Money Management

Most American businesses are considered small, according to the SBA. Keep reading to learn whether you’re ready to take your business idea to the next level. 

According to the U.S. Small Business Administration, there are 33.2 million small businesses in the United States, accounting for 99.9% of all businesses in this country. This is staggering, but note that the SBA considers companies with 500 or fewer employees to be small businesses.

If you’re dreaming of starting your own business, you’re clearly in good company.

But if you’re preparing to make the leap from someone else’s employee to business owner, how can you tell whether you’re ready? Here are a few ways to know your new small business venture is likely to succeed.

1. You have a great idea — and a solid business plan

The first step in creating a successful business is having an idea. Ideally, that idea is both unique and represents a good or service that people will actually want to buy from you. But it isn’t enough to have the idea — you need to make a real plan to help ensure your success.

A business plan forms a specific roadmap for your business, as it outlines your goals and provides a concrete record of how you’ll handle finances, business operations, sales and marketing, and beyond. In addition to helping you lay out your ideas and figure out what to do next, having a business plan will make it much easier to get funding for your venture, including small business grants and loans. After all, any entity that could give you money will want to see how you intend to use it.

2. You’re financially ready

If you’re going to be leaving a more traditional employment situation to pursue your dreams of business ownership, it is absolutely essential that you’re in the right shape financially first. The traditional recommendation for an emergency fund is three to six months’ worth of bills, but if you’re starting a business, you should give yourself as much runway as possible.

Aim to save as much as a full year’s worth of bills in a savings account before launching your venture. Yes, this is a lot of money, but if you’re working on a passion project and are unsure of how long it’ll take to become profitable, the last thing you need is to be worrying about how to pay your regular expenses — or going into debt to do so.

You may want to try to get your business off the ground while still working your day job, if you can. This might be a challenge, because running your own business is definitely more of a time commitment than your standard 40-hour workweek.

3. You’re prepared to keep excellent financial records

It’s absolutely essential that you keep track of all of your business’s income and expenditures right from the start. As a business owner, your taxes will be different from what they were when you worked for someone else. In those days, your employer took taxes out of your earnings before issuing you paychecks. But with your own business, you’ll be responsible for paying quarterly estimated taxes, and if you miss those deadlines, you could be penalized. You’ll also be able to write off business expenses, reducing your tax liability.

To help you deal with money matters and taxes, it’s a good idea to make an accountant your first hire for your new business. They can help you decide how to structure the business, which accounting software will work best for your situation, and other bits of financial groundwork. And remember that even though your new business may take over your life (at least for a little while), it’s crucial to keep your personal finances separate from it. Thankfully, there are plenty of great business checking accounts available to help you do just that.

Starting a new business is both scary and exciting. Use the above metrics to decide if you’re ready and if your business is likely to succeed — or if you need to go back to the drawing board.

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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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Costco offers great gift options for men, including TVs, air fryers, and more. Check out five great presents to buy at Costco. 

Whether you are shopping for Father’s Day or for another special man in your life, you may find it hard to find that perfect gift. The good news is, you don’t have to drain your bank account or scour the internet for hours in hopes of stumbling upon a present that will knock his socks off. You can just visit your local Costco.

Costco has a huge selection of electronics, clothing, personal care items, sports and fitness gear, and more. You’re sure to find something worth breaking out the credit cards for — including one of these five great gift options.

1. A new TV

Whether the man you’re buying for loves sports, movies, or binging Netflix, a new TV is sure to make his habit more enjoyable. Costco offers tons of them, including 70-inch TVs for under $500.

TV technology has changed a lot in recent years, with 4K technology becoming the norm and the prices of extra-large TVs tumbling. Check out Costco’s offerings to get a big new screen and make a big impression on your gift recipient.

2. An axe-throwing set

Axe throwing has become a popular modern sport, with many dedicated locations cropping up where you can take your turn tossing an axe at a target. But if you purchase this EastPoint Axe Throw Set for just $84.99, you can bring the fun home.

This is a great gift for the man who already has most outdoor games and who wants a new challenge. And, best of all, it folds up for easy storage so it won’t take up too much space after playing.

3. An air fryer

Cooking is a passion for many men, and an air fryer provides a great alternative to grilling. Costco has several of them to choose from, including the Gourmia 7-Quart Digital Air Fryer for just $57.99.

With a dishwasher-safe basket and built-in reminders to turn the food, this air fryer is simple and intuitive to use. There are 10 one-touch cooking options so meals come out perfect every time with minimal effort. It even comes with a recipe book so your gift recipient can get inspired to use it right away.

4. A high-tech thermostat

If temperature wars are a thing in your home or the man in your life loves to turn the thermostat up or down on you, the Google Nest Learning Thermostat with Nest Temperature Sensor can make a great gift.

This high-tech device will pay for itself in just two years through lower electric bills, which will make the price-conscious man excited to get it installed ASAP. The thermostat learns your habits to adjust the temperature automatically, and it can be controlled from your smartphone or through a high-res display.

There’s currently a $50 manufacturer coupon offer for the Nest thermostat too so you can get a bargain while your gift recipient gets the joy of controlling the thermostat right from his pocket.

5. Garden beds

If the man you’re buying for is passionate about improving the look of his yard or growing things with his own two hands, you can’t pass up the Vita Modular Vinyl Garden with Planting Grid. This comes as a two-pack of garden beds and the beds can be joined together to create multiple gardens in a custom layout. It’s also safe for food growing since it is BPA free.

Each of these items can be a great gift for the man you care about so check them out today to see if one of them stands out as being the perfect present.

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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.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Costco Wholesale, Intuit, Netflix, and Target. The Motley Fool has a disclosure policy.

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A recession could be in store for 2023. Read on to see how that might benefit investors. 

Will a recession strike in 2023? Last year, many financial experts seemed to think that was inevitable. But here we are in June, at roughly the midpoint of the year. And so far, there doesn’t seem to be any major indication that economic conditions are worsening.

In May, the U.S. economy managed to add almost 340,000 jobs. That’s not exactly a sign of trouble.

But still, many people in tune with the economy think things could worsen as 2023 chugs along. Even the Federal Reserve insists that a recession may be on the horizon.

It’s a good idea to prepare for a recession by boosting your savings account balance in case you lose your job. But you may want to pump more money into your brokerage account as well. Here’s why.

It’s all about opportunity

The scary thing about a recession is that it’s hard to predict how broad an impact one might have. Often, a recession will mean an uptick in unemployment. Now, some industries tend to be fairly recession-proof, like healthcare and education. And a mild recession may not drive so many people into joblessness. But still, unemployment is a concern.

A recession also has the potential to batter the stock market. This isn’t guaranteed to happen, but it’s a potentially concerning side effect.

That said, a recession also has the potential to be a good thing for investors. If an economic decline leads to a drop in stock values, it gives investors a chance to scoop up stocks on the relative cheap. And that could lead to a world of opportunity.

Let’s imagine you’ve been eying a company whose stock is trading at $200 per share. If a recession hits and pounds the stock market, that company’s share price might drop to $180.

Now, let’s say you buy 10 shares at $180 for a total of $1,800. If that same stock then not only recovers its value, but gains value to the point where shares are worth $220 apiece, you have the potential to enjoy a sweet $400 profit.

Look at the silver lining

Nobody wants to see the economy take a turn for the worse. The idea of losing a job is scary, and the idea of seeing your portfolio drop can be almost as unsettling.

But if a recession does end up hitting at some point in 2023 or beyond, the good news is that it may open the door to a world of opportunity for investors. To prepare for that, pump some extra money into your brokerage account so you have a chance to jump on discounted stocks once they become available.

That said, it’s extremely important to have a fully loaded emergency fund ahead of a recession. If you don’t have enough money in savings to cover at least three full months of essential bills, boost your cash reserves there before adding funds to your brokerage account.

But if you’re all set on emergency savings, it’s a good time to beef up your brokerage account balance. That way, you can put your money to work if the opportunity arises.

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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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More than half of Americans have asked ChatGPT for financial advice. But is it useful? Here’s what it has to say about saving and investing. 

If you haven’t asked ChatGPT for financial advice, you’re in the minority. According to a riveting survey by The Ascent, 54% of American adults have.

But ChatGPT isn’t a god. It doesn’t have all the answers, and even when it does, it hallucinates — not that the cute bot will tell you that. Unless you pay $20/month, the bot is limited to pre-2022 information and can’t browse the web.

Let’s experiment. I’ll ask for financial advice from GPT-3.5 (free version) and GPT-4 (paid version). We’ll check out the answers, and you can decide if it’s worth asking the fastest-growing AI chatbot on the planet how to manage your money.

How it works

How does ChatGPT work? It’s like texting. You open a chat and message the bot, and it replies. You can enter statements or questions. If you follow up, the bot will remember your previous responses. To test ChatGPT’s internal logic, we won’t enable web browsing on the paid version.

We’ll stick to asking one question per topic.

If you have a paid ChatGPT account, click the links below to continue my conversations with the bot. Or, copy the prompts and paste them into the free version to start your own conversation.

Hot tip: You can talk to ChatGPT by heading to the OpenAI website and logging in with your Google account. (I recommend trying it out, since AI will transform jobs over the next decade.)

Financial topics

Below are prompts asking ChatGPT for advice on budgeting, investing, and more.

1. Budgeting

Prompt: You are BudgetGPT, a budgeting expert. I’m looking for advice on how to budget. My income is $50,000. I have $10,000 in debt. How should I be budgeting my money?

For more information, you can continue the conversation with ChatGPT.

Overall, GPT-3.5 was accurate but overwhelming. GPT-4 immediately offered a handy starter template I could copy and paste into my favorite budgeting app. The paid version of ChatGPT provided advice that was specific, helpful, and consistent with budgeting best practices.

2. Investing

Prompt: You are InvestGPT, an investing expert. I’m looking for advice on how to invest for the long term. I have $10,000 to invest right now. I want my investments to be recession-proof. How should I be investing my money?

For more information, you can continue the conversation with ChatGPT.

Overall, both versions of ChatGPT responded to my request with conservative investment advice. A beginner might find GPT-4’s sample portfolio helpful as a starting point. Notably, both specified that no investment is genuinely 100% recession-proof.

3. Reading

Prompt: I’m a beginner at managing money. Suggest popular books on topics like investing and savings. Stick to recent Amazon bestsellers.

For more information, you can continue the conversation with ChatGPT.

Overall, results were mixed. Both versions recommended older books like The Total Money Makeover: A Proven Plan for Financial Fitness, published in 2009. The paid version provided insight into how I might find the books helpful, which I enjoyed.

4. Saving

Prompt: You are SavingsGPT, an expert on saving money. I want to save up $10,000 by the end of this year. List three popular savings challenges and how to go about them.

Overall, the advice was okay. All challenges would help me hit my $10,000 goal. Some were more realistic than others. I won’t save $10,000 a year with the $5 Challenge. Nor do I habitually pay with cash — these days, I prefer payment apps like Apple Pay.

For more information, you can continue the conversation with ChatGPT.

Does ChatGPT give useful financial advice?

Yes, to a point. ChatGPT mostly followed instructions and accounted for details I provided, such as my income and savings goals. The paid version provided useful templates I could follow for budgeting and investing, which I didn’t ask for, but appreciated.

However, the bot has some big limitations:

Context. The bot is limited to the information you provide. Forget to tell ChatGPT something relevant? Oh, well. The bot probably won’t correct your oversight.Web browsing. The bot doesn’t offer web browsing unless you pay for the $20/month subscription. Information is limited to what it scraped from the pre-2022 internet.

Context

Context really matters. For example, I didn’t tell ChatGPT my age or risk tolerance, so it didn’t consider those when suggesting an investment portfolio. A good financial advisor would have asked me more about my risk tolerance before making suggestions.

The more you know about a topic, the more relevant context you can provide, and the better questions you can ask ChatGPT — leading to more satisfying answers.

Web browsing

I didn’t bother asking ChatGPT to compare financial products. There was no point. It would need access to web browsing for up-to-date information — and anyway, Bing AI is better than ChatGPT at browsing the web.

ChatGPT is a black box, but web browsing allows you to track where chatbots like ChatGPT are pulling their financial advice. Super useful for weeding out hallucinations.

Best results

Double-check financial advice given by ChatGPT. Feel free to consult a financial advisor. But bare minimum, verify results with a quick Google search. Language models like ChatGPT draw upon humanity’s collective knowledge, and as we know, humans are fallible.

But is the bot useful? Absolutely. Just like we can learn from strangers on the internet, we can learn from AI like ChatGPT by incorporating digital best practices we already use, like Googling new information to ensure it’s not ridiculous.

TL;DR: ChatGPT offers a good starting point for boosting financial literacy. It can draft plans and provide actionable advice. Ask it for a starting point, then verify claims you’re unsure about. Provide context, and tweak advice to meet your financial needs for best results.

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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.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon.com, and Apple. The Motley Fool has a disclosure policy.

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A writer lost out on $1,000 and wants other people to avoid that fate. Read on for one homeownership blunder it’s best to avoid. 

When you buy a home, you don’t just take on the expense of a mortgage loan. You also take on the expense of maintaining your property, and that extends to the exterior.

Years ago, my husband and I noticed we had some dead trees in our backyard. We knew that if a bad storm blew in, those trees would be in danger of falling, causing damage to not only our property, but several neighbors’ properties. We made what we thought was the right decision by paying to have them removed.

It turns out, a nuance in our property boundaries made it so we actually were not allowed to do that. And we wound up getting hit with a costly fine as a result.

When doing the right thing backfires on you

Part of our backyard is a conservation easement — a special provision that was put into place before we bought our home to preserve that land. We knew that since we had an easement on our property, we were restricted from doing certain things to alter that land — for example, putting in a shed or pool. Thankfully, neither were part of our plans, so it wasn’t an issue until we discovered the dead trees and thought we were doing the responsible thing by removing them.

The terms of our conservation easement stated that removing any sort of vegetation was prohibited. And apparently in our case, that included dead trees that posed a hazard.

When our township found out that we’d had those trees removed, it proceeded to slap us with a fine. In the end, we had to pull $1,000 from our savings account to deal with it.

Now, had we wanted to pursue the matter legally, we probably would’ve had some recourse. The trees we removed posed a hazard, and while we knew we couldn’t remove healthy trees from our easement, we potentially could’ve gotten an attorney to argue our case. But we also figured that the time and money we’d spend on a lawyer would equal or exceed the $1,000 we had to fork over, so it just wasn’t worth our aggravation.

An important lesson learned

My husband and I only found that our property had conservation land on it when we pursued a landscaping project a few years after moving in. And the reason we didn’t know about that easement beforehand was that we didn’t carefully read our property survey before buying our home. That was actually our biggest mistake. Had we known about it, we probably would not have purchased our home because we’ve run into other issues with that easement as well.

If you’re in the process of buying a home, make absolutely sure that you review your property survey carefully before finalizing that purchase. Experian says that your mortgage lender or title insurance company should be able to provide you with a copy.

In fact, you may be paying for a new property survey as part of your closing costs to put your mortgage into place. And so in that case, you absolutely deserve a look at that survey.

My husband and I learned the hard way that overlooking a major detail in the home-buying process can have consequences. Review your survey carefully to avoid a similar issue.

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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.Discover Financial Services 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 Discover Financial Services. The Motley Fool has a disclosure policy.

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This writer’s Dad thinks Father’s Day is “commercial poppycock.” If you have non-materialistic loved ones or lack cash, discover some cost-effective gifts. 

My dad’s frugality is legendary in my family. He hates wasting anything, particularly money. This is a man who, when my parents were still dating, asked a neighboring table in a restaurant if he could have their leftovers. He will always set the thermostat several degrees lower than what’s comfortable in the winter.

As an adult, one of the many things I am grateful to him for is that he taught me to live within my means and save for the future. But it presents an interesting conundrum when it comes to birthdays, Christmases, and Father’s Day. How do you treat someone who actively dislikes frivolous spending?

Why Dad isn’t a fan of Father’s Day

In fairness, Dad isn’t a full-on Scrooge. And it’s not only about money. He worries about the environmental impact of the amount of “stuff” we all consume. He is someone who’d always rather fix something than buy new, and he hates the crazy levels of consumerism in the world.

He also doesn’t want us spending our money on things he doesn’t need (or really even want). Especially not for what he considers to be a day that was made up by greeting card companies to sell more products. “Commercial poppycock,” he told me when I told him about this article. Never mind that National Geographic tells me it was actually President Nixon who made Father’s Day a holiday back in 1972.

My dad has done a lot to help me build secure financial foundations and build wealth. He’d much rather I put any spare cash I had into a brokerage account than spend it on him. Personally, I think it’s possible to do both — I can invest and occasionally get something special for my dad. Plus, there are a lot of ways to buy thoughtful gifts that bring joy and won’t end up in landfill.

Cost-free ways to make Father’s Day special

Whether it’s because you don’t have much spare cash right now or your dad doesn’t like Father’s Day, there’s no reason it has to break the bank. When you think about it, most of these celebrations are about showing love and appreciation. Sure, you can spend money, but you can also spend time and effort on your loved ones.

Here are some of the ways we’ve done that for my dad in the past.

1. Spend time together

Think about things that your dad enjoys and see if you can make some of them happen this Father’s Day. That might mean going for a long walk, watching sport, or helping him out in the garden. Or organizing a family gathering and bringing people together. You might cook his favorite meal or watch a movie you think he’ll like.

If you aren’t able to visit, plan a phone call or video call. One of the few upsides of the pandemic was that we all learned to get creative about socializing without being in the same room. If he’s into quizzes, perhaps you can do a family quiz on Zoom. Or make a video with messages from various family members that he can watch.

2. Make a card

Given my dad’s views on greetings card companies, I’d never dare to buy him a Father’s Day card. Cards at Hallmark start at around $3.50 and stretch to almost $10. It won’t dent your bank account that much, but it all adds up. Indeed, part of living frugally is to pay attention to those small costs.

It’s surprisingly easy to make your own — and if you have kids, you can get them involved as well. If you’re not artistically inclined, don’t let that put you off. Cut out a picture from an old magazine or newspaper and stick it onto a folded piece of paper or card. Or print something off the internet. Or use a photo of you and your dad. It doesn’t have to be super creative, it really is the thought that counts.

3. Share memories

I think any special occasion is a good opportunity to show the people I love what they mean to me. One way to do that is tell your dad what you’ve learned from him, or reasons you appreciate him. It can be fun to share happy memories and remind him of things that stand out from your childhood. If you have siblings, encourage them to do the same — it’s amazing how we all remember different things.

4. Make him something

In years gone by, I had more time for ambitious craft projects involving recycled materials. Now I’m more likely to make a jar of his favorite jam or whip up some cookies. That said, my sister is a dab hand with a sewing machine and can churn out cushion covers, bags, and all kinds of things. If you’re into it, DIY gifts can be a great and affordable way to spoil someone, especially if they’re super materialistic. It doesn’t have to be craft-related either. You might write a poem or make something musical if that’s what you enjoy.

Bottom line

Family celebrations don’t have to be about money. In fact, when you take money out of the equation, it can sometimes push you to find gifts or ways to celebrate that are more meaningful. Focus on the person and the things that make them happy and you’ll quickly find cost-effective ways to mark any occasion.

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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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