dollars a month (say, in the form of an account maintenance fee), but they add up over time. I lost $50 to savings account fees in 2022, and I’m still a little annoyed with myself.

You can avoid paying needless bank fees by reading the fine print on your accounts and ensure you’re following the guidelines (for example, I paid fees to my bank because my savings account balance was too low). Another thing to try? Switch banks — many online-only banks in particular have done away with fees altogether.

2. Food waste

The problem of food waste is a serious one in this country — one-third of purchased food is thrown away. Not only is all this wasted food terrible for the environment, but it can also have a financial impact — throwing away food you’ve purchased is like tossing cash in the trash. Stay on top of the contents of your fridge, freezer, and pantry, and shop with a list. And while you’re at it, reconsider buying food in bulk unless you’re sure you can finish it before it goes bad.

3. Utility costs

Sure, it’s easier to turn your home’s heat up than it is to put on a sweater or plug in an electric space heater, but it will result in a higher heating bill. Similarly, you might run your air conditioning all summer long, without considering shutting it off on cool nights and opening windows instead. If you own your home and can make changes like new energy-efficient windows and better weather sealing, I recommend it. The savings might not be huge, but they’ll add up over time.

4. Impulse buys

Spending an unplanned $5 or $10 here and there is so easy, and you might not notice the impact on your personal finances, but that extra money can make a big difference if you stash it in a savings account instead.

Let’s say you spend $25 on impulse purchases every week, equaling $1,300 in a year. This is likely not a complete emergency fund for you (unless your monthly expenses are super low), but surely $1,300 would really come in handy the next time you have an unplanned expense, like a home or car repair. So think twice before you spend randomly — or give it a line in your budget, so at least you know you’re spending it, and planning around it.

5. Credit card interest

If you have to carry a credit card balance forward and it’s not on a card charging 0% APR, you’ll accrue interest on it — and credit card interest isn’t cheap, averaging 24.52% as of this writing. If you’ve gotten into the habit of casually carrying over a few hundred dollars in charges from month to month, you might not notice your balance ticking up thanks to interest, but breaking this habit sooner rather than later can help you save.

6. Unused streaming services

We’ve all done it. You sign up for a streaming service, justifying it to yourself by noting that it only costs $12 a month. But then you stop watching it, and that $12 charge keeps showing up on your credit card statement month after month. Streaming video is one of the great things about the 21st century, but it is also one more way to waste money. Get in the habit of auditing the services you pay for every month, and if you’re not watching one of them, cancel it. If you miss it later on, you can always rejoin.

7. Buying name-brand foods

This is another one that I’m absolutely guilty of, and I’m trying to break the habit. I recently discovered that store-brand peanut butter is pretty good, while store-brand frozen fruit bars are not. Lesson learned! If you only buy name-brand foods, I recommend trying some store-brand items to compare. They’re often noticeably cheaper, and in the case of Costco’s Kirkland Signature, some products are made by the big brands anyway!

8. Speeding

Thankfully, gas prices have also come down from the heady days of 2022; AAA reports that the average price for a gallon of regular gas as of July 16 was $3.564 (it was $4.548 a year ago). That said, improving your driving habits (and especially slowing the heck down) can help you save gas, and therefore money. Follow the posted speed limits, don’t overload your vehicle, and keep it in good running order.

I’m willing to bet that you can save more money by employing at least one of the tips above. After all, why waste money if you don’t have to?

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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 positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Do you long for a beautiful inground pool oasis to get you through the hot, muggy summers? Find out why it might not be all it’s cracked up to be. 

Summers are hot, and getting hotter, all across the country. An inground pool of your own can provide the perfect oasis to chill out, relax, and escape the oppressive heat. But they come at a high cost. Homeowners in some parts of the country in particular — namely, those that experience all four seasons and only have three short months of summer weather — might find that the cost is too high to really make the investment in an inground pool worth it.

Learn more about the various costs you’ll pay for an inground pool, and a few suggestions for alternatives to consider instead.

How much does an inground pool cost?

According to data from Bob Vila, the average cost for an inground pool ranges from $39,000 to $80,351. The national average cost is $57,938. The primary factors affecting the total cost of your inground pool include things like size and shape, materials used, extra features (such as waterfalls, fiber optic lighting, slides, diving boards, and a pool deck or fence), labor, and permits required for the build. Do note that this is not an exhaustive list, but just an example of the numerous costs involved in installing an inground pool.

Whether the pool you choose falls on the low end of that average or the high end, you can expect to be spending a large chunk of change on your new addition. And unless you have the spare cash to pay for the pool upfront, then you can expect to pay a premium to finance your pool. This is due to the currently-inflated rates we’re seeing across the board right now thanks to Federal Reserve rate increases.

Installation aside, your new pool also costs money to maintain. It will need to be cleaned regularly to keep the water clear and free of obstructions and to ensure all the systems (filters, pumps, and heating systems) continue to operate properly. Chemical levels will need to be checked and maintained. And the pool will need to undergo opening and winterizing services each season. Bob Vila estimates that you can expect to spend about $100 to $200 per month on pool maintenance alone. You’ll also want to consider the extra utilities, such as electricity to power above-mentioned pumps, filters, lights, and other systems. Even a small increase to your monthly electricity bill will add up over time and should be factored into your budget.

Your homeowners insurance premium could spike

There are a couple reasons you could see a notable increase in your homeowners insurance premium when it comes to your new inground pool. For one thing, inground pools are typically included in replacement cost value of your property, so you would need to increase your claim limit to make sure your pool is covered in the event of disaster or destruction to your home.

Pools are also what homeowners insurance companies consider “attractive nuisances.” Essentially, this means they can attract children and other uninvited persons while also endangering them. When you have a pool on your property, you are liable for accidents and injuries that happen as a result of it. Therefore, increasing the liability insurance on your homeowners policy would be prudent. Policies generally include at least $100,000 of liability coverage, but some experts recommend as much as $500,000 in coverage if you have a pool.

Homeowners insurance premiums vary widely depending on who your insurer is, how big your home, your geographic location, any policy add-ons, and whether or not you bundle your coverage, so it’s difficult to estimate exactly how much your specific premium might increase with a pool. But you should be aware of an expected premium increase before moving forward with your inground pool installation.

What to consider instead

As you can see, inground pools are not a cheap addition to your home. And if you live in a part of the country where summers are short and you can only expect to use your pool between June and August, then there’s a good chance these costs (both initial and ongoing) just won’t make sense for you.

If you’re looking for a way to cool down in the summertime, consider a season pass to your local YMCA, community center, or waterpark. You might pay a couple to a few hundred dollars, depending on your family size, for these types of passes, but you’ll get unlimited fun and relaxation, with none of the cleanup, liability risk, or maintenance!

If you’re really set on the idea of having a pool of your own, consider a small above-ground pool instead. Costco has a range of types and pricing options on pools that can be set up for the season and then torn down and stored until the following year. Just need a place to splash around and cool off with the kids? Try this Bestway Steel Pro MAX 13′ x 30″ above-ground pool for $199.99. Want enough space to float around and enjoy umbrella drinks on a raft, and perhaps even entertain some guests? How about this Bestway Platinum Series Power Steel 31’4″ x 16′ x 52″ above-ground pool for a steeper $999.97?

The summer heat can be tough to bear, but there are affordable ways to cool off while soaking up that vitamin D. Take a hard look at your personal finance situation before deciding to move forward with your inground pool plans if you live somewhere where your usage will be limited. It’s a huge commitment, and one that could very well leave you with regrets if it turns out the reward isn’t worth the cost.

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Costco is known for its bulk items and notably low prices. But is membership worth it for a single person? Learn how to save if you’re shopping for one. 

Costco membership is an easy call for many families. A basic annual membership costs only $60, and you can save money on tons of products, ranging from groceries to travel packages to kayaks and clothes and electronics. But for those who are single, the question is a bit more complicated. After all, even if you did eat enough potatoes to justify buying a 20-pound sack of them, would you even have the space to store Costco’s bulk goods?

While it’s not for everyone, a Costco membership can still be worth it if you’re single. Here’s how.

1. Save on paper products

You might not eat enough perishable foods, like carrots and ground beef, to justify buying groceries in bulk at Costco. But you could buy paper products, like toilet paper and paper towels, in bulk and stock up. At my local Costco, for instance, I can buy toilet paper for about $0.80 a roll, while similar toilet paper from Walmart would cost me around $1.12. Even better, the toilet paper at Costco has 380 sheets, while the Walmart brand has 242.

So Costco’s toilet paper is cheaper and will last longer — a win-win savings situation to help any single person’s personal finances.

2. Get a Costco travel package

You really don’t have to look far to save money at Costco. But for those travelers who are looking far, Costco Travel can help you get there — and save tons on domestic and international travel.

Every now and then, Costco Travel will advertise exclusive, limited-time travel packages to members. For example, I’ve seen all-inclusive vacations in Hawaii that are not only cheaper than booking the pieces of your trip separately, but will give you resort credits between $50 and $200. I’ve also seen cruises with jaw-dropping prices and all-inclusives in Mexico and Puerto Rico. Booking travel through Costco could potentially save you enough to cover your membership dues with one purchase.

3. Buy Costco tires

Costco’s Tire Center is one of the warehouse’s few underappreciated departments. To be sure, Costco doesn’t always have the cheapest tires, especially when other tire shops, like Walmart and Discount Tire, are offering promotions. But when Costco is offering tire promotions of its own, Costco Tire Center could save you between $100 and $150 on a set of four tires. That’s enough to pay for a Costco membership — and leave some cash in your checking account for a few $1.50 hot dogs.

4. Shop for your pets

Finally, even if you’re the only human in your home, you might have dogs and cats to feed. Costco’s bulk pet food comes at a low price — especially in comparison to other pet stores, like Petco — and its flea and tick treatments are significantly cheaper. Costco may not have the same variety of pet supplies as other stores, but for basic food, cat litter, and toys, it’s hard to beat the warehouse retailer.

Here’s the thing. Even if you’re not sure Costco could save you money, it doesn’t hurt to try. That’s because Costco will reimburse your annual membership dues if you try it out and decide it’s not for you. And if you’re really ambitious, you could try out Costco’s Executive Membership for $120 per year. You can earn 2% cash back (up to $1,000 in annual earnings) and save on additional Costco services.

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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 positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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People are often unsure about the best way to invest their money. Learn about dollar-cost averaging and why this method of investing works so well. 

One of the most common investing mistakes is trying to time the market. It sounds great in theory — instead of investing no matter what’s going on, why not get in when you expect prices to go up? If you’re right, you could make more money on your investments.

There are a few serious issues with this approach. For starters, it’s practically impossible to accurately time the market. Even if you could, you wouldn’t make that much more compared to simpler investing methods. And what often ends up happening is that you don’t invest nearly as much money because you’re constantly second guessing yourself.

Let’s say the price of a stock that you like goes down. It seems like a good time to buy, since you can get it at a discount now. But then you start to wonder if it could drop even lower in a few hours, or tomorrow. When you’re trying to time the market, this is what you go through all the time.

Fortunately, there’s a much better and easier option. It’s called dollar-cost averaging, and it takes all the guesswork out of investing.

How dollar-cost averaging works

Dollar-cost averaging is when you invest a fixed amount of money on a regular schedule. For example, you could invest $100 a week, or $500 on the first and 15th, or any other amount and schedule that you want.

The biggest benefits of dollar-cost averaging are how easy it is and how much time it saves. There’s no debating whether to invest or how much. You just follow your schedule. With most top stock brokers, you can also set up automatic investments, meaning you don’t need to spend any time making your investments.

The million-dollar question is what kind of results you can expect from dollar-cost averaging. And in a comparison of several investing styles, it did extremely well.

Dollar-cost averaging vs. other investing methods

In 2021, Charles Schwab ran the numbers on how multiple investing styles would have performed over 20 years of investing (from 2001 through 2020). For its hypothetical scenario, each of five investors received $2,000 to invest at the beginning of every year. Here were the investing styles:

Perfect timing: Timed investments perfectly every year by always investing the full $2,000 when stock prices were lowest.Invest immediately: Put all $2,000 in the stock market on the first trading day of the year.Dollar-cost average: Divided the $2,000 into 12 equal portions and invested one portion at the beginning of each month.Bad timing: Timed investments poorly every year by always investing the full $2,000 when stock prices were highest.Stay in cash: Left the money in treasury bonds and never got around to investing.

Over those 20 years, each portfolio received $40,000. Here’s how the results from these investing style compared:

A simple and effective way to invest

Charles Schwab’s results weren’t just a one-off. It analyzed time periods dating back to 1926, and the results were extremely similar for most 20-year time periods.

Perfect timing is the winner, but it’s also impossible to achieve. Investing immediately and dollar-cost averaging both delivered consistently strong results as well, and even bad market timing turned a healthy profit. The worst performer was staying in cash, showing the danger of waiting to invest because you’re forever waiting for the perfect time.

Dollar-cost averaging works so well because you can do it consistently. Investing immediately is also effective, but only when you have a lump sum. Dollar-cost averaging, on the other hand, is a strategy you can use on a regular basis.

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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.Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly 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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You don’t have to worry about lower interest rates with a CD. Read on to see why. 

The great thing about putting money into a savings account is that you get to earn interest on it without taking on any risk. As long as your bank is FDIC-insured and your deposit doesn’t exceed $250,000 (or $500,000 if it’s a joint account), you won’t risk losing out on any principal the same way you risk losing money by investing in stocks.

But there’s a drawback to putting money into a savings account. You might start out with a generous interest rate on your cash. But that interest rate isn’t guaranteed to last, and your bank isn’t obligated to keep paying it.

You could put $1,000 into a savings account paying 4% interest, and the month after, your account’s rate could drop to 3.5%. And then 3% the month after that, and so forth.

The beauty of putting money into a CD (certificate of deposit) is that the interest rate you lock in is the rate you’re guaranteed to receive throughout its term. If you sign a 12-month CD at 5% interest, that’s the interest rate you’ll be entitled to for a full year.

As such, when you sign a CD, you don’t have to worry about interest rates dropping, because they won’t affect you. But despite this perk, there are some pitfalls of CDs you should know about.

You might miss out on a higher rate

Falling interest rates aren’t a concern when you have money tied up in a CD. But on the flipside, when you lock money away in a CD, you also don’t get to benefit from rising interest rates.

In other words, let’s say you sign a 12-month CD at 5% interest. If, a month later, your bank starts offering that same CD at 5.25%, you’re out of luck, because you’ve already committed to that initial CD.

On the other hand, with a savings account, you run the risk of seeing your interest rate drop from one month to the next. But your interest rate could also rise.

You’ll risk a penalty for an early cash out

You may have every intention of keeping your money locked up in a CD for the duration of its term. But what if you end up needing that money in a pinch?

With a savings account, you can take a withdrawal at any time without being penalized. But if you cash out a CD before it comes due, you’ll risk a penalty, the amount of which will depend on your bank.

At Capital One, the penalty for cashing out a 12-month CD early is three months’ worth of interest. That’s a pretty big hit to take.

Be careful when opening a CD

Dropping interest rates don’t have to be a concern when you have money in a CD. But do be aware of the aforementioned drawbacks before deciding to open one up. And if you are going to put money into a CD, try to make absolutely sure you can afford to part with it for a period of time.

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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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