Money Management

Car ownership is becoming increasingly more expensive. Read on for the costs that should be on your radar if you’re about to buy your first car. 

Depending on where you live and the lifestyle you lead, you might need a car to get to work, run errands, and otherwise complete your daily activities. Unfortunately, owning a car isn’t cheap, and if you’ve never owned one before, you might not be familiar with what expenses you should be ready to pay along the way.

Let’s take a look at 10 things you’ll need to remember (and potentially budget for) if you’re contemplating taking out an auto loan and buying a vehicle.

1. A down payment

While you may be able to buy a car without a down payment, it’s generally a good idea to put some amount of money down so you’re not financing (and paying interest) on the whole purchase. Plus, you get to make fewer (or smaller) payments to eventually own the car outright. Autotrader notes that 20% is the recommended down payment for a new vehicle, but you may be able to get away with less down for a used car.

2. Monthly payments

Once you’ve purchased your vehicle, you’ll have monthly payments to look forward to — er, budget for — every month. And a car payment could definitely ding your budget these days. A report from Edmunds found that for people buying a new car in Q4 2022, 15.7% signed on for car payments of more than $1,000 per month, while 5.4% of those buying used cars also wound up with payments in the four-figures range. Based on those numbers, the odds are better that you’ll owe less per month by buying a used car.

3. Vehicle registration and taxes

To legally drive your car, you’ll need to register it with your state’s Department of Motor Vehicles (the agency’s name will vary depending on your state) and get license plates for it. Registration costs could be charged annually or semi-annually. You may also owe sales tax when you buy it. Costs vary depending on the state where you live, and possibly even depending on your county.

In New York, for example, you’d pay a registration fee between $26 and $140, depending on the vehicle’s weight. You’d also owe a license plate fee of $25, a title certificate fee of $50, and your aforementioned sales tax. Plus, there would be a county use tax that varies from county to county (and is higher in the counties that make up New York City).

4. Auto insurance premiums

Car insurance is a must-buy, and definitely not optional under any circumstances. Without it, you stand to be financially ruined by a car accident or other auto-related mishap, like expensive weather damage to your car. Drivers owe a car insurance premium payment on a monthly basis, or may be able to pay for six months or a year at a time. Thankfully, there are ways to get discounts on required coverage, such as by bundling a car policy with homeowners or renters insurance.

5. Auto insurance deductible

In addition to paying for your auto insurance premium, you’ll also have to pay a deductible when you file a claim, and your insurer will then pick up the rest of the tab for the covered claim’s costs. Drivers can often raise their deductible (say, from $500 to $1,000) and pay less per month for the premium as a result. It’s a good idea to keep cash in a savings account at the ready in case your car sustains damage and you need to file a car insurance claim and pay that deductible.

6. Gas or charging expenses

What good is a car without the means to make it go? As such, car ownership also comes with the cost of fuel, whether that’s gasoline or electric charging in the case of EVs. Gas prices were a major topic of discussion in 2022, and with good reason, as they were higher than usual. The average price of a gallon hit a peak of $5.016 in June 2022. As of this writing, the average price is $3.537, per AAA.

If you have a long commute, it pays to consider buying a smaller vehicle that sips on gas, or perhaps getting a credit card that offers rewards on gas purchases. You might also consider buying electric, if you can swing a higher purchase cost and want to save on fuel expenses. The cost to charge an EV will depend on how you charge as well as your vehicle’s battery.

7. Maintenance costs

While you will eventually pay off your car loan, I’m sorry to report that the maintenance costs don’t ever go away. I drive an elderly car that I made the last payment on nine years ago, and I have already shelled out over $1,200 on it this year, for an oil change, new tires, and new knock sensors. If you buy a new car, it’ll likely come with a warranty that should cover at least some of your maintenance costs for a period of time. But once it expires (or if you buy used), you’re on the hook for tuneups, oil changes, fresh tires and brakes, and whatever else your vehicle needs to keep it in good working order.

8. Depreciation (perhaps)

Depreciation of your car’s value isn’t a cost you’ll pay per se, but if you end up wanting to sell the vehicle, it’s something to be aware of. This is especially the case if you’re underwater on your loan — meaning you owe more than the car is worth. If you wanted to sell in this instance, you’d have to come up with more money to pay off your lender.

9. Parking (maybe)

Parking is another cost that may not touch you at all. If you live in a place with abundant free parking and hardly ever visit areas that require you to pay to leave your car, parking might be a tiny part of your car-owning budget indeed. But if you own a car in a big city, parking could cost you a pretty penny. SpotHero reports that the monthly cost to park a car in New York City is $570 a month. Ouch.

10. AAA membership (optional)

You can likely get roadside assistance through your auto insurer, but you might want to get a AAA membership anyway. It can save you money on hotel stays and other travel costs, and the towing services AAA offers might be more useful to you than those offered by your insurance company.

If you’ve never owned a car before, you may now be frantically updating your monthly budget to account for all these costs. Before taking the plunge on buying, it’s a good idea to take a deep breath and ensure you can cover all the associated expenses you’ll be taking on in the process.

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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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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If you plan to sell your home, some upgrades increase property values more than others. Here are some renovations that can pay off. 

Rumor has it that any home will sell in today’s market. And while that may be true to an extent, why not try to get top dollar for your property? The truth of the matter can be scary. It takes a potential buyer between eight and 12 seconds to form an impression of your home. That means the wheels are already turning when they walk through the front door. The finding also underscores the importance of curb appeal.

1. Create curb appeal

Anyone who grew up watching television recognizes the exterior of the homes on Leave It to Beaver, The Brady Bunch, and Golden Girls. They’re designed to look like pure suburbia — neatly groomed and cared for. And then, there’s the exterior of the house lived in by the Conner Family of Roseanne fame — dumpy, neglected, and a good representation of the home’s interior.

Life may not be a sitcom, but home exteriors set the mood for what’s to come. After all, it’s hard to imagine someone taking care of the interior of their home if they can’t be bothered to keep up with the exterior.

Ideally, the first thing a potential buyer feels is excitement as they drive up to your home. That’s far more likely if you focus on curb appeal. Here are some ideas to get you started that won’t drain your bank account.

Pull weeds, clean flower beds, and pick up leaves, sticks, and other debris. Wash down the driveway, sidewalks, and any steps leading up to the house.If any children’s toys are out in the yard (front or back), stow those away.Take a look at the front door. If it’s looking a little dingy, give it a fresh coat of paint.Clean the windows — inside and out. Stage the porch with flower pots and inexpensive, bright flowers.

2. Appeal to the nose

While all of our senses are important, smell uniquely influences how we perceive things. If you’ve ever smelled a whiff of something and been flooded with memories associated with that smell, you’ve experienced a “Proustian moment,” named for a French author who described the phenomenon.

According to scientists, it all concerns the brain’s anatomy and how it allows olfactory signals to get to the limbic system quickly. If you want your home to worm its way into a potential buyer’s heart (mind or limbic system), take control of the smells in your home.

It begins with deep cleaning your house, ensuring any offensive odors are gone. Place lavender potpourri in bowls, boil a few cinnamon sticks an hour or two before a showing, or go the old-fashioned route by baking chocolate chip cookies in the hour leading up to the showing.

When people walk into a room filled with lovely aromas, they’re emotionally prone to view the entire house that way.

3. Act like a stranger

Before the house goes on the market, walk through it with a pen and paper. You’re looking for anything a potential buyer might see and think, “I’ll have to fix that as soon as I move in.” For example, if walls are scuffed, a light is flickering, or the toilet is running in the master bath, address those issues. Ideally, you’ll head off minor problems before home buyers have a chance to worry about them.

If you’re afraid you’ll miss something, ask a friend, family member, or your real estate agent to help you create a list.

4. Edit, edit, edit

Rent a storage unit while your home is on the market and clear the house of everything but the necessities. The less “stuff” you have filling the house, the larger the space will feel. The larger it feels, the more a potential buyer can imagine their belongings in each room. Put most of your kid’s toys and any miscellaneous piece of furniture in storage until the house is sold. Empty closets of everything but the essentials. Clean drawers and store away anything you’ll think you’ll need in your next home.

If a storage unit seems like an unnecessary expense, you may be surprised by how much more a buyer is willing to pay for a house that’s not filled to the brim with someone else’s belongings. Some buyers are willing to take out a larger mortgage for a move-in-ready home.

Getting a home ready to sell is hard work, but once those offers start rolling in, you’ll be glad you went to the trouble.

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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 no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Getting help with financial planning is a good thing. Read on to see how you can benefit from the assistance of a professional. 

It’s a big myth that financial planning is something only the wealthy need to do. It doesn’t matter whether you earn $50,000 a year or $500,000 a year. No matter what your income and assets look like, you need to make the most of your money and resources. And that’s where a financial planner comes in.

A recent CFP Board survey, however, found that only 53% of Americans have worked with a financial planner. So if you’ve yet to give one a try, here are three reasons to do so.

1. You might have an easier time meeting your goals

You might have several near-term and long-term financial goals. The former might include buying a home. The latter might include retiring with enough money in your IRA or 401(k) plan to enjoy your senior years to the fullest.

Working with a financial planner won’t guarantee that you’ll be able to meet those goals. But will it increase your chances? It’s fair to say yes. That’s because a financial planner can tell you how to invest your money in a savvy manner to maximize its growth without taking on undue risk. A financial planner can also help you determine whether your goals are realistic or whether they need to be tweaked.

2. You can spend your money more confidently

Many people enjoy taking vacations. But have you ever put down a deposit on one while harboring feelings of dread due to worrying whether you can really afford a $5,000 island getaway?

If you work with a financial planner, you might be able to avoid feelings like that. That’s because a financial planner can help you map out a budget that accounts for your essential expenses and goals so that when you look to spend money on the things you enjoy, you can feel confident you’re not making a poor choice.

3. You can lower your stress load

Lots of people harbor general financial anxiety. They worry about covering their bills and having enough savings for future goals, even if they’re doing a job of managing their expenses and contributing to a retirement account (or whatever account is most appropriate for their respective goals).

The upside of working with a financial planner is that having help might take a lot of that general worry off the table. And the less stress you’re grappling with, the happier a person you just might be.

It pays to get financial help

No matter what your income looks like or what your goals entail, working with a financial planner is a move that might benefit you in more ways than one. It pays to seek out a financial planner, and a good way to do so is to solicit recommendations from friends, colleagues, and neighbors.

In fact, it’s a good idea to talk to different financial professionals to get a sense of how they work and how much they charge for different services. That way, you can compare your choices and, ideally, land on the right person for the job.

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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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Working for a small business has its advantages. Read on to learn more. 

While graduating from college is an exciting milestone to celebrate, there’s a downside. Now that you have your degree and your studies are over, it’s time to enter the real world and go out and find a job so you can cover your bills.

When it comes to finding work, you have choices. You may be motivated to work for a large employer with vast financial resources. But here’s why applying to work for a small business could benefit you even more.

1. You have a chance to build great experience

When you work for a large company, you might never actually meet its president or CEO — even if you end up employed there for multiple years. When you work for a small business, you could end up working alongside the person who owns and runs the company, as well as other seasoned individuals who can teach you a lot when you’re first starting out.

Many people underestimate the value of free on-the-job training. And at larger companies, you don’t always get so much of that — at least not on a one-on-one basis.

2. You might have an easier time getting promoted

Being able to get promoted could mean not only growing your career over time, but also, your savings account balance. But it can be difficult to snag a promotion when you work for a large company and there are dozens of employees like you who are all vying for the same few higher-level positions.

The upside of working for a small business is that you might be only one of two candidates in line for a promotion at any given time. In some cases, you might be the only person eligible for a promotion, which means that if you do your job well, chances are, that higher-level job is yours.

3. You might earn a nice wage

It’s easy to assume that larger companies pay higher wages than small businesses. After all, these companies have extensive financial resources, whereas small businesses tend to have limited resources.

But actually, you may be surprised at how much money you can make at a smaller operation. Small businesses paid an average hourly wage of $31.49 as of April, according to Paychex. Assuming a 50-week work year (at 40 hours per week), that’s an annual salary of about $63,000.

If you’re coming in straight out of college without any experience, you might earn less than that. But as you grow your skills, you may find that you’re able to earn a lot more than that by working for a small business.

Also, don’t assume that working at a small business will mean not getting any benefits. You may be privy to everything from a retirement plan to paid time off to a nice health insurance plan. Small businesses are often very invested in employee retention, and are often willing to offer nice perks to keep workers happy.

Working for a small business out of college could work wonders for your career in many ways. It pays to consider applying for small business jobs as you’re entering the labor force.

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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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Many people want to be a millionaire. Keep reading to learn about some moves to avoid if you want to achieve this financial milestone. 

Do you want to become a millionaire?

Many people aspire to this financial goal, which is why playing the lottery is so popular. But since your odds of winning the grand prize on a PowerBall ticket are 1 in 292,201,338.00, you’re going to have to come up with a better strategy if you want a seven-figure bank account.

There are some must-dos to hit millionaire status, including investing plenty of money in your brokerage account. And there are also a few things you absolutely must avoid as well. In particular, here are two things not to do if you want to become a millionaire.

1. Spend more than you earn

The first thing you have to avoid is spending more than you earn. If you spend every dollar — and then some — you can’t possibly grow your net worth to become a millionaire. This is true no matter how much money you make. If you earn $1 million a year but spend $1,000,001 on consumer goods, cars, and luxury trips, you still won’t ever become a millionaire.

Rather than spending more than you earn, you need to spend less. Ideally, you’ll save at least 20% of your income consistently over time. If you do that, it’s almost inevitable you’ll become a millionaire with a long enough timeline.

In fact, say you made just $40,000 a year over your entire career, but you saved 20% of that amount ($8,000 a year) consistently for 28 years and earned 10% average annual returns. At the end of that time, you’d have about $1,072,620.23.

To be sure you’re spending less than you earn, make a budget that treats saving 20% of income as a must-pay bill. Work the rest of your spending around that so you can live within your means, and make sure you’re making automated transfers of your required 20% to a brokerage account on every payday so you never miss a chance to save.

2. Gamble with your investment dollars

The next key thing to avoid is gambling with your investment dollars.

You need to invest in order to benefit from compounding returns, which is when returns are reinvested and earn returns of their own. Thanks to compounding, your money works for you so you don’t have to work as hard. To understand the impact, consider what would happen if you invested that same $8,000 over 20 years and earned only a 1% average annual return because you kept the money in a savings account. You’d have just $256,777.06 instead of over $1 million.

But, while you need to invest, you also don’t want to gamble. After all, if you lose all the money you’re putting into the market, you’ll be left with nothing.

For many people, buying an exchange-traded fund (ETF) that tracks the performance of the S&P 500 is the best bet. It’s simple, presents minimal risk, the ETFs come with low fees, and the S&P 500 has consistently produced 10% average annual returns over time, before inflation. If you would prefer to pick individual stocks, you can — but be sure you’re smart about how you do it. This means developing an investment strategy, doing your research, and investing for the long term.

If you can avoid these two things, millionaire status should be within reach even if you don’t earn a huge income. Just invest smartly and consistently over time and the millionaire lifestyle will be yours.

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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.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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In 2022, 60-40 investment portfolios didn’t perform well. But then, neither did many asset classes. Find out whether this model could still work for you. 

The 60-40 portfolio is a classic investment strategy. It involves putting 60% of your investments into stocks and 40% into bonds. It is viewed as a good way to diversify your portfolio and reduce risk. Moreover, the two often move in opposite directions, price-wise. When stocks fall in value, bonds often rise — and vice versa.

But analysts at BlackRock are advising clients that the 60-40 portfolio has had its day. The team argue it’s too simplistic and that investors can’t just set and forget their portfolios in this climate.

Why BlackRock says 60-40 logic doesn’t hold water today

High inflation is one of the main reasons the BlackRock team thinks investors need a new playbook. They advocate alternative ways to build more resilient portfolios that can better handle high interest rates and inflation. The analysts think we need to think harder about what sectors we invest in, and also be ready to change if things aren’t working.

Read more: Best Stock Brokers

Another route might involve considering different asset classes, such as commodities, or even holding cash. There are several high-yield savings accounts paying more than 4% right now. As Jean Boivin, head of the BlackRock Investment Institute, told CNN, “Cash is yielding, you know, 4% or 5% depending on how you implement this.” He said the fact that you can already generate that kind of income just by sitting on cash sets the bar for asset allocation much higher.

Moreover, the analysts question the logic that stocks and bonds will continue to balance one another. Before 2022, the BlackRock report says there were only three times in almost a century when bonds didn’t go up when stocks went down. Last year was the fourth, and the team thinks the factors we saw in 1969–70 are similar to the scenario at play today. “In that period, a combination of many factors including loose monetary policy, generous fiscal stimulus, and energy supply disruptions sparked a decade of higher inflation,” says the note.

Is BlackRock right?

One big challenge about the current economic climate is that there’s a lot of disagreement among economists and financial experts about what’s likely to happen. We’ve just come through an unprecedented global pandemic, which has made it harder to predict what will happen next.

So, while BlackRock thinks investors need to look beyond a 60-40 allocation, Vanguard, another investment giant, says it’s too soon to rip up the rules. It argues that one bad year is not enough to give up on a strategy that’s delivered results for many years. “If you look at the nine years prior to 2022, a globally diversified portfolio posted a lofty 8.9% annualized return, despite the low interest rate environment,” said Todd Schlanger, a senior investment strategist at Vanguard in a note.

Vanguard also argues that the pain of last year could mean stocks perform well in the coming decade. It thinks expected results have improved and there’s less risk of downside. “Far from being dead, the 60/40 portfolio is poised for another strong decade,” said Vanguard investment strategist Ziqi Tan.

Read more: How to Invest in Bonds

BlackRock’s idea of being more nimble is also difficult for many long-term investors who carefully research and buy assets they plan to hold indefinitely. There’s a fine line between deciding to sell stocks because something’s not working and making emotional decisions based on a sudden drop in prices. However, high levels of uncertainty mean it may make sense to rebalance our portfolios more regularly. This can help manage risk and keep your investments on track.

What it means for investors

If you’re a long-term investor, don’t give up on a particular strategy just because of one bad year — particularly a year that was bad for almost every asset class. Instead, consider whether BlackRock’s logic holds water moving forward. If inflation and high interest rates continue, it’s true that the trick will be to find ways to hedge against them. As BlackRock suggests, that might involve diversifying into other asset classes or taking a more active approach to your investments.

It’s also worth bearing in mind that a 60-40 allocation was always only a starting point. People who are nearing retirement might opt for a higher ratio of bonds, while those who are just starting out and have many investing years ahead of them might favor more stocks. The right route depends on your stage in life, risk tolerance, and views on what might happen with inflation.

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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.Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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