Money Management

If you’re a freelancer, you’re a small business owner. Find out why you may want to use business bank accounts to keep your freelancing finances in order. [[{“value”:”

Freelancing can be a rewarding experience. Controlling your hours and schedule and having more freedom with the type of work you do each day can be life-changing. But your finances can look quite different when transitioning to this type of work. It’s wise to set yourself up for success early on to run your small business effectively.

Having a business bank account can make it easier to handle your financial affairs. Many top banks offer plentiful business banking products for businesses of all sizes. Here are a few reasons to consider using business banking products if you’re a freelancer.

1. Easily see where your business finances stand

A separate business checking account can allow you to understand your cash flow better. You’ll see recent transactions and your account balance without subtracting personal expenses. Knowing where your financials stand will make it easier to make important business decisions.

2. Have organized financial records for tax season

Your tax situation changes when you become a freelancer. Since you no longer have an employer deducting taxes from your paychecks, you’ll be responsible for making quarterly estimated tax payments as your freelance business brings in income.

It can also be helpful to keep track of your business expenses for tax purposes when you’re a small business owner because eligible business expenses may qualify for tax deductions.

Having a dedicated business bank account can simplify tax season. You’ll have clear and organized records of your business finances all in one place, and you may find tax season much less overwhelming once you separate your personal and business financial affairs.

3. Spend less money on software and tools

Having business banking products can also save you money on software and tools. This is especially helpful if you’re a new freelancer growing your business. You may lack extra funds to spend on business software solutions like small business accounting software.

How can business bank accounts save you money on these expenses? When your business finances are well organized, handling your invoicing and accounting needs will be easier.

Additionally, many business banking apps include built-in tools that can help you manage your money better, which could eliminate the need for pricey software.

4. You may be taken more seriously

Using business banking accounts can also make you appear more professional. Unfortunately, some prospects may be wary of working with a new business if they don’t appear established.

If you’re a new freelancer establishing yourself, how potential clients perceive you matters. Using business banking products can make your business look more legitimate. It can also illustrate that you take your small business seriously and are invested in its success.

5. Save yourself time and feel less stress

Time is money, and a less stressful life is more enjoyable. Separating your personal finances and business finances can simplify your life. You may feel less stressed because you don’t have to waste precious time sorting through various charges in your bank accounts to determine which are business-related expenses and which are personal bills.

Explore business banking solutions

Even a solopreneur can benefit from using business banking products. You’re a business owner, after all. Whether you’re already freelancing or just getting started, take some time to explore business banking solutions so you can manage your company’s finances with ease.

In addition to business bank accounts, business credit cards can be worthwhile. You can earn rewards on your spending and get value from the benefits included with your credit cards. Review our list of the best business credit cards to learn more.

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There are certain steps you should take immediately following a layoff. Read on to learn more. [[{“value”:”

In March, the U.S. economy added 303,000 jobs, well exceeding expectations (economists had initially forecast the addition of just 205,000). In spite of that, it’s not a given that you won’t be a victim of layoff this year. Sometimes, companies choose to downsize even in the strongest of economies.

If your job is given the ax, you’ll want to take some key steps shortly thereafter. Here are four important moves to make within 48 hours of losing your job.

1. See what severance you’re eligible for

It’s not a given that you’ll be in line for a severance package from your employer. But if you are, read your agreement carefully. Before you sign it, you should have a clear understanding of what pay you’re eligible to receive, and also, what rights you may be giving up by accepting that money.

Sometimes, severance agreements will seek to reinforce a noncompete clause you may have signed when you were hired. Noncompete clauses can be tough to enforce in practice, but you’ll want to make sure you’re not putting yourself in a position where it may become harder to get a new job.

2. See if you’re able to get paid for unused time off

If you’re entitled to vacation days and you haven’t used any since the start of the year, you may be eligible to get paid out for the time off you didn’t take since January. If you have a copy of your employment agreement spelling out what happens in the event of a layoff, pull it up and figure out what compensation, if any, you’re entitled to.

Otherwise, ask your manager or HR representative. They’re not going to lie to you if there’s a written policy somewhere, as that could get them into hot water.

3. File for unemployment

Generally, you’re eligible for unemployment benefits if you lost your job through no fault of your own, as opposed to being fired for a reason, such as chronic tardiness. It pays to get your unemployment claim in as soon as possible, because it can take time to process. And you want that money to start rolling in as quickly as possible.

Now if you’re getting severance, what may happen is that you’re not eligible for a weekly unemployment benefit until that pay runs out. To put it another way, let’s say you’re eligible for four weeks of severance. You can file for unemployment immediately, but you may not get a weekly benefit check until after your four-week severance period ends. But it’s still good to put in that claim immediately, in case there are issues or holdups.

4. Review your budget and savings

There’s really no way to know how long it will take you to find a new job after getting laid off. So it’s important to assess the state of your savings account and see where your emergency fund stands. If you have enough savings to cover three months of bills, a month of severance, and unemployment, you might conceivably have a total of about five months where you can sustain yourself before going into debt.

Now that’s not information you should use as a reason to put off your job search. But it might give you some peace of mind.

At the same time, you’re going to want to review your budget and see where there’s room to cut back. What if, for example, you have enough money to maintain your lifestyle for five months, only it takes you six months to find your next job? You don’t want to land in debt if you can help it, so see if there are some bills you can cut temporarily.

Also, you may have bills set to autopay that you don’t need to cover now that you’re not working. If you have a monthly train pass for commuting that’s charged to your credit card every month, you may want to cancel it for the time being if you’ll be spending the coming weeks mostly sending out resumes and networking from home.

Losing a job can be a big blow. But the sooner you make these key moves, the better you can set yourself up to get through that situation with minimal financial repercussions.

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There are steps you can take to reduce your tax burden for future years. Read on to learn more. [[{“value”:”

As of late March, the IRS had processed more than 90 million tax returns and issued almost 70 million refunds. And the average refund came to $3,050.

But what if you didn’t get a refund when you filed your taxes this year? If so, you may be looking to avoid a repeat scenario in 2025.

Now as a point of clarity, not getting a refund isn’t necessarily a bad thing. When you get a refund, it essentially means that you gave the IRS a tax-free loan the year before for nothing in return. When you owe a bit of money, it means you kept more of your earnings rather than letting the IRS hang onto that cash.

But still, you may hate not getting money back when you file your tax return. So if you’re eager to get a refund or lower your 2024 tax burden, here are three steps to take.

1. Pump more money into a retirement account

You’ll need savings to live on once you’re retired — so why not get a tax break in the process? Contributions to a traditional IRA or 401(k) plan serve the very important purpose of exempting some of your income from taxes, provided you don’t exceed the allowable limits set by the IRS.

This year, you can contribute up to $7,000 to an IRA, or $8,000 if you’re 50 or older. For a 401(k), these limits are $23,000 and $30,500, respectively.

So let’s say you put $5,000 into an IRA this year and your income puts you in the 22% tax bracket. That means you’ve saved yourself $1,110 in taxes.

2. Fund an HSA

A health savings account, or HSA, is a special account that lets you set aside funds for healthcare expenses you can use at any time. Like traditional IRAs and 401(k)s, HSAs are funded with pre-tax dollars, so your contribution exempts some of your income from taxes.

This year, the maximum you can put into an HSA is $4,150 if you have self-only coverage, or $8,300 for family coverage. There’s also a $1,000 contribution you can make on top of either limit once you’re 55.

That said, you can only fund an HSA if your health insurance plan is compatible with one — but it pays to check. This year, you’re eligible if your health plan has a minimum deductible of $1,600 for self-only coverage or $3,200 for family coverage. Your out-of-pocket maximum also cannot exceed $8,050 or $16,100, respectively.

3. Take strategic losses in your brokerage account

Because the purpose of investing your money is to make money over time, it’s generally not the best idea to dump stocks the moment their value declines. But if you have a stock in your portfolio that’s been consistently losing value over time and you don’t expect it to recover, selling it at a loss this year could lower your tax burden.

Losses from investments can be used to offset capital gains. So if you have another investment you sold at a profit, you’ll need to pay taxes on it — unless you have a loss you can use against it. And if you don’t have capital gains to cancel out, you can use up to $3,000 from an investment loss to offset ordinary income.

Remember, it’s really not the worst thing not to get a tax refund, because it means you kept more of your money for yourself as you earned it. But if you want to shrink your 2024 tax liability, then it pays to make these moves between now and December.

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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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There’s a new person in charge at Costco. Will that impact consumers? Read on for some potential changes. [[{“value”:”

On March 15, Gary Millerchip replaced longtime Costco executive Richard Galanti as CFO. And while there haven’t been any major shake ups so far, in time, a new person in charge could mean new rules on the Costco front. Here are some changes Costco members may be in store for with a new CFO at the helm.

1. Membership fee hikes

The last time Costco raised its membership fees was June 2017. Back then, the cost of a basic membership rose from $55 to $60 per year, and the cost of an Executive membership went up from $110 to $120 per year.

Those prices have remained in effect for almost seven years at this point. So it’s not out of line to assume that under Millerchip’s leadership, they’re going to rise eventually.

Galanti has stated repeatedly on Costco earnings calls that the store would raise membership fees in due time, but he never committed to an actual timeline. But given how long it’s been since those fees went up, it wouldn’t be shocking to see an increase within the next 12 to 18 months.

One thing to keep in mind, though, is that if your membership is currently offering you good value, then it will probably make sense to keep your membership even if it gets a bit more expensive. If, for example, you’re currently saving $300 a year on groceries by paying $60 for a basic Costco membership, then it’ll probably make sense to keep that membership at $65.

2. New product offerings

Costco has introduced its fair share of new products through the years. Some of those have hit the shelves, while some have reached the food court.

As Millerchip settles in, we could see new items arrive at Costco, and new services as well. If so, members might be in a position to get even more value out of the $60 or $120 they’re currently paying.

But chances are, there are already some services Costco offers that you’re not taking full advantage of as a member. Did you know, for example, that you can get low-cost eyeglasses and contact lenses at Costco’s optical center, and that you might reap savings on medication by using its pharmacy? It pays to explore all of the benefits your membership currently offers.

3. Changes to Costco’s return policy

Costco has one of the most generous return policies among major retailers. In a nutshell, it will take almost anything back at any time if it doesn’t meet expectations, with limited exceptions (electronics, for example, must be returned within 90 days).

But Costco has also been criticized for being too lenient with its return policy. Recently, a video went viral when the store took back a couch that a member returned after two years. So it wouldn’t be surprising to see Millerchip establish some new rules with the store’s return policy — for example, that you can’t buy a piece of furniture, use it for months on end, get sick of it, and bring it back for a full refund.

To be clear, none of these changes are guaranteed to take place. And while we can expect membership fees to increase at some point, that may not happen until 2025 (or beyond). But if you’re a Costco customer, it’s a good idea to pay attention to announcements that have the potential to impact you financially and help you better manage your membership.

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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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You might save on interest with a 15-year loan. But read on to see why this option may not be a good idea for your finances. [[{“value”:”

If you’ve been trying your hardest to buy a home this year, you may be frustrated by how expensive it is to sign a mortgage. And while mortgage rates could drop later on in 2024, especially if the Federal Reserve moves forward with interest rate cuts, they might still remain high, historically speaking.

As such, you may be thinking of taking out a 15-year mortgage to save money on your loan’s interest rate. It’s a good idea in theory, but here are a few signs that this isn’t a good strategy for you.

1. The higher monthly payments will be a stretch

As a general rule, it’s not a good idea to spend more than 30% of your take-home pay on housing. And that 30% should include not just mortgage payments, but also expenses like property taxes and homeowners insurance.

Meanwhile, as of this writing, the average rate on a 30-year mortgage is 6.82%, per Freddie Mac. But the average rate on a 15-year loan is 6.06%.

So let’s say you’re borrowing $300,000 to buy a home. A 30-year loan at the above rate will have you spending $1,959 a month on principal and interest. A 15-year mortgage at the above rate will have you spending $2,539.

But that extra $580 might make it so you’re allocating more than 30% of your pay to housing, putting you at risk of falling behind on other bills. That’s not a great thing to do. So if you can’t stick to that 30% threshold with a 15-year loan, then you may be better off with a 30-year mortgage, even if it means getting stuck with a higher interest rate and a longer payoff timeline.

2. You have other goals to save for

While a 15-year mortgage might save you money on interest, it might also impede other financial goals you have. Let’s say you have kids who are in middle school, and you’re trying to buckle down and save for their college. If you’re spending many hundreds of dollars extra per month on a mortgage, that’s money you can’t invest for their education.

Similarly, let’s say you’re first buying a home at age 50. You may be inclined to choose a 15-year mortgage to get your home paid off in time for retirement. But if your nest egg needs work, making those higher mortgage payments might stop you from funding your retirement account, leaving you with a big shortfall once your career wraps up.

3. You don’t have much in the way of emergency savings

No matter your housing situation, it’s important to have a fully loaded emergency fund. But you can argue that it’s especially important to have money in the bank when you’re buying a home, because you always run the risk of having to make sudden repairs.

If your emergency fund isn’t in good shape — meaning, you don’t have anywhere close to three months’ worth of essential expenses socked away — then you may want to stick to a 30-year mortgage. Those lower monthly payments could make it possible to catch up on emergency savings and potentially avoid costly debt as a result.

It’s easy to see why a 15-year mortgage might appeal to you. But before you rush to sign one, run the numbers to see what it’ll cost you on a monthly basis. And also, make sure your higher monthly payments won’t get in your way of meeting other goals or building your financial security.

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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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