Money Management

Costco and Sam’s Club are two of the world’s largest retailers. How does that success impact employees? Read on as we compare employee treatment at each. 

It would be easy to make a snap decision regarding whether Costco or Sam’s Club employees enjoy better treatment. However, that’s not what we set out to do. We wanted to check apples against apples to learn which environment is most employee-centric. To do that, we compared average employee pay, company benefits, the potential to unionize, and finally, what employees have to say. Here’s what we found.

Average employee pay

Whether we’re looking at hourly wages at Costco or Sam’s Club, it’s important to note that they are entirely dependent on the job title. To come up with an average nationwide hourly wage, ZipRecruiter included all employees — those on the bottom of the wage ladder as well as those at the top.

According to ZipRecruiter:

Costco: Average hourly wage of $20.91/hour, or $43,493/yearSam’s Club: Average hourly wage of $19.31/hour, or $40,165/year

How an employee feels about their job can be directly tied to whether they have enough money in their checking account to cover bills. As we’ll see later, the fact that Costco pays a better overall rate is likely one of the reasons Costco employees appear to be more satisfied with their jobs.

Winner: Costco

Benefits

It’s a challenge to fairly compare the two company’s benefits, primarily because offering the same benefits does not mean they are equal. For example, both companies offer health insurance, but all Costco employees are eligible, including full-time and part-time (after a specific period of employment). Health benefits at Costco include medical, dental, vision, and prescription drug coverage. While Sam’s Club does offer health insurance, it’s only available full-time employees. Both companies do offer a 401(k) plan with an employer match, though.

Winner: Costco, due to a more generous healthcare plan and bonus program. For example, long-tenured hourly employees receive an annual bonus as well as additional compensation twice a year in the form of bonuses and extra checks.

Potential to unionize

Due to its merger with the union-staff Price Club in the 1990s, employees working in the old Price Club locations are unionized. According to a Q&A feature on Indeed.com (where answers are provided by employees), even mentioning unions as a Sam’s Club employee can lead to termination.

Winner: Costco

Employee satisfaction

The job search site Glassdoor gives company employees the opportunity to rate the company they work for. Along with the respect they’re shown on the job, flexibility, and the opportunity to move up the ranks, this is where having enough money to save a little each month factors into job satisfaction. Here’s how Costco and Sam’s Club employees rated their respective employers.

Overall rating

Costco employees: 4.0 out of 5Sam’s Club employees: 3.3 out of 5

CEO approval

Costco employees: 84%Sam’s Club employees: 61%

Would recommend the job to a friend

Costco employees: 76%Sam’s Club employees: 54%

Winner: Costco

Perhaps the best snapshot of how well a company treats its employees can be found in one statistic: The turnover rate. While Costco experiences a turnover rate of 17%, Sam’s Club has a rate of 44%. In our opinion, that makes the final decision easier. Costco treats its employees better than Sam’s Club treats its employees.

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

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A Costco membership can save you money, but it may not be the best deal for everyone. Read on to find out why it didn’t work for me. 

My grandfather loved discount membership clubs. He loved finding a good deal, and I think he’d admit he probably loved a free food sample even more. I like to think I follow in my grandfather’s footsteps when I hunt for a good deal. But using a Costco membership to save money has never quite worked out for my family.

Don’t get me wrong. Costco memberships can be a great way for people to save money. This is especially true for shoppers who use the Costco Anywhere Visa® Card by Citi to earn 2% cash back on Costco purchases.

But there are three reasons why a Costco membership didn’t work out for us.

1. My family doesn’t buy in bulk

Many people swear by buying in bulk, but it didn’t work for my family. We could never get the hang of buying large quantities of household goods. They just filled up our cabinets and took up space on our shelves.

We have two kids, and even our family of four couldn’t get through the items we bought in bulk fast enough. Sure, those massive bottles of mouthwash gave us an endless supply of fresh breath, but they were far more than we needed.

We learned that our family prefers shorter, more efficient trips to the grocery store rather than big trips for bulk items. We were still running out to the grocery store even after our Costco trips, which made the membership seem unnecessary.

If we ever need to buy something in bulk, we use our Amazon Prime membership to easily order it online from Amazon’s Subscribe & Save service. And since we have a Prime Visa, we get cash back for our online purchases already.

2. We’re not very brand-loyal

Costco offers most of the same brands you’ll find at any grocery, in addition to its own Kirkland brand. This works well if you have specific preferences for what snacks you like or which brand of butter you want.

But our family isn’t especially brand loyal — except for my kid’s very specific frozen pizza preferences — and we’ve found that discount grocery store Aldi has better deals on the food we buy.

Aldi doesn’t offer the same brands found in most grocery stores, including Costco. This may be a deal breaker for some shoppers, but we don’t mind the rotating brand names as long as the prices are low.

3. Costco was too busy for us

Costco has nearly 125 million members, and they keep many Costco stores very busy. We regularly fought lots of traffic and a full parking lot at our Costco, making the

grocery runs more stressful than needed.

Personally, I view grocery store shopping more like a supply run in a zombie apocalypse than as a casual outing. My goal is to get in and out as fast as possible. Costco’s busy atmosphere, large sections, and massive parking lots don’t match my shopping strategy.

The packed parking lots also caused us not to use a key Costco membership benefit: discount gas. Where I live, Costco gas is $0.29 cheaper per gallon than the average gas station, according to data from GasBuddy.

But the long gas lines at our Costco kept us from using the membership benefit, so the low prices never really paid off for us.

I’m willing to try a Costco membership again sometime

I haven’t completely written off signing up for a Costco membership in the future. But if my family does get it again, I think we’ll be more strategic about finding the best products to buy at Costco. Either that, or I’ll follow in my grandfather’s footsteps more closely and just take advantage of those free samples.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com, Costco Wholesale, and Visa. The Motley Fool has a disclosure policy.

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A new career can also mean a new financial frontier. Find out what one writer did to capitalize on changes to her personal finances. 

If you’re considering moving on from your old career and transitioning into something new, you’ll have a lot to think about. Part of that could be a change in how much money you earn, and you might need to make some decisions about how to make your new salary work for you and use it to achieve your personal finance goals. You might also need help with tax planning, investing, and paying off debt. This is where a financial planner comes in.

Here’s how working with a financial planner impacted me, and why you should consider doing the same if you’ve recently changed careers.

A career change can open many doors

I moved from museum operations and management to digital content in 2021, but it wasn’t until early 2022 that I first met with a Certified Financial Planner (CFP) to shed some light on my money situation. At that point, I was feeling comfortable enough in my new role, but frustrated that little had really changed for me on the financial front. I had become a remote worker, and got to choose the city I live in now for reasons other than “I have a job here,” but I wasn’t earning a higher salary.

The most immediate money problem I faced was being in debt. Dedicating a portion of your future pay to high-interest debt payments can limit your ability to buy a home, save for retirement, or achieve other goals. So the first order of business was making a plan for me to get out of debt.

I had been trying to find a suitable side hustle since the end of 2021, so I could increase my income. My CFP gave me encouragement about finding a side gig that could help me build skills in my new career field as well as earn money to pay off debt. He also noted that I’d owe quarterly freelance taxes, and that a high-yield savings account was the best place to keep that money in between payments (he even recommended the bank I chose).

A financial planner can help you decide which doors to walk through

The first few monthly meetings with a CFP gave me plenty to think about, as well as actionable no-nonsense advice. I ended up finding the right side gig not long after the first meeting, and managed to earn enough money to pay off my debt and give myself a financial clean slate. As I approached a $0 balance, I thought more and more about what was next for me.

My full-time job was no longer working for me, and while I was happy to have had a stepping stone to a new career field, I wanted work that was a better fit. I applied for many more full-time roles, and was under serious consideration for a few of them, but thanks to the wise counsel and encouragement of my CFP, I ended up making plans to become a full-time freelancer instead of just taking another salaried job. And no one was happier for me than my CFP when I followed through on that plan at the start of this year.

Another subject that loomed large for me was buying a home. I decided after changing careers that homeownership was something I wanted to pursue again, after many years of renting in the wake of my first disastrous experience owning a home. With higher pay and no debt, getting a mortgage had become a real possibility. So as soon as I made that last debt payment, I switched my focus to saving money for a down payment, closing costs, and other expenses I’ll incur when I become a homeowner. Again, the advice and help I received from my financial planner has been paramount to my confidence in my ability to make this happen for myself.

Financial planners aren’t just for rich people

I used to believe that it only made sense to meet with a finance professional if you had a lot of money to manage. As it turns out, this isn’t the case at all. I think if I’d had the opportunity to work with a CFP sooner, I might have been able to get out from under debt and make positive moves for my career and financial future sooner. But ultimately, it was better late than never.

There’s so much a financial planner or other finance professional can do for you. If you need help with the basics like budgeting, or more complicated matters like estate planning, investments, and beyond, look for a money coach of your very own. And if a career change is in your future (or your recent past!), you may appreciate the help even more.

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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 could be denied a mortgage loan due to low credit, a recent job change, too much debt, or other issues. Find out what to do if this happens to you. 

Being denied a mortgage loan can be really frustrating. You may have been excited about the idea of buying a house. But you won’t be able to move forward if the bank says you can’t borrow to pay for it.

Your mortgage lender should tell you why you were not approved for a loan. But there are some common reasons you should be aware of. Here are some reasons you may be denied a home loan by a lender — as well as some tips on what you should do if this happens to you.

You have a low credit score

A low credit score is a leading reason why you might be denied a loan for a home. Typically, to qualify for a conventional loan (one without a government guarantee), your credit score would have to be about 620. If your score is below that, you could be denied.

If bad credit is the reason for your problems finding a loan, your options include:

Considering a different lender: Some lenders have more flexible underwriting policies or cater to borrowers with bad credit. Just pay attention to loan terms and fees so you don’t get a mortgage that’s too expensive.Considering a government-backed loan: With an FHA loan, for example, you may be eligible to borrow for a house with a score as low as 500.Getting a cosigner: If a borrower with better credit is willing to pledge to your lender that they’ll share the legal responsibility for loan payback, you may be able to get approved with their help.

You have too much debt

If you have a debt-to-income ratio of more than 36% (which means your total debt payments including your new mortgage exceeds 36% of your income), then you could be denied a home loan.

In this situation, your options include:

Switching loan types: Some loans allow for a larger debt-to-income ratio. Again, FHA loans could be an option, as you may sometimes be approved to borrow with a debt-to-income ratio of 43% or even higher with compensating factors.Paying down debt: If you can reduce what you owe, you’ll fix your debt-to-income ratio issue.Choosing a less expensive house: Your new home payments are factored into your debt-to-income ratio calculation so if you get a lower-cost mortgage, you may be able to get approved.

Your income isn’t stable enough

Unstable income is another issue that could lead to a mortgage denial. For example, if you recently changed careers or your income wildly fluctuates from one year to the next, this can make lenders nervous.

You have few options here, other than waiting to apply for a loan until you have a solid job history showing two years of the same income (and ideally in the same job). You also could apply for a loan you can afford even at your lowest income level, or could get a cosigner with a more stable income.

The house didn’t appraise for enough

Finally, the last problem could be if your house doesn’t appraise for enough. See, mortgage lenders only allow you to borrow a certain percentage of a home’s value, and if your house appraises low, it could mess up the loan-to-value calculation.

Say, for example, you offered to pay $400,000 for a house and you were making a 10% down payment because your lender is only willing to loan you 90% of what the home is worth. If the house appraised for $300,000 instead of $400,000, the $40,000 down payment you’d been planning to make would leave you borrowing $360,000 for a house valued at $300,000 — and no lender would approve this loan.

In this situation, you’d either have to renegotiate the price of the home, walk away from the deal, or put enough money down to meet your lender’s loan-to-value requirements (so you’d only be able to borrow $270,000 and would have to pay for the rest of the house in cash.

Ultimately, being denied for a loan is a disappointment but as you can see, you still have borrowing options. Just talk to your lender, find out the issue, and see if any of these solutions will work to help you get the loan you need to buy your dream home after all.

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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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We’re at the midpoint of 2023. Read on to see what key tax moves you should be making. 

The midpoint of the calendar year isn’t exactly a common time to be thinking about taxes. After all, it’s not like your next tax return is due anytime soon.

But even though this time of the year isn’t exactly a popular one for tax-related matters, it’s important to do a mid-year tax checkup. Doing so could leave you paying the IRS less money and help you avoid stress when the time comes to tackle your next return. It could also help you from a cash flow perspective. Here are some key moves to tackle now.

1. Check your withholding

If you’re a salaried employee, your tax withholding determines how much tax is taken out of your paychecks. And it’s important to get that number just right.

If you have too much tax withheld, you might end up with a larger tax refund. But in return, you might end up losing out on money in your paychecks that you need to pay your upcoming bills and generally live more comfortably.

On the flip side, having too little tax withheld could leave you owing the IRS a whopping sum of money when you file your 2023 tax return in 2024. That’s not ideal, either.

Take a look at your withholding and consult an accountant or tax professional to see if it’s accurate. (Your payroll department at work most likely cannot advise you on what to do.) If you need to make adjustments to your withholding, submit a new W-4 to your payroll department so they can process that change.

If you don’t have an accountant to talk to, and you’re not looking to get one, another option is to see if your withholding is the same as it was last year, and then see what your refund status was this past April. If you got a lot of money back from the IRS, it means you may want to adjust your withholding to have a little less tax taken out of your upcoming paychecks.

2. Make sure you’re keeping good records

If you’re self-employed in any capacity, whether it’s your full-time job or a side hustle you’ve picked up, it’s important to make sure you’re maintaining a good record-keeping system. Go through your bank and credit card statements, and make sure you’re recording all purchases related to earning an income. You’ll need accurate records to file your next tax return, and you won’t want to end up scrambling next April to figure out what deductions you’re entitled to.

Some examples of purchases you should be recording include office supplies if you’re self-employed, and equipment needed to do your work, like baking supplies if your side hustle has you making custom cakes.

3. Review your investment portfolio

You may have sold some stocks at a profit this year when the market rallied. If so, you may be liable for capital gains taxes that could result in you owing the IRS money next year.

Take a look at your portfolio and see if there are any stocks it pays to sell at a loss to offset recent gains. If not, you may want to consider paying estimated taxes on your recent gains if they’re larger in nature.

This probably isn’t something you need to do if you’re sitting on a $300 gain in your brokerage account. But for a $5,000 gain, an estimated tax payment could be appropriate, depending on your situation.

4. See how you’re doing on retirement plan contributions

The money you contribute to a traditional IRA or 401(k) plan can serve as a tax break for you — not to mention set you up for a secure retirement down the line. At this point, it’s a good idea to see how much you’ve put into your retirement savings year to date. If you’re not happy with that number, you’ll have another six months to ramp up your contributions.

If you’re under the age of 50, IRA contributions this year max out at $6,500, while 401(k) contributions max out at $22,500. If you’re 50 or older, you can put up to $7,500 into an IRA and up to $30,000 into a 401(k).

So, let’s say you’re 40 years old and want to max out your IRA this year. If you see that you’ve only contributed $2,000 to date, it’s a sign that you’ll need to boost your savings rate in the coming months if you want to hit the $6,500 mark by the time 2023 wraps up.

At this point, a lot of people are deep into summertime mode — and not so focused on tax matters. But if you take the time to tackle these moves in the near term, you’ll be much happier for it once next year’s tax-filing season rolls around.

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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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Investing now can ensure financial security in the future. Keep reading to learn why it pays to open a brokerage account ASAP. 

You should start investing right now. Don’t wait any longer to begin putting your money into the stock market.

There are a few big reasons why it is important to open a brokerage account and begin investing ASAP. Here’s what they are.

1. You need to begin taking advantage of compound growth

Compound growth is an extremely powerful phenomenon that can go a long way toward helping you build wealth.

Here’s what happens. Say you invest $100 and earn 10% on your money. After a year, you have $110. Now, even without adding another $1, you’re investing $110 instead of $100. So, if you earn another 10%, you’d have $121.00 at the end of that year. Now, you’d be investing $121 and would end up with $133.10 the following year.

This phenomenon is sort of like a snowball rolling downhill. You start with a little ball, and with each turn, it picks up more and more snow and it grows. And the more times your snowball rolls, the bigger it gets.

So, the sooner you start investing, the sooner you start the ball rolling, the more “rotations” you get, and the bigger your wealth grows without any extra effort on your part. Why wait to get this growth working for you?

2. You could be missing out on valuable tax breaks if you aren’t investing

If you are investing for retirement, you can contribute to an account that gives you tax breaks, such as a 401(k) or an IRA. If you invest in these accounts, you can deduct the amount you contribute, up to annual contribution limits.

If you invest $1,000 in a 401(k) and are in the 22% tax bracket, you reduce your tax bill by up to $220, so your take-home income is only lowered by $780. The government is essentially giving you that $220 to put into your account (although you do have to pay taxes on withdrawals as a retiree).

For each year you do not invest, you’re passing up the government subsidy. If you don’t contribute in 2023, for example, you’ll never again get the chance to claim the government help available to you this year.

3. You will make your future life harder if you don’t invest right now

Finally, the biggest reason to start investing right now is you’re going to make life harder for yourself later if you wait.

You cannot rely on Social Security as a sole source of retirement funds, since your benefits only replace about 40% of pre-retirement income. Taking a 60% pay cut would seriously damage your quality of life. So, you need to make sure you’re investing enough money to replace around another 30% to 40% of your income to get up to the recommended amount.

Unfortunately, the longer you wait, the harder it is to do that. Say you want to end up with a $1,000,000 nest egg at age 65. If you start saving at age 30 and earn 10% annually, you’d need to invest about $307.47 monthly. But if you waited until age 40 to start saving, you’d need $847.33 each month. That would mean taking a whole lot of extra money out of your checking account.

Don’t force yourself to save a fortune in the future. Start investing today, claim your tax breaks, and get compound interest working its magic.

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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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