Money Management

There’s a reason Costco pizza tends to come out consistently delicious. Read on to learn more. 

It’s hard not to get hungry when shopping at Costco. Not only might you be tempted by the store’s delicious bakery offerings, but just walking through one of those massive warehouse club stores is enough to burn some calories and work up an appetite.

Thankfully, Costco stores feature a food court when you can score a variety of quick meals without racking up a giant credit card tab in the process. Perhaps the most iconic food court offering is the $1.50 hot dog and soda combo — a deal whose price has stayed the same for many years. But another popular item you’ll find at the Costco food court is pizza. And once you try it, you may find yourself going back for more.

To be clear, if you’re a pizza connoisseur, and you live in a big “pizza town” like New York or Chicago, you may not be totally enamored with Costco pizza. But if you’re someone who enjoys pizza in general and isn’t overly picky about it, you may find Costco’s version to be quite tasty.

But there’s a reason Costco is able to serve up its consistently yummy pizza across its numerous warehouse club stores. The retail giant has found a way to automate the pizza-making process so that customers get to enjoy the same great bite no matter where they’re doing their shopping.

It’s all about the robots

If you visit your local pizza store, you may find that your meal is made by hand. But Costco’s process is far more automated.

First, it involves loading dough onto a flattening machine that presses it down and spreads it. Then, a robot applies sauce in a uniform pattern to ensure that each base of pizza dough is thoroughly and evenly covered.

From there, actual people do get involved. Costco employees weigh out a preset amount of cheese and then place the pies in a super-efficient oven that allows them to bake in just six minutes. The result? A warm, delectable cheesy bite in every food court.

An affordable option

Costco prices can vary by location, but for the most part, a slice of pizza at the food court will cost you $1.99, while a giant pie will cost you $9.99. And if you’re throwing a party and want multiple pies, that’s no problem. Costco will generally let you place an order with its food court ahead of time so you can stop by, scoop up your pies, and head on your merry way, all the while saving money.

Of course, some people will tell you that Costco’s pizza is too doughy, chewy, or cheesy. But if you’re the sort of pizza eater who thinks these are good problems to have, then you may want to pick up a slice the next time you find your stomach rumbling in the middle of a Costco run. And while you’re at it, you may want to bring a pie home for dinner and save your Costco groceries for the next day’s meals.

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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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If you’ve just graduated from college, here are three key financial facts to help you get prepared to become an official adult. 

For many people, graduating from college is the start of adulthood. Hopefully, you’ll have a great job with your degree and will be going out on your own for the first time — or will be on the path to do so soon.

As you embark on this next adventure, there are a few money tips you need to be aware of. Here’s what they are.

1. Everyday items cost more than you think

If you’ve never lived in an apartment on your own before because you’ve been in a dorm or in your parent’s house, it may come as a shock to you to find out how much everyday items cost.

For example, the U.S. Energy Administration reports that the average monthly energy bill across the U.S. is $121.01. Depending where you live, you may also have to pay for things like sewer, water, and garbage services. This can add up to far more than you might expect if you’ve never paid for these things before.

It’s important to make sure you take these items into account when deciding how much you can afford to spend on an apartment or house after graduation. You don’t want to drain your bank account because you forgot to consider your total costs for living on your own.

2. Surprise expenses happen

When you’re young and just starting out, it’s tempting to assume everything will go smoothly and you won’t face any major surprises — but that’s simply not a reality.

Unexpected expenses can happen to anyone at any time. In fact, the Federal Reserve reported about 20% of adults faced major unexpected expenses over the prior 12 months. You might end up on the hook for extra costs if, say, your car breaks down or you have to travel at a moment’s notice due to a family problem.

You need to be prepared for these surprise costs, so start saving up an emergency fund in a high-yield savings account ASAP after graduation.

3. The right kind of insurance coverage is crucial

Buying insurance can be very complicated, but it’s something you need to think about as a college grad.

You may soon have to leave your parent’s health insurance if you are still on it, or you may be given the chance to sign up for coverage at work. Pay attention to the premiums (amount you pay each month) as well as the copay (amount you pay out of pocket for services) and deductible (amount you pay before the insurer starts covering bills). You’ll want to try to find a good balance with an affordable plan that has low premiums but that doesn’t require you to pay a fortune if you actually need care.

You should also be sure you have enough car insurance to protect your assets in case the worst happens (including liability coverage, collision coverage, and comprehensive coverage to pay for damage you cause others as well as theft and damage to your own vehicle). And, you may wish to consider buying life insurance as it can be cheaper to buy it at a younger age. You’ll be happy to have it in place later if you have dependents who rely on your income.

By taking care of your insurance needs, making a realistic budget for everyday expenses, and preparing for emergencies, you can ensure you’re taking the right steps as a new college grad so you can build a foundation for financial success.

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I’ve increased the amount I plan to spend on a home. Read on to learn why I decided my original budget was too conservative. 

I’m in the market to buy a new house. When I started my search, I had a set budget in mind, but I’ve since increased it. I’m now looking for houses that cost as much as 10% more than I had originally planned on spending.

Here are a few big reasons why I’ve made this choice.

I don’t want to move again

I have moved several times over the past 10 years because I wasn’t quite in the right house. We were initially living in a home that was too small for our growing family, then we ended up needing to move to a different location, and then the house we bought was in a high-traffic area that became a pain to deal with.

I really do not want to move again any time soon, since each time I do it is expensive and time consuming. And once I started looking for houses, it became abundantly clear that if I wanted to purchase a home I’d be happy to stay in for a very long time, I would need to spend more than I had originally planned.

There were simply no houses in my desired location with private backyards that were big enough for my family that fell within my budget. While I could have moved further out or bought a smaller house, doing either of those things likely meant I would be moving again soon since I wouldn’t be happy with either of those alternatives over the long haul.

I was conservative in my estimated budget

Another big reason why I decided to increase my housing budget was that I was very conservative when I set my initial spending limit.

I don’t generally want to commit too much of my income to housing costs because I have other goals, like saving for school for my kids and traveling a ton and investing for my retirement. So, I’ve generally tried to keep my mortgage costs and total housing payments well below what I could afford — and well below the 25% of my income, which many financial experts recommend capping costs at.

Since I had some wiggle room and I needed more money to live where I wanted in the kind of house I prefer, I felt comfortable increasing the amount I was prepared to spend.

Our household income has increased

I was also comfortable increasing my budget because we have more money coming into our house. My husband has expanded his business by hiring a new person to work in his office under him, and I have been able to continue to increase the work I do over time as my kids become a little bit older and are able to be left with other caregivers for longer.

Since I am making more money, I can easily afford a higher mortgage payment on my new home than I had originally planned.

My experience shows that there can come a time when you need to make an adjustment from what you originally planned when you started the house-hunting process. But, if that happens, the important thing is to make sure you run the numbers and ensure your choices are right for you over the long term. I wouldn’t have upped my budget if I couldn’t easily afford it, so I would have had to make a different kind of change if things didn’t pan out, like perhaps opting to buy a fixer-upper.

Just be prepared for the fact that buying a house may not look exactly like you thought it would, as there are inevitably going to be some surprises along the way.

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Applying for life insurance when you’re young could work to your advantage. Read on to learn more. 

The gift of life insurance is one of the most important ones you might give to your loved ones. By putting a policy in place, you can buy the people you care about financial protection so that if you were to pass away, they’d still be able to pay their bills and function.

Meanwhile, data from LIMRA shows that 44% of Generation Z adults and 50% of millennials are planning to get life insurance coverage this year. And if you’re on the younger side, you should know that applying sooner rather than later could work to your benefit, too.

It’s a matter of risk

There’s a reason younger life insurance applicants tend to snag lower premium rates on their coverage. In the eyes of life insurance companies, younger applicants tend to be in better health, and therefore, they’re looking at less risk.

Remember, life insurance companies don’t want to have to pay out on the policies they write. So it’s in their best interest to insure candidates who come across as unlikely to pass away over the course of their coverage window. (As a point of clarity, if you buy whole life insurance, your coverage will be permanent. But term life insurance will run out on you at some point in time.)

While applying for life insurance at a young age could result in big savings, you should know that it’s not just age that insurance companies consider when writing policies. Health is a big factor, too. So if there are aspects of your health you have the potential to improve upon, it could pay to do so before you submit any life insurance applications.

As an example, quitting smoking before getting life insurance could result in lower premiums. So could losing weight. These aren’t necessarily things you can do overnight. But are they possible in the course of a few months? Potentially.

The savings could be huge

Being young won’t always guarantee that you’ll end up paying less for life insurance. But if you’re young and in great health at the time of your application, you might enjoy a world of savings.

As a point of comparison, Dave Ramsey says the average cost of a 20-year, $1 million term life insurance policy is $52 a month for a 28-year-old non-smoking male. By contrast, the average cost of that same coverage for a 36-year-old male non-smoker is $64 a month. And for a 40-year-old man who doesn’t smoke, it’s $84 a month.

Now, it’s worth noting that these rates are slightly lower for women, since they’re generally considered less risky by life insurance companies due to their longer lifespans. The point, however, is that the cost of life insurance tends to rise with age.

As such, if you’re able to apply for life insurance on the younger side, it might result in premiums you can more easily afford. And remember, you don’t need to reach a certain age for life insurance to make sense. Once you have someone in your life who depends on you financially, life insurance becomes something worth paying for.

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A fixed-rate mortgage has a guaranteed interest rate for the life of the loan, while an ARM’s rate can change. Read on to learn more about how they differ. 

When you apply for a mortgage, choosing between a fixed and an adjustable-rate mortgage (ARM) loan will be one of the most important choices you make. You need to know the difference between these two loan options before buying a home so you can make the right decision about what kind of home loan makes sense for you.

Here are three big differences between fixed-rate loans and ARMs.

1. Your interest rate, monthly payments, and total borrowing costs can change with an ARM

The biggest difference between a fixed and adjustable-rate loan is right in the name. A fixed-rate loan has a fixed rate and an adjustable-rate loan has a rate that can adjust.

With the fixed-rate mortgage, your interest remains the same during your entire repayment period. It will not change. Your total payoff costs therefore also won’t change, nor will your monthly payment.

With an adjustable-rate loan, on the other hand, your payments absolutely could change and so could your total borrowing costs. That’s because your interest rate is linked to a financial index and can adjust upward or downward, depending upon market conditions. If rates go up, you will pay more — sometimes a lot more.

Say, for example, you borrowed $350,000 over 30 years and your initial interest rate was 5.00%. Your initial monthly payment would be $1,878.88. But if:

Your mortgage loan adjusted after 60 months,There was a 12-month period between adjustments,You expected your rate to increase by 0.25% with each adjustment,And your interest rate was capped at 12.00%?

You could end up with a maximum monthly payment of $2,620.96.

You run the risk of your payment increasing significantly with an ARM, with the exact details depending on the mortgage loan you take out. You will need to carefully read the fine print to find out just how expensive your loan could get if you take this risk.

2. The starting interest rates are usually different

The starting interest rate is typically different on a fixed versus an adjustable-rate mortgage. For example, if you have a FICO® Score of between 680 and 699, the national average APR for a $300,000 30-year fixed-rate loan as of May 18, 2023 is 6.844% according to myFico. But, with that same credit score and a 7/1 ARM (an adjustable-rate loan that can begin adjusting after seven years), you’d be looking at a starting interest rate of just 4.123% as of May 18, 2023.

While you do get a lower starting rate with an ARM in most situations, remember that as mentioned above, you run a serious risk of your rate going up over time.

3. You may need more asset reserves for an ARM

Many lenders require you to have more assets in reserve when you take out an adjustable-rate mortgage. This may not be the case for a fixed-rate mortgage. This is because you are taking on that added risk of your interest rate changing. So you will need to be able to show you have extra cash if you’re thinking of choosing an adjustable-rate loan.

You should carefully consider these differences and decide whether you want to take a chance on an ARM if you qualify for a lower starting rate, or if you would prefer the certainty of knowing exactly what your home loan is going to cost you over the life of the loan.

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There are many benefits to opening a 529 plan. Read on to learn about a few of them. 

If the idea of having to put your kids through college is enough to induce panic, you’re no doubt in good company. The average cost of tuition and fees at an in-state public college was $10,423 for the 2022-2023 academic year, according to U.S. News & World Report. And in-state college might be your cheapest option.

For out-of-state colleges, the average cost this past academic year was $22,953. And for private colleges, it was $39,723.

Now, there are different options you can look at when it comes to saving for college. One is to put your money into a regular savings account. But going this route might lead to minimal growth over time.

You could also save for college in a regular brokerage account. This way, you get complete flexibility with the money you invest.

But you may find that a 529 plan is a much better home for your college savings. Here’s why.

1. You can enjoy tax-free growth on your money

If you keep your college fund in a savings account, the interest you earn on it will be subject to taxes. And if you invest your college fund in a regular brokerage account, any gains in that account will be taxable as well.

With a 529 plan, you’re not required to pay taxes on your investment gains provided you use the money for qualifying education expenses. So, let’s say you contribute $40,000 to a 529 plan, but over time, your balance grows to $80,000. That’s $40,000 in gains you can avoid paying taxes on if you use that money for its intended purpose.

2. You get the flexibility to change beneficiaries

You might assume that all of your kids will go to college, or that they’ll all choose expensive schools. But what if your oldest opts out of college and decides to start their own business instead? And what if your middle child decides they’ll go to community college, thereby saving a bunch of money on costs?

In that case, you’re not doomed. 529 plans let you change beneficiaries without a hassle.

So if you have $50,000 earmarked for your oldest child’s education and they decide not to go to college, you can reserve that money for a younger child and designate them as the beneficiary. Similarly, if you have $50,000 for another child of yours to attend college and their education only ends up costing you $40,000, the remaining $10,000 can go to a younger child.

In fact, you don’t even have to use the money in your 529 for your kids. You can designate a niece or nephew as a beneficiary, or use the money to go back to school yourself.

3. You can use the money for private education for grades K-12

It used to be that a 529 plan could only be used for higher education. But the rules changed a few years back, and now, you can take withdrawals to cover private school tuition for grades K-12. So if your child decides they really want to go to a specialty high school, you’ll have the option to dip into your 529.

Granted, if you raid your 529 plan for elementary, middle, or high school education, you’ll have that much less money left over for college. But still, that’s a choice you get to make.

All told, there are plenty of good reasons to save in a 529 plan. You don’t necessarily have to make it your only college savings option, but you should at least consider putting some money into one of these accounts.

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