Money Management

It’s an option that might benefit you tremendously. 

You might assume that if you’re self-employed, you’re at an automatic disadvantage when it comes to retirement savings plans. But actually, if anything, being self-employed opens the door to more account choices.

If you’re a salaried employee, you might have access to a 401(k) plan through your job. And if not, you might have to look to a traditional IRA or Roth IRA. But your options pretty much end there.

If you’re self-employed, you can fund a solo 401(k), which is a 401(k) plan you manage yourself, a traditional IRA, or a Roth IRA. But you can also save in a SIMPLE or SEP IRA. The latter two options offer the benefit of higher annual contribution limits than traditional and Roth IRAs.

This year, a SEP IRA is an attractive option for retirement savers in particular. That’s because SEP IRAs allow you to sock away up to 25% of your net earnings for retirement, up to a maximum of $66,000. Traditional and Roth IRAs, by contrast, max out this year at $6,500 for savers under age 50 and $7,500 for those who are age 50 or older.

But if there’s one negative thing to be said about SEP IRAs, it’s that they’ve historically not allowed for a Roth savings option — that is, until now.

SEP IRAs are changing for the better

When you save in a Roth retirement plan, you forgo a tax break on the money you put in. What you get instead, though, are tax-free investment gains in your account and tax-free withdrawals once you retire.

The latter is really important, because as much as paying taxes can be a burden while you’re working, they can become an even bigger burden once you’re retired and trying to live on a fixed income. So avoiding taxes later in life is something you may want to take steps to do.

Meanwhile, beginning in 2023, SEP IRAs will offer a Roth version so savers can benefit from higher contribution limits and tax-free withdrawals down the line. Plus, SEP IRAs offer all of the benefits of Roth IRAs without the restrictions.

With a Roth IRA, there are income limits to consider. If your earnings exceed $138,000 as a single tax-filer or $218,000 as a married couple filing jointly, your Roth IRA contributions start to phase out. And above incomes of $153,000 and $228,000, respectively, the option to save in a Roth IRA goes away this year.

But there are no income limits to worry about with a SEP IRA. Granted, your allowable contributions will be based on your income. But you can fund a SEP IRA whether you earn $40,000 or $400,000 a year.

A savings option worth exploring

You may be used to funding a SEP IRA and snagging an upfront tax break on your contributions. Giving up that benefit might be challenging. But you’re apt to appreciate having access to tax-free income once you retire and money inevitably gets tighter. So once your SEP IRA adopts these new rules, it pays to consider taking advantage of the Roth savings option.

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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 remotely is still worth it, for a number of reasons. 

As far as I’m concerned, one good thing that has been spurred by the COVID-19 pandemic of the last three years has been the widespread rise of remote work. I am perhaps feeling the effects more acutely than those who could work remotely before the world shut down in spring 2020, however. I changed careers in part because of the pandemic and went from being completely location-based to now working (and living) wherever I want.

I’m not alone in being pleased with this turn of events. Zippia research from last year noted that 68% of Americans would prefer to work fully remote, and at least 23% of those surveyed would take a 10% pay cut to be able to do it indefinitely.

Employers are also taking notice of the trend. Payscale’s 2023 Compensation Best Practices Report noted that 48% of organizations surveyed are considering changing compensation based on geographical location of employees. This number was 40% in 2022. This could mean that employees who live in less-costly areas could be paid less than their colleagues who live in expensive ones. Doing the same job for less money just because of where you live isn’t fair, right? Well, let’s take a look at a few reasons why remote work is likely still worth it — even if you have less money coming into your checking account as a result.

Working remotely can save you money

While you may be spending more on your utility bills since you have to keep your home comfortable during hours you may previously have been working in an office, think of all the other money you’re probably saving. That expensive suit-and-tie wardrobe is likely a thing of the past, as is paying for lunch every day (or even a few times a month; no one wants to brown-bag it every single day, especially if you have lunch options aplenty near your office). You’re also saving money on gas and wear and tear on your car, or on the expense of public transportation.

Working remotely can be good for your health

Speaking of that commute, if it was a source of stress for you, remote work is likely a breath of fresh air. Having that extra time in the morning and evening can also translate to more sleep, being able to prepare and consume healthy meals at home, and possibly having time to exercise. After all, the average remote worker saves 72 minutes per day, and you can use that time to actively improve your health if you so choose.

Working remotely can mean better work-life balance

If you’re juggling your job alongside a spouse, kids, or both, it’s likely that remote work can make it easier to balance all the competing pressures on your time and energy. It likely won’t save you money on childcare, but it could open the door to more and better time with your kids when you’re not working. And some remote jobs are flexible, meaning that you could conceivably design your own schedule that benefits your life and the people you love most.

Crunch the numbers

If you’re still doubting whether remote work for less pay is a good deal for your life and your finances, sit down and try to estimate your cost savings on your commute, work wardrobe, and other tangible expenses of working from an office. It might be harder to quantify intangible things like work-life balance and better health, but these are also important and worth considering.

None of this is to say that you should accept a salary that is insultingly low or not enough for you to live on (and meet your financial goals) just for the chance to work remotely. We are in a historically tight labor market, so if you want to work remotely and your current employer won’t go for it, spiff up your resume, reach out to your contacts, and see if you can make it happen somewhere else.

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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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Switching banks isn’t as onerous as you may be fearing. 

Are you tired of antiquated mobile banking apps, pointless fees, and earning just pennies a year in interest on your savings account? Maybe it’s time for a change. If you’re worried about how long it might take to move your cash from one bank to another, fear not. Let’s have a look at how long it’ll take you to complete all the little tasks that go along with changing banks.

Choose a new bank account: Time varies

There’s really no way to quantify how long it might take you to choose a new bank and then an account at that bank. Luckily, there are plenty of resources to help. Take a look at our list of the best checking accounts. Follow that up with the best savings accounts. And if the recent headlines about bank failures have you feeling nervous, it wouldn’t hurt to consider the safest banks in the U.S. in your search for a new home for your money.

Open the new account: One hour (if that)

Once you’ve chosen a bank and the right account for you, you’ve got to open the account. It likely won’t even take a full hour to do this, especially if you’ve chosen an online bank. (If you’ve picked a brick-and-mortar bank and must meet with a representative to open your account, it still likely won’t take an hour — I recommend making an appointment if you need to do this in person.)

Your new bank might want the account and routing number from the bank you’re leaving, so you can fund the new account. You’ll also need a few pieces of information so the bank can verify your identity and get in touch with you:

Photo identificationSocial Security numberBirthdateAddressEmail address and phone number

Update your direct deposits: One hour

Once the account is open, you’ll be given your account and routing number. This is good, because it means you can update your direct deposit settings. If you have only one employer, this should be pretty quick and easy. Get in touch with HR and give them the new bank information so your next paycheck will land in your new account. If you have multiple employers (say, you’re a freelancer with multiple clients), the process is the same, but you’ll need to repeat it for as many people as you have paying you.

Change your autopay and transfer settings: Two hours

If you have your bills set to autopay, you’ll need to change the settings with all your utility companies, mortgage servicer, credit card companies, and any other entity you pay. This will be the most tedious part of the whole process. I recommend going through a year’s worth of bank statements at your old bank to make sure you don’t forget anything (I’m looking at you, newspaper subscription that is billed annually). And if you transfer money regularly to, say, a brokerage account, make sure you update those settings too.

Sign up for mobile banking: A few minutes

And now onto one of the easy parts. I recommend setting up an account with your new bank via its full website, so you can check out all the account tools at your disposal. Then you can download the mobile banking app for your phone and/or tablet (why not both?) and take it for a test drive.

Move your cash over: Potentially a few business days

If you opened the new account with a small amount of cash or a check, rather than everything you have, it’s now time to actually transfer all your money to the new account. ACH transfers are free between U.S. banks, but it could take your money up to three business days to arrive in the new account and be available, rather than “pending.” You might consider leaving a little money in the old account, in case you still have pending payments.

Close your old account: One hour

The last step, but an extremely crucial one. Closing your bank account doesn’t take long, but you want to ensure your money is out of the old account (once those pending payments have been taken out, that is), and that you have written confirmation that the account is closed. You may also need to furnish something in writing to your old bank.

All told, you’re looking at anywhere from several hours to a few days to complete the switch from one bank to another once you’ve picked the right one for you. Not too bad, right? Don’t be afraid to change banks to find more convenience, save on fees, and earn more interest — after all, your bank account should make your life easier.

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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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Sometimes there’s a tradeoff between saving a few bucks and protecting your community. 

One of the results of the crazy high prices we’ve seen in the last year is that dollar stores have become more appealing. After all, who wouldn’t want to buy basics like cereal and cleaning products at a lower price than in their normal store?

Unfortunately, a recent report shows there’s a hidden cost of dollar stores. Not only can they damage your community in the long term, but it also says dollar stores aren’t always cheaper. You might feel like you’re getting a better deal, but you might be getting smaller packages and, in fact, worse value for money.

How dollar stores can hurt local economies

According to a March report from the Institute for Local Self Reliance, nearly half the new stores that opened in the U.S. in 2021 were dollar stores. It says at the start of 2022, there were more than 34,000 Dollar General, Dollar Tree, and Family Dollar stores — more than McDonalds, Starbucks, Target, and Walmart combined.

There’s an argument that we should welcome dollar stores into our communities because they answer a consumer need. After all, if you’re struggling to put food on the table, any savings helps. But the report points out that dollar stores often undercut local grocery stores with predatory practices, and their staffing models and other practices damage communities.

The authors say, “These stores aren’t merely a byproduct of economic distress, they are a cause of it.” For example, it shows the stores create fewer jobs and pay lower wages. Not only do understaffed stores mean less employment, but the lack of staff in these stores can make them unsafe. So much so that one Georgia sheriff told the press they’d earned the nickname “stop-and-robs.”

Another issue is that these stores employ a “carpet-bombing” strategy that undermines existing food stores. A big issue is fresh produce. Small local stores often lose money on perishable food and need the sales of packaged goods and other products to stay afloat. Take that away, and it’s difficult for those stores to function.

Once the local stores are gone, communities can be left without access to fresh produce. Some leaders say this can lead to poor health and even lower people’s life expectancies. They also lose one of the hubs that brought them together. All in all, the report paints a damning picture about the impact of these shops that people use to save money.

What it means for consumers

The difficulty in all this is that if you’re living paycheck to paycheck and don’t have enough money in your bank account to cover the bills, it’s almost impossible to justify spending more. Even if you know it could make your life — and that of your community — more difficult in the long run. Particularly if you’re already using a credit card or other form of debt to cover essential bills, as a number of Americans already are.

However, in addition to supporting local stores when you can, there are other steps you can take.

Make sure the dollar store is actually saving you money: Don’t assume a dollar store is automatically cheaper. Track the price per ounce, and try to compare prices against your normal shop. One local grocer told the report, “You’ve got a Snicker’s bar that is two ounces less, but it looks just like the one in my store. The consumer thinks Dollar General is selling it cheaper.”Join any community action: Communities can minimize the damage done by dollar stores and ensure their tax dollars aren’t incentivizing harmful practices. In a number of areas, local authorities have stepped in to control dollar store expansion and activity. Some have enforced restrictions on the distance between dollar stores, so they can’t open two within a set distance of one another. Others have implemented demands that dollar stores stock a certain percentage of fresh produce on their shelves.

Low-cost stores are not the only way to reduce the cost of your grocery bill. Other tactics include bulk buying, cash back apps, and clipping coupons wherever possible. Use price comparison apps to help you know whether something is actually a good deal, especially when the packages are different sizes.

These are challenging times and the desire to shop in dollar stores is understandable. But if you’re aware of the issues, you might be able to stop them suffocating your local businesses along the way.

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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 positions in and recommends Starbucks, Target, and Walmart. The Motley Fool recommends the following options: short April 2023 $100 calls on Starbucks. The Motley Fool has a disclosure policy.

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