Money Management

Pet insurance can spare you from catastrophic costs, but you still need cash reserves in the bank. Read on to see why. [[{“value”:”

Bringing a pet into your life has the potential to be an expensive undertaking. And sometimes, the costs involved can be difficult to budget for ahead of time.

Rover, for example, puts the cost of owning a dog at $1,000 to $5,225 per year. But clearly, there’s a huge difference between the lower end of that range and the higher end.

One of the reasons your pet ownership costs might come in higher than expected is if your pet encounters health issues. You may be able to budget for routine care, but it’s harder to factor in the cost of emergency vet appointments and potential animal hospital stays.

That’s why it’s a good idea to put pet insurance in place. With a pet insurance policy, you’re generally covered in the event of catastrophic medical bills that might otherwise drive you into debt.

But even if you buy a pet insurance policy for your animal, it’s important to have money in savings at all times. Here’s why.

You still have to fork over the money

With regular (human) health insurance, you usually present your insurance card at the time of an appointment, and, based on your policy, you’re charged a percentage of your care under the assumption that your insurer will pay the rest. Pet insurance works differently, though.

With pet insurance, you generally have to pay for the cost of your pet’s care upfront. From there, you’ll need to submit a claim to your pet insurance company for reimbursement. In some cases, the facility that treats your pet might submit that claim on your behalf to spare you the work.

But either way, it’s not like pet insurance kicks in right away so that you’re not handing over the full cost of your pet’s care. Usually, you are. And it could take weeks or even months to get reimbursed after filing a pet insurance claim. So it’s important to have cash reserves so you can pay those initial bills without landing in debt.

Plus, you might assume that a given health issue your pet encounters is covered by your pet insurance, only to learn that it’s not. So that’s another reason to make sure you have some savings available.

Like human health insurance, your pet insurance policy might come with a deductible you need to pay before your pet’s care is covered. So let’s say your plan has a $400 deductible. If you encounter a $420 expense, you’re basically paying for all of it in full even if you have coverage in place.

Finally, remember that even with pet insurance, you may be responsible for a portion of your pet’s care. Let’s say your policy pays for 90% of major surgeries. If the cost of one of those is $6,000, you’re still going to have to shell out $600.

Always have savings on hand

Adopting a pet is a huge financial commitment. You need to make sure you’re financially ready, and that means having money in the bank at the time of that adoption.

Along these lines, it’s important to have savings available at all times as a pet owner. So one thing you may want to do is allocate a portion of your paycheck each month to a pet care savings fund. That way, you won’t immediately have to stress when your pet gets sick and you have to shell out the money for its care.

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Do you know how much food gets wasted every year? See how food waste affects climate change — and how Confetti Snacks is fighting back with crunchy chips. [[{“value”:”

In honor of Earth Day (April 22, 2024) we are spotlighting a few Earth-friendly small businesses. Entrepreneurship can be good for the planet, because it creates new ways of giving humans what they need while protecting the environment and supporting the climate. Changing the types of food we eat can make a big difference in carbon emissions and climate change.

One surprising example of reducing carbon emissions is by reducing food waste. You might not realize this, but every day in the global economy, lots of fresh fruits and vegetables get wasted and thrown away because they’re “ugly” — there’s nothing wrong with the food, but their appearance is not perfect enough to appear on grocery store shelves.

Confetti Snacks is an eco-friendly small business that’s trying to help solve the problem of food waste by repurposing “ugly” produce into delicious snacks. Let’s see how this earth-friendly food business is making a difference on Earth Day and all year round.

Reducing food waste — a surprisingly big impact on climate change

Here’s a shocking statistic that most Americans might not know: About one-third (33%) of all the food in the United States goes to waste, according to data from the U.S. Department of Agriculture. Think of all the tomatoes, potatoes, and eggplants that are grown in fields and transported on trucks, only to end up uneaten and thrown away.

It’s tragic to think about how many hungry people could have been fed with this wasted food. And what if, by eliminating all of this food waste, we could make everyone’s groceries 33% cheaper? Wasted food also ends up creating a big climate impact. According to data cited by Carbon Brief (carbonbrief.org), food waste represents about one-sixth (17%) of global greenhouse gas emissions. If we could stop wasting food, we could help cool our rapidly-heating planet.

How Confetti Snacks fights food waste

Confetti Snacks is a food startup that is trying to help solve the problem of food waste by turning rejected “ugly” produce into colorful plant-based snacks. Grocery retailers often consider certain types of produce to be unsellable, or “ugly” — because the fruits and veggies have an irregular shape or size. These vegetables are not damaged or bad, and they still taste good. They just don’t look perfect enough to appear on a shelf in the produce section.

Confetti Snacks “upcycles” this type of rejected produce, buying it from farmers and keeping it from going to waste and ending up in a landfill. Instead of the usual potato chips or corn chips, Confetti Snacks uses this “ugly” produce to make flavorful, nutrient-rich veggie chips with ingredients that include mushrooms, radishes, carrots, okra, and sweet potatoes. It also makes fruit chips from mandarin oranges.

Fighting climate change with Singapore flavors

The company was founded by Betty Lu, a Singapore native, and uses Singapore-inspired flavors like Tandoori Curry, Summer Truffle, and Teriyaki BBQ. Singapore has one of the most unique food cultures in the world, because its cuisine has a mix of diverse Chinese, South Asian, and Indian influences. You can experience a few of the best flavors of Singapore by eating Confetti Snacks.

Confetti Snacks also uses a proprietary low-heat baking process that helps preserve the nutrient content of the vegetables while also delivering a satisfying “crunch” from the chips. The goal of these veggie chips is to be so delicious, you’d think they were “regular” potato chips; they can deliver the craveable taste that salty snack lovers demand, while having strong nutritional value.

According to Confetti Snacks, the company has achieved average year-over-year growth of 312% since the start of its veggie snacks product line. Confetti Snacks have recently started to appear at U.S. retail stores. You can also buy its veggie snacks online at us.confettisnacks.com.

Bottom line

Small businesses and entrepreneurs can be part of the fight against climate change. By “upcycling” unwanted produce, Betty Lu and her Confetti Snacks company are helping reduce food waste while creating delicious new products. Finding new business models for unwanted food, or for upcycling or recycling materials that would otherwise go to waste or end up in the landfill, can create new economic opportunities for small businesses while reducing carbon emissions.

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Great credit could work to your advantage. Read on to see how. [[{“value”:”

Credit scores under the FICO model, the most popular one used today, range from 300 to 850. As you might imagine, a credit score of 850 puts you in a strong position to borrow. On the other hand, with a score in the 300s, your chances of getting approved for a loan or credit card are pretty weak.

Meanwhile, within that range, Experian, one of the three credit bureaus, says that a FICO® Score of 740 to 799 is very good, while a score of 800 or above is excellent. If you have a credit score in the mid-700s or higher, it could mean that you might have no problem getting approved to borrow money. And you might score a more favorable rate on a loan than someone with a score of, say, 650.

But that’s not the only way a great credit score might work to your advantage. Here are some other ways you might benefit from having great credit.

1. You might pay less for car insurance

The amount of money you’re charged for auto insurance will hinge on different factors. These include the type of car you have and its age, your personal driving record, and the area you live. But if you’re an applicant with great credit, you may find that you’re able to snag a lower premium rate than someone with a less favorable credit score when all of your other factors are relatively equal (meaning, you’re in the same ZIP code, have similar cars, and so forth).

Now at first, this might seem silly. Car insurance isn’t a loan — it’s a financial product you pay for. So why would your credit score matter?

A higher credit score is often taken as a sign that you’re someone with a good handle on your finances. So insurers tend to assume that if you’re careful with your money and debts, you’re more careful on the road and less likely to file a claim, too. Interestingly, some states don’t allow insurers to use credit scores when determining premiums (California, Hawaii, Massachusetts, and Michigan).

2. You might get away with a smaller security deposit on a rental

When you rent a home, it’s common to put down a security deposit at the time you sign your lease. That deposit may be the equivalent of a month’s rent, or it may be more or less.

Coming up with a security deposit may be tricky if you’re strapped for cash at the time of your lease-signing (say, because you just paid for a move) but have an otherwise steady job. In that situation, you may be able to use your great credit to your advantage by negotiating a smaller security deposit with your landlord. If you show that you have a history of paying on time, they may be willing to accept a smaller amount.

To be clear, a security deposit isn’t just to protect your landlord in case you damage their property. It’s also to protect your landlord in case there’s a month when you can’t make rent. But if you have a pretty impeccable history of paying your bills on time, that may be less of a concern for the person who’s renting you a home.

3. You may have an easier time starting your own business

It can take money — and lots of it — to get a small business off the ground. And when your business hasn’t even been founded, it can be hard to get a business loan.

But you may have an easier time getting some sort of loan to start a business with, like a personal loan, as an owner with great credit. And even once your business is up and running, you may find that borrowing for it is easier if your credit remains strong. Access to funding could make it possible to grow your business — and earn a steady income for many of your working years.

Having a great credit score can do you a world of good. So if yours needs a lift, try:

Paying all debts and installment loans on timeAsking your landlord to report timely rent payments so you get credit for them (this doesn’t always happen automatically the same way mortgage payments get reported)Keeping your credit card balances low relative to your credit limit, or paying off existing balancesChecking your credit report and correcting errors

Remember, you definitely do not need an 850 credit score to benefit from the perks above. But if you can get your credit score into the mid-700s or higher, it could open the door to a world of opportunities.

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TikTok personal advice trends like “loud budgeting” can be helpful, but TikTok is also full of misleading information about stock picks. See how to navigate it. [[{“value”:”

TikTok has become a bubbling cauldron of hot personal finance trends in recent years, with Gen Zers using the short-form video app to learn about everything from “cash stuffing” to “loud budgeting.” But is most TikTok personal finance advice actually good for people? Or are TikTokers vulnerable to financial misinformation that could hurt their bank accounts?

The verdict is mixed. Some studies of social media personal finance information show that people are getting some worthwhile help with saving and budgeting. But TikTok personal finance advice might encourage people to listen to untrustworthy influencers and make risky investments.

Let’s look at the landscape of TikTok personal finance advice, and see what researchers think about its effects — both good or bad.

76% of Gen Z learns about personal finance from TikTok and YouTube

A recent survey from WallStreetZen found that 76% of Gen Zers are learning about personal finance from TikTok and YouTube, and TikTok is the most popular social media platform for this kind of self-taught financial education. The topics that Gen Zers are most likely to learn about on social media are:

Budgeting (81% of respondents)Passive income (63%)Stock investing (59%)

On the one hand, it’s good if TikTok videos are teaching young adults to understand budgeting, spending, and saving. The “loud budgeting” concept is actually a brilliant idea. People declaring healthy boundaries around money and pooh-poohing the concept of flashy “FOMO”-driven spending is probably a net positive for the world.

But not all financial information on TikTok is helpful, healthy, or even well-intentioned. One person’s “passive income strategy” is another person’s “get-rich-quick pyramid scheme.” And as for buying stocks, Gen Zers who look to TikTok for stock-buying advice might be more vulnerable to pushy sales pitches from sketchy stock-picking gurus.

TikTok: Too much bad information about buying stocks

Another WallStreetZen study of TikTok financial advice found that 63% of stock advice on TikTok’s stock-related hashtags is misleading. A whopping 95% of TikTok’s investing content doesn’t have any disclaimers, and only 0.8% of TikTok stock influencers have relevant qualifications. This is not the standard you would look for in a financial advisor.

Why is TikTok stock advice so potentially dangerous? Because it’s making big promises and encouraging people to take risky actions with their money:

36% of the misleading stock advice on TikTok pushes viewers to buy specific stocks22% of TikTok stock advice videos are making excessive promises about specific returns on investment, advertising average annual returns of 600%7% of the videos encourage viewers to put a specific portion of their money into the stocks being discussed

Promising 600% annual returns is not realistic, and these pushy behaviors are not something that reputable financial advisors or stock market analysts would do. The Motley Fool Stock Advisor does not act this way. TikTok should be a happy place to watch comedy videos and learn fun dance moves, not a sweaty boiler room where an aggro stock broker tries to trick you into betting your life savings on a dicey stock.

However, the good news is: Gen Zers do not appear to be taking everything they see on TikTok too seriously. Another WallStreetZen study found that 83% of Gen Zers agree that they have seen misleading information about personal finance on social media, and 82% agreed that the short-format videos of TikTok can lead to oversimplification of complex financial topics.

If Gen Zers can maintain a healthy skepticism about TikTok personal finance, especially about picking investments, they might end up doing just fine. Don’t get all your investment information from short videos — get it from qualified experts.

More good news about TikTok personal finance advice

Sketchy stock picks and get-rich-quick schemes aside, there really is some good information on TikTok that can help Gen Zers make better money moves. Bloomberg columnist Alison Schrager, who’s also an economist at the Manhattan Institute, recently analyzed some TikTok personal finance videos.

In a February 2024 Bloomberg article, Allison Schrager wrote that “TikTok is not the worst place to learn about personal finance,” and “I found a lot of sound financial advice on TikTok. Unlike academic papers in economics journals, TikTok videos are engaging and short, and they are practical in a way that most economists just aren’t.”

Schrager praised the advice she saw from TikTok influencers who encouraged people to have an emergency fund in a high-yield savings account, keep a budget, and invest in an S&P 500 index fund. She also appreciated how TikTok influencers show people exactly how to open a brokerage account and select funds to invest in, instead of assuming that everyone knows how to do this for themselves. More practical advice on how to buy stocks can be valuable, especially for people who are just getting started as investors.

Bottom line

Every generation has to find its own way in the world, and if Gen Zers are getting useful, thoughtful, practical advice about personal finances on TikTok, that’s good. But if you use TikTok for stock picking, or if you’re hearing too many big promises about how wealthy you can get overnight by signing up for some guru’s expensive online course…you might want to close the app and go for a walk.

TikTok personal finance advice can be a useful starting point to learn about budgeting, saving, and the basics of investing. But don’t assume that any one social media app has all the answers, and don’t risk money on trendy TikTok stock picks that you can’t afford to lose.

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You might be surprised at how much you need to create the lifestyle you want. Keep reading to learn how to create a savings target. [[{“value”:”

How much money do you need to retire? $1 million is a pretty popular answer, and people often have a dollar amount in mind. One report from Northwest Mutual in 2023 found the average American believes they need $1.27 million to retire comfortably, and a separate survey by Schwab conducted around the same time found that Americans think they need $1.8 million.

While having a financial goal in mind can certainly help motivate you to save and invest wisely, I also think these surveys are asking the wrong question and are misleading Americans into thinking that their retirement “number” — that is, the money they have in the bank — is the most important factor in a comfortable retirement. It isn’t.

The most important retirement “number”

Here’s something financial planners know that many American workers often don’t realize. It isn’t necessarily about the amount of money you have saved. The most important number is how much income you can create after you retire.

Before we explore what this means, it’s important to discuss how much income you’ll need after you retire for a comfortable lifestyle.

The definition of a “comfortable” retirement varies from person to person. Some people plan to pay off all of their debts before retiring and live a relatively inexpensive lifestyle, while others can’t wait to take expensive trips to places they’ve always wanted to see.

With that in mind, a general guideline is that you’ll need about 80% of your pre-retirement income to maintain your standard of living. The idea here is that you won’t have certain expenses you do now (such as IRA contributions, commuting expenses, etc.), so 80% is likely to give you the same amount of money to work with as you currently have. Of course, you can adjust this income requirement to fit your situation, but let’s use this as an example. This means that if you have a $100,000 salary, you’ll need about $80,000 per year in retirement income.

How much retirement income will you need from your savings?

The good news is not all of your retirement income will need to come from your savings. At the very least, you’ll have Social Security, and if you aren’t sure what to expect from it, you can create an account or log in to the Social Security Administration site and see an estimate.

You should also consider any pensions, annuities, or other sources of income you anticipate having, such as cash flow from rental properties.

Now it’s time to do some basic math. Take your estimated total retirement income needed and subtract your other sources of income. Let’s say that you will need $80,000 in annual income after retirement and will have $25,000 from Social Security and $10,000 from a pension. This means you’ll need $45,000 in annual income from your savings.

How much money will you really need for retirement?

There’s no perfect rule of thumb, but the often-used 4% rule of retirement says that you can comfortably withdraw 4% of your retirement brokerage accounts in your first year of retirement and increase this to keep up with inflation in subsequent years, without much fear of running out of money.

A quick mathematical trick to figure out how much you’ll need in savings to produce a certain amount of income is to multiply the income you want by 25. Using the previous example of $45,000 of annual income needed from savings, this shows that you’ll need $1,125,000 in retirement savings.

The bottom line

To be sure, the methods discussed here make a lot of assumptions, and you can tailor the formulas used to fit your situation. If you feel you need more income for a truly enjoyable retirement, factor that into your analysis. But the point is to get you thinking less about how much you want in savings, and more about how much income you want in retirement, and what you’ll need to save in order to get it.

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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.Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Charles Schwab. The Motley Fool recommends the following options: short June 2024 $65 puts on Charles Schwab. The Motley Fool has a disclosure policy.

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Certain habits of yours may be harming your finances. Read on to learn more. [[{“value”:”

As of late 2023, a whopping 63% of Americans did not have ample cash reserves to cover an unplanned $500 expense, according to SecureSave. If your savings are in a similar boat, perhaps you’ve fallen into certain habits that are harming your finances. Here are three habits that could be causing you to waste money rather than bank it or use it to meet your financial goals.

1. Impulse spending

The potential for impulse spending exists everywhere. You could walk into the grocery store for milk and eggs and come out with a half-full shopping cart. Or you could run into Target for a package of underwear and a birthday card but emerge with a $150 credit card tab.

You can’t exactly control the fact that certain items tempt you. If you’re someone who loves clothing, and you walk into a store that sells clothing, you may be tempted to walk away with a new shirt, sweater, or pair of lounge pants.

But while you can’t control your brain’s desire to have something, you can control the actual purchase of the item in question. So the next time you’re shopping and you’re tempted to buy something on a whim, ask yourself, “What will I have to give up to purchase this item?”

The $40 sweater you’re eyeing might force you to give up a night out with friends. The $20 extra in snacks you threw into your supermarket cart might result in interest on your credit card, and too much of that could force you to have to cut your spending in another area.

Also, think about impulse buys in terms of your time. Spending an extra $40 on a whim to buy a couple of couch pillows for your apartment might seem fairly innocent. But if you earn $20 an hour, those pillows just cost you two hours of your time. When you think about it that way, they may not be worth it.

Finally, if you’re shopping online, force yourself to follow the 24-hour rule for unplanned buys. Basically, you leave the item you want in your shopping cart but don’t checkout, and then you revisit it 24 hours later. If, by then, you’re still convinced you want or need it, it’s less of an impulse buy and more of a thought-out decision.

2. Boredom shopping

It’s not unusual to browse sites like Amazon when you’re up at night struggling to fall asleep or you’re stuck waiting for your friend at a lunch spot who’s running 15 minutes later. But the problem with using shopping as an activity to alleviate boredom is that it could lead you to spend money you’re supposed to be reserving for other purposes.

Going forward, stop shopping simply because you don’t have anything better to do. And instead, find something better to do.

If you’re lying awake at night unable to sleep, go to your desk and pay some bills. That might get you groggy pretty quickly. And if you’re meeting a friend who’s chronically late, bring a book along so you have a way to stay occupied until they arrive.

One of the smartest moves you might make is deleting your credit card details from sites like Amazon so it’s harder to complete transactions. You may be someone who shops out of boredom. But if you’re in bed at midnight trying to sleep and your credit card is downstairs, you may decide to forgo your purchase rather than walk down a flight of stairs when you’re tired.

3. Keeping up with the Joneses

Keeping up with the Joneses is an age-old practice. But these days, social media makes us even more likely to covet our friends’ new cars, vacations, and furniture.

But while it’s easy to see why you’d want your home to look as nice as your neighbor’s, or why you’d love to join your friends on a weekend getaway and blow off steam, the reality is that you have no idea how they’re affording those purchases. And chances are, at least some of your friends aren’t. Rather, they’re putting those expenses on their credit cards and paying exorbitant amounts of interest to lead a more indulgent lifestyle.

Before you spend money to keep up with the people around you, make a list of the top things you might buy that could improve your life. And save up and spend your money on those things — not the things your friends are showing off online.

Wasting money could make it hard to meet your financial objectives. It’s important to recognize the habits of yours that lead to wasted money — and take steps to break them.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon and Target. The Motley Fool has positions in and recommends Amazon and Target. The Motley Fool has a disclosure policy.

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