Money Management

Freelancing is a great way to earn extra income. See how turning your skills into a small business can increase your income and drive professional growth. [[{“value”:”

Today, millions of people are embracing the gig economy, where they can turn their skills into freelance income. They’re enjoying the freedom and flexibility to work when they want and take on jobs that excite them.

Over time, however, the limitations of freelance work can hold you back. For example, the unpredictability of income can make sticking to a budget difficult. Freelancing can also cap your income because there are only so many hours in the day. Even if you’re earning a high hourly rate, you can’t create more time.

Whether you’re a graphic designer, dog walker, developer, or any other kind of freelancer, there are actionable steps you can take to turn your side hustle into a thriving business. It starts with changing your mindset.

Shift your mindset

The first step to becoming a business owner, rather than a freelancer, is shifting your mindset. Freelancers tend to be focused on day-to-day operations, such as which projects they need to complete and what emails to send. But business owners focus on the long term. They’re creating budgets, building processes that scale, and thinking strategically about growth.

Starting today, think of yourself as a business owner, not just a freelancer. You aren’t just in charge of responding to that email; you’re responsible for building the future of your company.

Decide on a legal structure

There are several types of business structures, and the format you choose will depend on the state in which you operate, whether you have business partners, and the overall risk of your business. For example, if you own a home repair company with a partner, you may want the liability protection of an LLC, while a solo graphic designer might choose a sole proprietorship.

The main types of business structures are sole proprietorship, partnership, and LLC. A sole proprietorship is the simplest form of business and doesn’t require any paperwork at all. A partnership is a type of business with more than one owner and also doesn’t require any paperwork. Finally, an LLC, or limited liability company, creates a separate legal entity for your business. This protects your personal assets and can offer some tax advantages.

Take the time to research how the different types of business structures work in your state before making a decision for which type to use.

Create a business plan

A business plan serves as the blueprint for the business you want to build. It outlines your business goals and the specific steps you will take to reach those goals. It should include a brief introduction of your business, a mission statement, organizational structure, and a list of the products or services you’ll provide. You’ll also want to include market research, the specific products or services you’ll be using, and your marketing and sales strategies.

Take the time to write a detailed business plan. This will help you clarify your overall goals and plan the specific steps you’ll take to turn your freelance gig into a real business.

Set up financials

The shift from freelancer to business owner requires taking a different approach to finances as well. You’re not just earning an income as a business owner — you’re managing business finances and thinking about the long term. This could mean opening a company checking account. You might want to consider getting a business credit card, too.

How much will you invest in marketing? What long-term goals do you need to save capital for? How will you budget your profits? It may be worth consulting with a financial advisor to plan for your business’s future.

Outsource and scale your business

As a freelancer, you’re doing most of the work yourself. As a business owner, you need to delegate at least some tasks. Think about what tasks take up most of your time, that you don’t like doing, and don’t require a high level of industry knowledge, and hire someone else to do them.

If you have a drop-shipping company, can you hire someone else to manage the blog or write your emails? Or maybe you like writing blogs but want someone else to handle uploading them to WordPress. Look for ways to automate or organize your business processes. For example, calendar tools like Calendly make it easier to manage your schedule, while using the right customer relationship management (CRM) software will help you manage client contacts. Keep in mind that this should be a slow transition. Start by choosing one or two tasks that take up a lot of your time and look for ways to outsource or automate them.

Following these steps will help smooth the transition from a freelancer to a business owner, but remember, it’s a process. Take the time to try new things and build a strong foundation for your business before hiring and expanding.

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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. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

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Debit and credit cards look a lot alike, but function quite differently. Learn when it’s better to opt for credit over debit. [[{“value”:”

Got a debit card in your wallet? The data says you probably do — research from The Motley Fool Ascent found that in 2021, 93% of American adults had a debit card (according to the Federal Reserve). A debit card is a convenient way to pay for purchases, but it’s also a direct link to money in your bank account.

Credit cards don’t link to your own money; instead, when you use one, you’re borrowing from the card’s issuer and paying it back when you pay your bill. Consequently, if someone gets your credit card information and runs up charges, you will have to deal with the inconvenience of reporting the fraud and replacing the card, but you likely won’t be out any money of your own. The best credit cards have $0 fraud liability, too.

With this important difference between debit and credit cards in mind, here are a few instances in which you should opt for a credit card over a debit card.

1. Online shopping

You certainly can use your debit card for online shopping, but it’s not a good idea for several reasons. Your debit card is linked to your bank account, so if your card number is stolen or leaked in a data breach, you could lose all the money in that account.

Depending on when you report the problem to your bank, you may not end up losing any money in the process. But it will still take time for your bank to investigate, and you could be cashless in the meantime.

Purchase protection is another reason to opt for a credit card over a debit card. If you order something and it never arrives, or you were misled about a product and want your money back, you may have little recourse with a debit card. But if you’ve used a credit card, you can file a dispute with the issuer, who will then go to bat on your behalf.

2. Hotel and rental car reservations

The issue with using a debit card to reserve a hotel room or rental car is the temporary authorization hold. It’s common for hotels and rental car agencies to put a large hold on a payment card, in case the customer causes damage to a vehicle or runs up a big room service bill.

If you’ve used a debit card, you could find yourself unable to access hundreds of your own dollars thanks to a hold.

3. Gas stations

Personally, I’d never use a debit card to buy gas. For one, I have a credit card that pays bonus cash back on gas purchases. For another, gas stations are notorious for being vulnerable to credit card skimmers on the payment systems at each pump.

Gas stations are busy places, and the employees likely don’t have time to individually monitor the comings and goings at each gas pump. Thieves use skimmers to steal the card information of the people who pay at the pump. Since a debit card is directly tied to your bank account, you could encounter a lot more hassle if someone steals that information.

While your bank will investigate and you may not lose money if you report fraud immediately, you could still potentially lose access to your own money for a period while your bank does its job. (And since gas stations also sometimes put a hold on payment cards, you could have this happen even if there’s no fraud with the transaction or afterward.)

For this reason, it’s best to use a credit card to pay for gas — or go inside to pay an employee directly.

4. A big purchase

If you’re buying a big-ticket item, like furniture, a computer, a smartphone, or something else expensive and potentially breakable, using a credit card for the purchase is the better choice.

Remember, the best credit cards come with purchase protection. If your new item is stolen or damaged, and the retailer is unwilling to help you, you could potentially file a claim with your credit card company and get your money back.

Is it ever worth using a debit card?

Personally, I don’t use debit cards for many purchases these days, and instead do my everyday spending on credit cards. Credit cards can help you build credit and earn rewards on your spending. Plus, they’re not tied to your bank account, meaning the risk of loss from fraud is less. But this doesn’t mean debit cards can’t still have a place in your wallet.

If you struggle with credit card debt, using a debit card is absolutely better. You won’t be borrowing money to use one, and knowing that you’re limited to the money in your linked bank account can keep you from overspending.

Another reason to have a debit card in your wallet is access to cash. Many of them function as ATM cards. If you pay in cash frequently, it’s handy to keep your debit card on hand so you can take out more as needed.

Debit cards have fewer consumer protections and are far less likely to pay rewards on spending than credit cards. They could still be a big part of your money management, though. Just think twice before using them in the above situations.

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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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A savings account can do you a world of good — but it’s not the perfect spot for all your money. Learn when to consider other financial accounts, too. [[{“value”:”

Savings accounts are a basic way to keep your money safe, and pretty much everyone can benefit from having at least one. Savings accounts are a great place for your emergency fund and any money you might need for a big purchase or goal in the next couple of years.

Thanks to a series of Federal Reserve rate hikes, you can open a high-yield savings account right now that pays 5% APY on your money. That’s not too shabby, given that the average rate across all savings accounts is just 0.45%, according to the FDIC.

But how do you know how much money belongs in your savings account? There’s a way to find out. Here are a few questions to answer if you’re wondering whether your savings account is underfunded, overfunded, or just right.

How much do you need in your emergency fund?

First things first: Your emergency fund is a crucial part of your personal finance picture. It’s how you pay for unplanned expenses, and it could even get you through a crisis, like a medical emergency or losing your job.

Many experts recommend saving three to six months’ worth of regular expenses (such as your housing payment, car loan payment, utility bills, groceries, and insurance) for an emergency fund. Keeping this money in a high-yield savings account is a good way to ensure it’s accessible when you need it — and it’ll even grow with interest.

A money market account might also be a good place for your emergency fund since you’ll usually get one-step access to your cash via checks or a debit card (these are not features that most savings accounts come with). You can estimate your emergency fund needs by adding up your monthly bills yourself — or try an emergency fund calculator.

How much do you need for other near-term goals?

Are you saving for another purpose? To use myself as an example, I recently bought a home after 18 months of saving money toward the effort. I did some calculations initially to give myself a savings target, and I wound up saving about 40% more than my original goal.

This gave me the flexibility to buy a home that was move-in ready and still end up with a six-month emergency fund in the bank.

If you’re also saving to become a homeowner or pay for a wedding, new car, or vacation, take the time to figure out how much you need to reach your target. As a bonus, doing the math will help you figure out how much you need to save every month (or even every week, if you’re an overachiever like I am).

Breaking down a big goal into manageable chunks is my favorite trick for making the seemingly impossible happen.

If you’re saving for multiple goals, I recommend choosing a savings account that offers sub-accounts (these might be called “buckets,” “pockets,” or “vaults,” depending on the bank) within your main one. You can name your sub-accounts and set individual savings goals, making it easier to track your progress along the way.

Are there better options for your money?

Finally, it’s a good idea to investigate other account options that might be a better fit for your needs. For example, if you have cash savings beyond what you need to pay for unplanned expenses and shorter-term goals (like a vacation or a big purchase), you might consider opening a brokerage account and investing that money.

Investing is best done over the long term, as committing to leave your money in stocks for at least five years is how you can mitigate the short-term risk of loss. The stock market fluctuates, but over the last five decades, it’s returned an average of 10% annually.

If you put $5,000 into the market and earn that same 10% return, you can expect to have around $13,000 in 10 years, $33,000 in 20 years, and $87,000 in 30 years. Add more to the account and buy additional investments over time and you could grow quite a nice nest egg.

Remember, $250,000 is your savings account’s top limit

No matter what, you should keep your savings account balance under $250,000 (or $500,000 for joint accounts). Why $250,000? That’s the standard limit for FDIC insurance. The Federal Deposit Insurance Corporation insures American consumers’ bank deposits for up to that amount, per ownership category and per bank.

If your bank goes under, this means your insured money will be returned to you. You can find higher FDIC limits with some financial institutions, but it’s not likely that the average person will ever have to worry about needing more protection than this in a savings account.

Wondering if you’ve got too much cash in your savings account? Now you know the right questions to ask to determine that — and no matter what magic number you land on, be sure it’s less than $250,000.

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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 positions in and recommends Target. The Motley Fool has a disclosure policy.

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Costco gift cards are a popular membership perk, but they’re not right for everyone. Learn why you might want to avoid Costco’s gift cards. [[{“value”:”

Buying gift cards at Costco can save you 10% to 30% off the card’s face value. For example, buying two $50 Uber gift cards for $79.99 would save you $20 instantly. That is, so long as you actually use the Uber gift cards.

This last point is crucial. Around 47% of U.S. adults have at least one unused gift card, according to a survey by Bankrate, with an average unused value of $187 per person and value nationwide totaling $23 billion. To put that in perspective, our unused gift card value is larger than the economies of more than 70 countries.

Don’t Miss Out: These are the best credit cards for all your other Costco shopping.

Buying gift cards at Costco only to let them sit in the bottom drawer means inflation would eat away at what you saved on the face value price. Still, even if you’re not the kind of person who would let a gift card go to waste, the warehouse isn’t always the best place to buy them. Here’s why.

1. Selection is limited

Costco doesn’t sell gift cards to every brand or retailer. In fact, its selection is a little lacking. Online, you can find gift cards to popular restaurant chains, entertainment venues, gaming consoles, delivery services, and some travel. At your warehouse, you’ll likely find gift cards to local restaurants or chain retailers.

Don’t get me wrong — every now and then, Costco drops a pretty incredible gift card deal, like its Southwest Airlines gift cards. But if you, like me, don’t eat at popular chain restaurants, don’t play video games, and can’t remember the last time you stepped in a Chuck E. Cheese, Costco’s selection will likely disappoint.

2. Some gift cards come with restrictions

The best gift card options at Costco will likely have limitations on how they can be used, how they are delivered, and how many you can buy per membership.

Nearly all of Costco’s online gift cards are delivered electronically to your email address. You can then use the gift card in person if it can be scanned at checkout, order something online, or upload the card’s value into an app.

For example, Costco’s Cinemark e-gift card ($39.99 for $50 of value) can be added to your Cinemark account online or in its mobile app, which you can then use at participating Cinemark locations. Gift cards purchased in a warehouse may be physical cards that you can use at participating locations.

A digital card could be a problem if you’re trying to give it as a gift. It’s one thing to put a physical card in a birthday or graduation card; quite another to send the gift card to someone’s email. And if that person isn’t digitally savvy — say your father who still sends you pictures of “interesting” articles he’s reading from his desktop instead of just sending you the link — you might be gifting someone a problem (and contributing to the nationwide unused gift card balance).

Even if your receiver is digitally savvy, Costco gift cards have other restrictions that could make them frustrating to buy. Many of the best restrict how many you can buy per membership. For instance, you can only buy two $100 Instacart gift cards.

Others will have restrictions around how many transactions you can make. This caused a lot of confusion with Costco’s Uber gift cards, which are limited to two per membership but only one transaction total. In other words, you can buy two Uber gift cards in one purchase, but if you buy only one today, you won’t be able to buy another one, say, next week.

3. You might not find the right face value

Costco doesn’t let you set a gift card’s value. Instead, it sells them in denominations. So you can use your credit card to buy five $15 Subway gift cards for a total value of $75. But you can’t buy three $25 Subway gift cards, nor can you buy one $75 Subway gift card.

This could make it frustrating if you’re trying to buy bulk gift cards as gifts for different people, such as your kid’s teachers. If you want to give three teachers a $25 gift card, but Costco only sells that particular gift card in packs of five cards worth $15, you might be out of luck.

To be sure, these gift cards can help the right person save money at Costco. If you’re already shopping with a particular retailer and can get a discounted gift card from Costco, buying that in advance could leave extra money in your budget. Just be sure you understand the card’s limitations (if any) and avoid buying cards you’re not going to use in the near future.

Top credit card to use at Costco (and everywhere else!)

If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.

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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.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends Costco Wholesale, JPMorgan Chase, and Uber Technologies. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.

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