money

Here’s how to grow your business economically

Fact checked by Amanda Jackson
Reviewed by David Kindness

When you don’t have a big budget, marketing can be challenging, but there’s plenty a small business owner can do to attract and maintain a customer base. The rise in digital marketing has made it easier for small business owners to find a way to create a presence and attract buyers.

Advertising your business or product is about more than just having your company name and number on the side of your work vehicles. When you build a business, the first thing you want to secure is a customer base. Then, with a decent printer, a phone, and an internet-connected device, you can create a reasonably extensive advertising campaign without paying for digital space. Here are seven small business marketing techniques you can use to boost your business.

Key Takeaways

• Small businesses don’t have the advertising budget of larger rivals, but there are inexpensive ways to build a customer base.
• Hitting the pavement with flyers distributed door to door (where allowed) and placing posters strategically can help get the word out.
• Follow up with customers after the first round of ads to reinforce the initial message, and don’t fear cold calls—they can be effective.
• Value additions, such as discounts or freebies for repeat customers, are a big boon once the business is up and running.
• Referrals—both from customer to customer and business to business—are also important.
• Prioritize digital marketing, including traditional websites and social media.

Before You Start Marketing

Before your business starts marketing a product, it helps to think about the type of person you want to reach with your promotional materials. Once you have your ideal customer, you’ll have a wide choice of marketing methods. Most of these are low-cost or no-cost tactics (sometimes called guerrilla marketing). You may use different ones at different stages of your business cycle—or you may utilize them all at once from your business’s inception.

1. Flyers

This is the carpet-bombing method of cheap advertising. You find an area where you would like to do business and distribute flyers to all the mailboxes within reach. Your flyer should be brief and to the point, highlighting the services you offer or products you sell and providing contact information. Offering a free appraisal, coupon, or discount can help attract your first customers.

Flyers shouldn’t be mistaken for posters. Flyers are more informative, listing services or products provided, contact information, addresses, and specialties.

2. Posters

Most supermarkets, public spaces, and malls offer free bulletin board space for announcements and advertisements. This method is hit-or-miss, but you should try to make your poster visible and have removable tabs that the customers can present for a discount.

Make each location a different color to get an idea from the tabs where the most leads are generated. If one area is producing most of your leads, you can better target your campaign (flyers, ads in local media catering to those areas, etc.)

Posters should feature appealing images and catchy, memorable phrasing so viewers will recall it when they’re wondering where to go for whatever it is they need that you’re offering.

Traditional marketing methods like radio, print advertising, and billboards shouldn’t be overlooked. The more channels you use, the more exposure you have.

3. Value Additions

Value additions (or value-ads) are powerful selling points for any product or service. On the surface, value additions are very similar to coupons and free appraisals, but they aim to increase customer satisfaction and widen the gap between you and the competition.

Common value additions typically include:

• Guarantees
• Discounts for repeat customers
• Point cards
• Referral rewards

The deciding factor for a customer choosing between two similar shops might be a point card or preferred customer card. You don’t have to promise the moon to add value—instead, point out something that the customer may not realize about your product or service. It’s important to highlight the value additions when creating your advertising materials.

4. Referral Networks

Referral networks can be invaluable to a business. Referrals can be encouraged through discounts or other rewards per referral. However, referral networks also include business-to-business referrals. If you have ever found yourself saying, “We don’t do/sell that here, but X down the street does,” you might want to introduce yourself to X’s owner and talk to them about a referral quid pro quo.

When dealing with white-collar professions, this network is even stronger. For example, a lawyer might refer you to an accountant; in turn, the accountant might refer you to a financial planner, who could refer you to a broker. In each situation, the person stakes their professional reputation on the referral.

Regardless of your business type, make sure you create a referral network that has the same outlook and commitment to quality that you do.

Note

If you are too busy to take a job, throw it to your competition. You will often find the favor returned, plus it can be bad for your reputation if a customer has to wait too long for a service.

5. Follow-ups

Advertising can help attract customers, but what you do after they come in can often be a much stronger marketing tool. Follow-up questionnaires are one of the best sources of feedback on how your ad campaign is going. Questions you could ask include:

• Why did the customer choose your business?
• Where did they hear about it?
• Which other companies had they considered?
• What produced the most customer satisfaction?
• What was the least satisfying aspect?

Also, if your job involves going to the customer, make sure to slip a flyer into nearby mailboxes, as people who live in the same area often have similar needs and interests.

6. Cold Calls

Unpleasant? Important? Yes, and yes.

Cold calling—whether over the phone or door to door—is a baptism by fire for many small businesses. It forces you to sell yourself as well as your business.

Over the phone, you don’t have the benefit of a smile or face-to-face conversation—a phone is a license for some people to be as caustic and abrupt as possible (we are all guilty of this at one time or another). However, cold calling does make you think on your feet and encourages creativity and adaptability when facing potential customers. It also is a quick way to get your name out there and can drum up business.

Warm calls are an alternative to cold calls. You make calls to people you have already met or introduced yourself to through social events, email campaigns, or other activities.

7. Online Marketing

The importance of the internet in building a successful business cannot be overstated. The internet makes it possible to reach a massive audience from anywhere and generate interest in your business, potentially without spending a cent.

No company (even a local café) should be without, at the very least, a website with vital details such as location and hours. You need a point of access for everyone who searches the internet first when they want to make a buying decision.

You may also need:

• A social media presence: Facebook, Instagram, TikTok, X platform (formerly Twitter), LinkedIn, Pinterest, etc.
• A content management system (CMS): WordPress, Hubspot, Joomla, or Drupal
• Search engine optimization (SEO) skills: Optimizing your content for searches, internal and external linking, title tags, alt tags, and headings

All this digital dexterity may feel intimidating at first. However, publishing technology has evolved to the point where an open-source content management system can meet all these needs.

Important

The social media platforms that offer marketers the highest return on investment (ROI) are Facebook and Instagram, according to HubSpot.

How to Identify Your Value Proposition, Audience, and Goals

Before you begin printing and distributing your materials, it’s best to figure out who your audience is and how to make your product or services valuable to them. Then, set realistic and attainable goals for your business and marketing endeavors.

Value Proposition

A value proposition is a reason a customer should buy a product or service from you instead of the competition. Consider what your target audience needs from you rather than what your product has. These needs are usually called benefits, whereas a product’s physical properties or what it does are called features. You can still highlight features, but they should be backed up with a benefit that aligns with your audience’s needs.

Critical to selling your product or services is identifying what you offer that others do not (or that they don’t do very well). To establish your value proposition, compare what you’re offering to the competition’s product or service. Identify their features and benefits and compare them to yours, then make a note of the areas where you excel.

Your top value proposition should be unique to your offering and make it appealing to your audience. For example, imagine you have a coffee shop and bistro. It’s a trendy convenience found in many towns and cities, so you’ll have to analyze your competitors and use your imagination to discover the one thing that makes you stand out.

Say you’ve perfected bread recipes from around the world, like pão de queijo (a gluten-free Brazilian bread made from tapioca flour and cheese) or aish baladi (an Egyptian bread), and import coffee from the countries where those breads are baked and eaten. You may have a competitive advantage and an excellent value proposition—you offer products no other café in town does.

Audience

You’ll need to identify who your audience is. If you didn’t design your product or service for a specific demographic, you’ll need to do some research to determine which type of people to target. Audience is key to marketing. If you’re targeting one demographic that doesn’t have a large presence in your area, you may not be too successful unless you’re an online retailer.

You’ll need to identify who you want to sell to the most and ensure your product or service caters to them. For example, if you like the idea of a global café with bread and coffee from around the world, you’ll need a customer base to sell it to.

You could start talking to people and listening to their coffee concerns. Find out their ages and average incomes, see what they’d like, and ask what current issues they have in getting the coffee and the experience they want. Learn as much about them as possible—spending habits, needs, income levels, hobbies, or anything else that might provide insights into what might attract them.

Once you define your audience and what they need, you can figure out the message you’re going to send.

Goals

One of the best ways to accomplish something is to set a goal. However, you don’t want to set one goal—you should set an end goal and several small attainable goals that contribute to the final goal.

Set up a timeline and dates when you’d like to complete the small goals. This way, you have small steps to guide you and a way to measure your progress and success.

Marketing Channels

The internet, and the various technologies and platforms using it, gives businesses enormous marketing opportunities. Here are the top marketing channels used; it’s likely you’ve heard of or been exposed to them.

Search Engine Optimization

Search engine optimization (SEO) is top dog when it comes to marketing. It involves structuring your website and content so that it ranks as high as possible on Google search engine results pages.

Google uses a technique called web crawling that finds web pages to add to its index. When creating or adjusting your webpage or site for SEO, there are several factors to consider, such as following Google’s best practices and spam policies.

Content Marketing

Content marketing is a technique used to promote interest in your brand without explicitly promoting a product or service. You’ll find examples of this on many companies’ websites where a blog or article discusses a topic and how the company relates to it or works to help people do something. Generally, there is a call to action toward the end of the article, like “if you need help with XYZ, contact us today” or something similar.

Content marketing establishes expertise and gives potential customers a brand to remember.

Email Marketing

It’s been predicted that more than 4.85 billion people will have an email address by 2027. To gain access to this ocean of people, you’ll need an email marketing application. You can find hundreds of email marketing applications that will allow you to create email marketing campaigns.

Social Media Marketing

We’ve all seen advertisements on our social media pages that seem to target us by what we’ve been shopping for. It’s no secret that using social media increases brand exposure and generates interest, so it is in a small business’s best interest to, at a minimum, create a social media profile for itself and begin posting content.

Influencer Marketing

Influencers are people with a large viewer and follower base on their platform of choice. For instance, someone who regularly posts content on Instagram could have millions of followers. This person then becomes an influence in the lives of their followers—giving businesses another exposure outlet.

Chances are you’ve seen someone talking about a product or service on their social media platform; they’ve been sponsored by a company to talk about that business’s services. Influencers can help you generate tons of interest.

What Is Small Business Marketing?

Small business marketing is creating a campaign for your small business to generate interest and a consumer base. It involves using traditional and modern marketing techniques to develop a marketing campaign.

Which Marketing Is Best for Small Business?

The most effective marketing combines social media, networking, and traditional methods like flyers, posters, and cold calling. However, social media advertising reaches the most people the fastest.

How Can I Promote My Small Business?

Social media is the quickest method for promoting your business. For the promotion itself, you can offer discounts for referrals, promotional pricing, participate in events in your community, or anything else you can think of. Technology has created many more channels you can use, but it’s up to you to figure out how to exploit them.

The Bottom Line

More than likely, you will find that the conversion rate on marketing is very low. Even the most successful campaigns measure leads (and converted sales from those leads) in the 10% to 20% range. This helps to shatter any illusions about instant success, but it is also an opportunity for improvement. Consider that if you convert 0.5% of 1 million leads to sales, you’ve got 5,000 sales.

The more exposure you have, the more leads you can generate and convert. Ultimately, this turns into sales, profits, and growth.

Reviewed by Ebony Howard
Fact checked by David Rubin

Tornadoes, floods, and hurricanes. In addition to being devastating natural disasters, these events have another common denominator: the property damage they cause can be deducted from federal income taxes. If your home, vehicle, or household items and possessions are damaged or destroyed as the result of a qualifying event that the IRS considers “sudden, unexpected, or unusual”—including natural disasters—you may be able to write a portion of the loss off of your federal income tax.

Before you begin to imagine recouping the entire value of your loss, realize that there are limits. You will need to file an insurance claim (if you carry coverage), and your benefit payout will be factored in. If you have homeowner’s or renter’s insurance and file a timely claim to be reimbursed for the loss, the amount that you are reimbursed by your insurance company will be subtracted from the amount you can deduct from your taxes, upon approval. If you choose not to file a claim, you can only deduct the loss that was not covered by your insurance policy.

Qualifying Events

If you have personal property that has sustained damage—or has been completely destroyed—by any of the following three categories of events, you may be able to deduct a portion of your loss from your federal income tax bill:

1. Property damaged or destroyed by an act of nature, which includes floods, fires, earthquakes, landslides, storms, tsunamis, volcanic eruptions, and windstorms.
2. Theft or vandalism, including burglaries, extortion, embezzlement, robbery, and fraud.
3. Accidents, riots, terrorist attacks.

Unless your loss is due to a disaster and the president has declared your community a federal disaster area, you will need to deduct your loss the year that it occurred. If you live in a presidentially declared disaster area, you can deduct the loss on your federal income tax return for the year after the event.

Qualifying for Tax Relief

If you have been affected by a natural disaster recently, visit the IRS website to see if you qualify for tax relief. The site states that individuals in certain states affected by recent events qualify for tax relief. 

Figuring Out Your Potential Financial Write-Off

If you’ve determined that your loss is covered under a “qualifying event, ” and you’ve filed a claim with your insurance company, you’ll want to know how much, exactly, you could recoup by writing off your loss. To calculate that amount, you will first need to collect all related paperwork to substantiate and monetize property loss and/or repair costs.

To determine the value of your destroyed, damaged, or stolen item(s):

1. Figure out the original amount of the item/property.
2. Estimate the value of the item now (after the event). The difference is the decrease in the item’s fair market value (FMV).
3. Choose the smaller amount of either (1) or (2) above.
4. Subtract any insurance reimbursements you may have received from the number you came up with in (3).

If you’ve had several items stolen or damaged/destroyed as a result of a qualifying event, you will need to determine the loss on each item and then add those losses to come up with a total loss amount.

The number you come up with in (4) is the amount of your loss. Now that you’ve calculated the loss value, you can determine how much of that amount you can deduct from your taxes. If the casualty or theft affected personal use property (meaning not for business use) there are two limits to how much you can deduct:

1. Subtract $500 for each item that was damaged, destroyed, or stolen.
2. If your loss was due to theft or natural disaster in a non-presidentially declared area, you’ll need to subtract an additional 10% based on your adjusted gross income (AGI).

Your AGI is your total income minus qualifying deductions (not itemized deductions, i.e., mortgage interest, property taxes, charitable contributions, etc.). To calculate your AGI, first add up your gross income which includes:

• wages/salary
• dividends
• capital gains
• taxable interest
• IRA and/or pension or annuity distributions
• alimony
• unemployment compensation
• business income (or loss)
• farm income (or loss)
• rental real estate, royalties, partnerships, S corporations, trusts, etc.
• taxable Social Security benefits
• other income

Then subtract IRA contributions, student loan interest, tuition and fees deductions, educator expenses, health savings account deductions, half of the self-employment tax, contributions to health insurance, penalty for early withdrawal from savings, qualified retirement plans (i.e., IRA, SEP, SIMPLE, etc.), paid alimony, and moving expenses. There are also qualifying deductions for educator expenses, domestic production activities, and for certain business expenses of reservists, performing artists, and fee-based government officials. The resulting number is your AGI.

In order to support your claim, you should locate, if possible, before and after photos of the lost/damaged/destroyed items, receipts, canceled checks, deeds, and, if necessary, professional appraisals. A professional appraisal can provide you with an accurate estimate of the value of your items and serve as evidence for your insurance claims, and the appraisal fee can be deducted from your taxes. (For more, check out: Tax Tips for The Individual Investor.)

Need Help?

If you need assistance determining your potential write-off, consult with a tax preparation professional, or use the IRS.gov website to get answers to questions. The IRS Publication 584 Casualty, Disaster, and Theft Loss Workbook can help you determine your eligibility for a deduction, and your state income tax department can provide guidance on federal and state guidelines.

In a letter to Berkshire Hathaway Inc. (BRK.A) shareholders, legendary investor Warren Buffett once posed a deceptively simple question: “If you plan to eat hamburgers throughout your life (and are not a cattle producer), should you wish for higher or lower prices for beef?” The answer is lower, of course. Yet, according to Buffett, this question cuts to the heart of how investors should also think about markets and investing.

The “hamburger quiz” illustrates Buffett’s gift for making complex financial concepts accessible through everyday analogies. His point was clear: just as consumers should prefer lower prices for items they buy regularly, long-term investors should try to see market declines as opportunities, not disasters. We discuss why below—and it’s not about timing the market.

Key Takeaways

• In a letter to shareholders, Warren Buffett once asked if they would prefer their hamburgers to be cheap or expensive.
• If you answer “cheap,” he argues, you should also prefer lower-priced stocks.
• While not a perfect analogy, the insight holds that market downturns should be seen as opportunities.

The Hamburger Principle Applied to Markets

Buffett’s analogy connects our understanding of consumer behavior to counterintuitive market psychology. We instantly recognize that lower beef prices benefit hamburger consumers. Yet when stock prices fall, most investors tend to panic rather than scope out the bargains.

He continues with another metaphor: “Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.”

However, Buffett says many investors have the wrong answer when faced with their own version of the hamburger test. “Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the ‘hamburgers’ they will soon be buying.”

Many investors regularly check their portfolio , feeling better or worse as markets rise and fall. Fighting this natural response demands both intellectual understanding of Buffett’s principles and emotional resilience.

Eating vs. Investing

There are, of course, fundamental differences between consuming and investing, with each having entirely different purposes and the means for doing so.

Consumption goods like hamburgers provide immediate utility but no future return. Their value is realized through use, with nothing left over. Even a car, which can last for many years, steadily loses value and eventually becomes worthless, except maybe for some residual scrap value.

Meanwhile, investing sacrifices the ability to consume today since you’re putting that money into a portfolio to generate future returns. The purpose, then, is to create more wealth over time. In short, consumption is about the present; investing is about the future.

When you buy a hamburger, your concern ends with a full stomach. But with investments, timing matters tremendously. Market declines only benefit you if prices eventually recover during your investment horizon.

Retirees or those short on cash might need to sell off their investments to pay the bills. Thus, when the market declines, that’s a real problem, not an opportunity.

Warning

While Buffett’s hamburger principle highlights the opportunity in market downturns, it doesn’t mean you should try to time the market. Instead, you can use strategies like dollar-cost averaging—investing fixed amounts regularly no matter the market conditions—to naturally capitalize on price dips.

The Psychology of Sell-offs

The hamburger analogy does help focus attention on the psychological reality of watching markets decline. Even long-term investors can struggle to maintain perspective when their portfolio values plummet. Buffett’s message thus directly challenges how most people instinctively respond to downturns.

“Smile when you read a headline that says ‘Investors lose as market falls,'” he told Berkshire Hathaway’s shareholders. “Edit it in your mind to ‘Disinvestors lose as market falls—but investors gain.'”

The Bottom Line

The hamburger quiz teaches people to treat market downturns as buying opportunities. The challenge it highlights grows more difficult when market declines persist for extended periods. While Buffett’s hamburger principle remains insightful, the emotional toll of multiyear bear markets tests even disciplined investors’ resolve.

Reviewed by Andy Smith
Fact checked by Suzanne Kvilhaug

Principles-Based vs. Rules-Based Accounting: An Overview

All public U.S. companies are required to prepare their financial statements as set out by the Financial Accounting Standards Board (FASB), whose standards are generally rules-based.

FASB develops detailed rules and standards in establishing its accounting practices and methods. The law requires U.S. companies to adhere to these accounting standards when reporting their financial statements.

Most companies in other countries, however, do not use the standards as determined by FASB but rather use the accounting principles issued by the International Accounting Standards (IAS).

Key Takeaways

• U.S. companies follow a strict rules-based system (GAAP), while most other countries use a flexible principles-based system (IFRS).
• Princples-based accounting gives companies more freedom to interpret accounting standards, which is better suited for unique situations but also risks less transparency.
• Rules-based accounting ensures consistency and comparability but can lead to rigid and complex practices and even manipulation.
• There is no universal accounting system in place, which complicates the process of comparing global companies and raises concerns of accuracy and honesty.

Principles-Based Accounting

Principles-based accounting seems to be the most popular accounting method around the globe. Most countries opt for a principles-based system, as it is often better to adjust accounting principles to a company’s transactions rather than adjusting a company’s operations to accounting rules.

The International Financial Reporting Standards (IFRS) system—the most common international accounting standard—is not a rules-based system. The IFRS states that a company’s financial statements must be understandable, readable, comparable, and relevant to current financial transactions.

Rules-Based Accounting

Rules-based accounting is a standardized process of reporting financial statements. The generally accepted accounting principles (GAAP) system is the rules-based accounting method used in the United States. Companies and their accountants must adhere to the rules when they compile their financial statements. These allow investors an easy way to compare the financial information of different companies.

There are 10 principles of the rules-based GAAP accounting system:

1. Regularity
2. Consistency
3. Sincerity with an accurate representation of the company’s financial situation
4. Permanence of methods
5. No expectation of compensation
6. Prudence with no semblance of speculation
7. Continuity
8. Dividing entries across appropriate periods of time
9. Full disclosure in all financial reporting
10. Good faith and honesty in all transactions

The GAAP method is used when a company releases its financial statements to the public. It covers a number of things, such as revenue recognition, balance sheet classification, and how outstanding shares are measured.

Companies and accountants that do not follow GAAP standards could be brought to court if their judgments and reporting of the financial statements were incorrect.

Applications of Both Methods

The fundamental advantage of principles-based accounting is that its broad guidelines can be practical for a variety of circumstances. Precise requirements can sometimes compel managers to manipulate the statements to fit what is compulsory.

On the other hand, when there are strict rules that need to be followed, like those in the U.S. GAAP system, the possibility of lawsuits is diminished. Having a set of rules (rules-based accounting) can increase accuracy and reduce the ambiguity that can trigger aggressive reporting decisions by management.

Compliance with GAAP helps to ensure transparency in the financial reporting process by standardizing the various methods, terminology, definitions, and financial ratios. For example, GAAP allows investors to compare the financial statements of two companies by having standardized reporting methods.

Companies must formulate their balance sheet, income statement, and cash flow statement in the same manner so that they can be more easily evaluated. Changes in the way a business compiles and reports its financials can be costly and time-consuming.

If companies were able to report their financial numbers in any manner they chose, investors would be open to risk. Without a rules-based accounting system, companies could report only the numbers that made them appear financially successful while avoiding reporting any negative news or losses.

Note

In the U.S., private companies can technically use IFRS, but this is not a common practice.

Problems With Both Systems

The main problem is that no one accounting method has been universally adopted. There are 168 jurisdictions that use IFRS as their accounting standards, while the U.S. uses the rules-based GAAP method.

As a result, investments, acquisitions, and mergers may require a different lens when comparing international competitors such as Exxon and BP, which use different accounting methods.

Critics of principles-based accounting systems say they can give companies far too much freedom and do not prescribe transparency. They believe that because companies do not have to follow specific rules that have been set out, their reporting may provide an inaccurate picture of their financial health.

In the case of rules-based methods like GAAP, complex rules can cause unnecessary complications in the preparation of financial statements. Having strict rules means that accountants may try to make their companies more profitable than they actually are because of the responsibility to their shareholders.

Example of Accounting Manipulation

Enron was a major energy company in the 1990s. In 2001, Enron shareholders lost $74 billion in value after the company’s executives used fraudulent accounting practices to overstate revenue while hiding debt in its subsidiaries.

When Enron declared bankruptcy, it was the largest U.S. bankruptcy at that time, with $63 billion in assets. The company’s collapse sent shockwaves throughout the financial markets, leading to a wave of additional regulations.

When contemplating which accounting method is best, make certain that the information provided in the financial statements is relevant, reliable, and comparable across reporting periods and entities. Although there are benefits to principles-based accounting, it is recognized that the method may need to be modified to make it more effective and efficient.

What Is the Difference Between IFRS and GAAP?

Both International Financial Reporting Standards (IFRS) and generally accepted accounting principles (GAAP) are accounting frameworks that instruct companies on how they should report their financials. IFRS is used in most countries around the world, while GAAP is mainly used in the U.S. The primary difference between the two is that GAAP is a rules-based system that provides specific instructions on how reporting should be done. IFRS, on the other hand, is a principles-based system, allowing for more flexibility in accounting interpretation.

Why Does Most of the World Use IFRS?

The majority of countries in the world use International Financial Reporting Standards (IFRS) for their accounting. There are many reasons for this, all with the core goal of making accounting easily translatable across regions. Using IFRS simplifies cross-border business for companies and investors by providing a common accounting language.

This is increasingly important in a globalized world where companies operate in multiple regions. Additionally, many international bodies, such as the G20, World Bank, and International Monetary Fund, support the use of IFRS. Another key point is that IFRS, a principles-based method of accounting, is seen as more modern than traditional rules-based accounting standards, like GAAP.

Why Use IFRS Instead of GAAP?

International Financial Reporting Standards (IFRS) is used more than generally accepted accounting principles (GAAP) because it is required in more countries while GAAP is primarily used in the U.S. Because it’s used in more countries, IFRS makes accounting much easier for companies that operate in different jurisdictions and want to attract a wide assortment of international investors. Additionally, IFRS is more flexible, making financial reporting less complex than GAAP and better-suited in representing specific businesses with their unique characteristics.

The Bottom Line

Principles-based accounting, like IFRS, offers flexibility, while rules-based systems like GAAP provide consistency and clear standards. Each has its drawbacks; too much freedom can lead to manipulation, and too many rules can make reporting complicated. The best approach ensures financial reports are clear, accurate, and easy to compare.

Fact checked by Vikki Velasquez

Dreaming of a retirement filled with sunny days, scenic views, and an active lifestyle? Lake Havasu City, AZ, offers exactly that without breaking the bank. Located on the east side of the iconic Lake Havasu, it’s the largest city in Mohave County, with a population of nearly 60,000 and a median age of 53.

Known as “Arizona’s Playground,” Lake Havasu City offers affordable lakefront living, diverse recreation, accessible healthcare, and a vibrant social scene. Let’s explore exactly what makes Lake Havasu City an ideal retirement destination.

Key Takeaways

• Lake Havasu City offers a lower cost of living than many parts of Arizona and the U.S., allowing retirees to enjoy a comfortable lifestyle on a fixed income.
• The city’s lakefront location and desert landscape provide endless opportunities for outdoor recreation, making it ideal for active retirees.
• With historic landmarks, a thriving art scene, and cultural activities, retirees will find plenty to explore.
• Lake Havasu’s strong sense of community and frequent social events ensure retirees remain connected.
• With accessible healthcare, convenient public transportation, and a major airport nearby, the city is a practical retirement option.

Cost of Living in Lake Havasu City, AZ

Affordability is one of the primary factors to consider when choosing a retirement destination, especially for those on a fixed income. Lake Havasu City stands out for its cost of living, which is lower than both Arizona and national averages in key areas such as housing and food.

If you’re interested in homebuying, Lake Havasu City may offer significant savings. Between 2019 and 2023, the median home value in Mohave County averaged $253,200, while the median sales price for the nation averaged $419,200 (the most recent data available). Monthly housing costs tell a similarly promising story, with the median Mohave County resident paying $914, more than 32% lower than the national median of $1,358.

Food expenses in the city are also noticeably more affordable than in many other locations. According to the latest data, the median monthly food cost in Mohave County is just $617, which is $215 lower than the national average of $832.

Note

Given that housing and food are consistently the two highest expenses for retirees—accounting for 35% and 13% of the average annual expenditures for people over 65 in 2023—these savings can have a significant impact.

Healthcare and Accessibility

Access to quality healthcare is essential for retirees, who often require regular medical care. With 391 healthcare establishments and nine hospitals in Mohave County, Lake Havasu City more than satisfies this need. Local retirees can find appropriate medical facilities without having to travel too far, whether they need routine checkups or more specialized treatment.

Reliable transportation is also crucial for retirees, whether for running errands or attending medical appointments. While monthly transportation costs in Mohave County are slightly higher than the national average—$1,199 compared to $1,098 in 2023—Lake Havasu City also offers plenty of affordable and accessible public transportation options.

In addition to standard public bus transportation, that includes shared shuttle services with flexible routes. For example, Lake Havasu City Direct Public Transit provides on-demand rides Monday through Friday between 6:30 AM and 5:00 PM. Seniors and disabled individuals can also reserve dedicated Paratransit trips between 9:00 AM and 5:00 PM. All rides cost $3.00 each way, making it a highly cost-effective option.

If you ever need to travel long-distance, whether for advanced medical care or personal reasons, Harry Reid International Airport (LAS) is 151 miles away, offering connecting flights to many major destinations.

The combination of accessible healthcare, reliable public transportation, and proximity to a major airport can help Lake Havasu City retirees stay independent and well-connected.

Lifestyle and Recreational Activities

If you enjoy an active outdoor lifestyle, Lake Havasu City offers year-round potential for adventure. Lake Havasu itself provides endless opportunities for boating, fishing, and water sports, while the surrounding desert landscape—home to 18 different city and state parks—is perfect for hiking, ATV riding, and exploring.

Beyond outdoor recreation, Lake Havasu City boasts multiple iconic attractions. The London Bridge, relocated from England in the 1960s, is a beloved historical landmark. Meanwhile, the Havasu National Wildlife Refuge is ideal for birdwatchers, home to 318 species, including endangered ones like the Bell’s vireo.

If you’re drawn more to arts and culture, Mohave County features 62 different artistic establishments, including everything from galleries and museums to live music venues. The local community hosts regular events, like the Annual London Bridge Days Parade, creating plenty of social opportunities for retirees moving to the city or looking for new friends.

The Bottom Line

Lake Havasu City is a compelling choice for those seeking an affordable but fulfilling retirement destination. With the county’s housing and food costs well below average, you can easily enjoy a comfortable lifestyle on a fixed income. In addition, its public transportation options and proximity to a major airport make travel readily accessible.

The city’s rich blend of outdoor adventures, cultural attractions, and artistic institutions provide a healthy mix of recreational opportunities. Combined with a vibrant local community that hosts plenty of social events, Lake Havasu City is the perfect place to settle down and enjoy your retirement years to the fullest.

Find affordable living, natural beauty, and a tight-knit community in Omak, WA

Fact checked by Vikki Velasquez

Located 220 miles east of Seattle, the town of Omak, Washington is a hidden gem nestled in the curve of the Okanogan River and surrounded by national forests. With just over 5,000 residents, it’s the largest city in a small county of about 43,000 people, offering a quiet, close-knit community to match its scenic surroundings.

Named for the Native American word “omache,” meaning “good medicine” or “plenty,” Omak also boasts a below-average cost of living and a surprisingly robust health care system, making it an attractive retirement destination for those looking to balance affordability and quality of life. Let’s explore what it has to offer to help you determine if it’s the right place to spend your golden years.

Key Takeaways

• Omak offers retirees a lower cost of living than the national average in many ways, notably including housing and food costs.
• There are dozens of health care establishments in the county, including multiple hospitals, helping retirees get quality medical care without too much travel.
• Omak’s proximity to the rivers, lakes, and national forests makes it an ideal retirement destination for those who enjoy an outdoor lifestyle.
• Despite its size, Omak offers plenty of entertainment and community events, helping to foster an active and engaged retirement.

Cost of Living in Omak, WA

Because retirees often rely on a fixed income, cost of living is one of the primary considerations when choosing a retirement destination. Omak is an attractive option because it’s relatively inexpensive compared to the rest of the U.S. in many ways, allowing you to maintain an enjoyable quality of life without breaking the bank.

For one, housing in Okanogan County is significantly cheaper than in other parts of the country. If you’re interested in homebuying, the median house costs roughly $284,200 (according to the most recent data), almost a third cheaper than the national median of $419,200. Similarly, the typical local spends just $856 per month on housing, while the median American spends $1,358.

Food also tends to cost less in Omak, with the average two-person household spending $593 per month, $239 less than the national household average of $832. You can expect to enjoy budget-friendly restaurants that offer a mix of cuisines, including American, Mexican, and Chinese.

Note

Housing and food account for about 35% and 13% of the average retiree’s annual spending, making them the two biggest line items. Saving in both categories can make it much easier to afford day-to-day expenses in retirement.

Health Care and Accessibility

Health care is another primary concern for retirees, who may require more frequent medical services than other demographics. Fortunately, Omak and the surrounding area are well-equipped to meet your needs. Okanogan County is home to 64 different health care establishments, including six hospitals, ensuring residents can access care without extensive travel.

However, getting around can be a little more expensive than in other areas of the country. The typical monthly transportation costs in the county average $1,386, higher than the national average of $1,098. In addition, the nearest major airport—Seattle-Tacoma International—is 139 miles away from the county’s center, so long-distance travel isn’t the most accessible. 

Fortunately, there are still convenient and cost-effective local transit options. For example, the Transit for Greater Okanogan (TranGO) offers wheelchair-accessible buses with routes operating from approximately 7 a.m. to 6 p.m., Monday through Friday. With fares of just $1 per boarding, you should be able to navigate the area affordably.

Lifestyle and Recreational Activities

As practical a choice as Omak can be, there’s more to retirement than worrying about concerns like finances and health care. Enjoying your life is just as important, and Omak offers an idyllic small-town setting, especially for those who love nature.

The Okanogan River runs right through the city, and Omak Lake is only a short drive from the heart of town. Together, they provide plenty of opportunities for boating, fishing, or simply relaxing by the water. Omak is also filled with and surrounded by greenery. In particular, the nearby Okanogan-Wenatchee National Forest offers miles of scenic hiking trails to explore.

Despite its small size, Omak also has a vibrant cultural scene. The town is home to 28 different arts establishments, including the Omak Performing Arts Center—which puts on concerts, seminars, and theater productions—and the Omak Stampede Museum, where you can learn about the region’s rich history.

Fast Fact

Omak residents also have plenty of options for day-to-day entertainment, including a local movie theater, wine-tasting room, casino, and bowling alley.

In addition, Omak fosters a strong sense of community with regular social events suitable for retirees. The farmers’ market runs from June through October in Eastside Park, where you can buy fresh produce and handcrafted goods. Meanwhile, occasions like the annual Harvest Festival and Christmas Parade provide plenty of chances to connect with your neighbors.

The Bottom Line

Omak, Washington offers an appealing combination of affordability, natural beauty, and small-town charm, making it an enticing option for retirees. With a lower-than-average cost of living, strong health care options, and abundant ways to stay active and engaged, it’s an excellent place for a peaceful but fulfilling retirement.

Reviewed by Ebony Howard
Fact checked by Ryan Eichler

What does it mean to be financially responsible? It’s a complex question, but at its core is a simple truth: To be financially responsible, you need to live within your means. And to live within your means, you must spend less than you make.

Key Takeaways

• It’s not enough to pay the minimum on your credit cards each month. To be financially responsible, you need to pay them off in full every month.
• It’s crucial to know the difference between what you need and what you want—and then only buy your ‘wants’ if you can afford it.
• If you don’t have an emergency fund of three to six months’ worth of expenses, today is the day to start saving for one.

Credit Cards and Debt

If you’re really looking to be financially responsible, just being able to make your minimum monthly credit card payment doesn’t cut it. In fact, the fact that you aren’t able to pay your balance in full shows that you already spend more than you earn. Responsible use of credit means paying the balance on your account in full each month.

Consider the Interest

The same logic applies to all recurring payments that involve paying interest. Think about it: Paying interest on anything means that you are spending more on that item than the purchase price. Does that sound like the most responsible choice or just the most convenient?

When the interest payments are factored into the purchase price, you are spending more to obtain the item than even the item’s manufacturer thought it was worth.

Of course, certain interest payments are unavoidable, like with mortgages and car payments. In these cases, minimizing the amount you spend in interest each month is the most responsible action.

Necessities vs. Luxuries

For many people, cutting down on interest and borrowing is easier said than done, but in practice, it really comes down to knowing the difference between necessities and luxuries.

For example, buying a home in a financially responsible manner means that you should purchase one that won’t break the bank. In financial terms, this means it shouldn’t cost more than two or 2.5- times your annual income. Another rule of thumb is that your monthly mortgage payment should not cost more than 30% of your monthly take-home pay.

That said, being financially responsible does depend on your income. If you’re an ultra-high-net-worth individual, you may easily be able to afford a jet, a mega-yacht, and a mansion in the South of France. After all, there’s nothing irresponsible about buying things you can afford to pay for.

Paying Yourself First

For most people, saving is an activity that must be taken seriously. A great way to do this is when you get your paycheck—and before you pay your bills—pay yourself first. A good goal to save is 10%.

When it comes to saving, investing in the stock market might be the most profitable choice available. Sure, investing involves risk, but taking calculated risks is sometimes a necessity. The responsible way to go about it is to have a plan.

Start by examining asset allocation strategies to learn how to choose the right mix of securities for your investing strategy. From there, contribute to your employer-sponsored savings plan if such a plan is available.

Important

Most employers offer to match your contributions up to a certain percentage, so by contributing at least enough to get the match, you earn a guaranteed return on your investment.

If your finances permit, maximize your tax-deferred savings opportunities by contributing the full amount that the plan allows. After you’ve started investing, monitor the progress that you are making toward your goals and rebalance your portfolio as necessary to remain on track.

Emergency Fund

Financial responsibility means being prepared for the unexpected. Most experts agree that you need to be able to support yourself financially for at three to six months without an income. If you are married and used to living on dual paychecks, this means being able to pay the necessary bills such as the mortgage, food and utilities on one income, or even neither income. If a missed paycheck would ruin you financially, it’s time to create an emergency fund.

Don’t Keep Up with the Joneses

Financial responsibly means doing what you have to do to take care of your needs and the needs of your family. To make this happen, your focus should be internal. The neighbors aren’t paying your bills, so their spending habits shouldn’t dictate yours or set the bar for your standard of living.

Budgeting

Having a budget is one of the core pillars of financial responsibility. You should know where your money is going. Business owners know the importance of understanding their cash flows and balance sheets. As a result, no successful business exists without a budget. Neither should you.

How Much Money Does the Average Person Have in Credit Card Debt?

In Q3 2024, the national average credit card debt was $7,236.

What Is the 50/30/20 Rule?

50/30/20 is a budgeting system that says you should put 50% of your paycheck towards needs, 30% towards wants, and 20% towards savings or debt.

What Is Pay Yourself First?

Pay yourself first is a way to ensure that you make progress towards your savings goals. You pay yourself—that is, your savings—before you pay other obligations. You could try to do this on a month-to-month basis, or you could automate it, so you don’t have to think about it.

The Bottom Line

Ultimately, financial responsibility means living within your means, regardless of the level of those means. So take a close look at your financial situation, evaluate your earning and spending habits, and make the necessary adjustments to put yourself on responsible financial footing.

Reviewed by Michael J Boyle
Fact checked by Hans Daniel Jasperson

On Aug. 11, 2015, the People’s Bank of China (PBOC) surprised markets with three consecutive devaluations of the Chinese yuan renminbi (CNY), knocking over 3% off its value. Since 2005, China’s currency has appreciated 33% against the U.S. dollar.

The first devaluation marked the most significant single drop in 20 years. The move was unexpected, and many believed it was a desperate attempt by China to boost exports in support of an economy that was growing at its slowest rate in decades. However, the PBOC claimed that the devaluation was part of its reforms to move toward a more market-oriented economy. The move had worldwide repercussions, impacting countries including the United States and India.

Key Takeaways

• After a decade of steady appreciation against the U.S. dollar, investors had become accustomed to the yuan’s stability and growing strength.
• China’s President Xi Jinping had pledged the government’s commitment to reform China’s economy in a more market-oriented direction since he first took office in March 2013.
• Despite the IMF response, many doubted China’s commitment to free-market values, arguing that the new exchange rate policy was still akin to a managed float.
• The negative impact of currency devaluations on relations with the U.S. also contributed to China briefly being labeled as a currency manipulator in 2019 and early 2020.

Surprised Markets

After a decade of steady appreciation against the U.S. dollar, investors had become accustomed to the yuan’s stability and growing strength. The drop, which amounted to 4% over the subsequent two days, was small by stock market standards. However, many speculators in foreign exchange (forex) markets use a high amount of leverage.

Automatic stop-loss orders are one of the best ways for leveraged forex traders to protect themselves from sudden policy changes.

Stock markets in the U.S., Europe, and Latin America fell in response to the yuan devaluation. Most currencies also reeled. Some argued that the move signaled an attempt to make exports look more attractive, even as the Chinese economy’s expansion slowed. However, the PBOC indicated that other factors motivated the devaluation.

Effect on the International Monetary Fund

Chinese President Xi Jinping had pledged the government’s commitment to reform China’s economy in a more market-oriented direction when he first took office in March 2013. That made the POBC’s claim that the devaluation’s purpose was to allow the market to be more instrumental in determining the yuan’s value more believable.

The devaluation announcement came with official statements from the PBOC that as a result of this “one-off depreciation,” the “yuan’s central parity rate will align more closely with the previous day’s closing spot rates.” Furthermore, it was aimed at “giving markets a greater role in determining the renminbi exchange rate with the goal of enabling deeper currency reform.”

At the time, Professor Eswar Prasad of Cornell University indicated that the move was also consistent with China’s “slow but steady” market-oriented reforms. The currency devaluation was one of many monetary policy tools the PBOC employed in 2015, which included interest rate cuts and tighter financial market regulation.

There was also another motive for China’s decision to devalue the yuan: China’s determination to be included in the International Monetary Fund‘s (IMF) special drawing rights (SDR) basket of reserve currencies. The SDR is an international reserve asset that IMF members can use to purchase domestic currency in foreign exchange markets to maintain exchange rates. The IMF reevaluates the currency composition of its SDR basket every five years.

In 2010, the yuan was rejected on the basis that it was not freely usable. The IMF welcomed the devaluation, encouraged by the claim that it was done in the name of market-oriented reforms. Consequently, the yuan became part of the SDR in 2016.

Within the basket, the Chinese renminbi had a weight of 10.92%, which is more than the weights of the Japanese yen (JPY) and U.K. pound sterling (GBP), at 8.33% and 8.09%, respectively. The rate of borrowing funds from the IMF depends on the interest rate of the SDR. As currency rates and interest rates are interlinked, the cost of borrowing from the IMF for its member nations would now hinge in part on China’s interest and currency rates.

Skeptical Views

Despite the IMF’s response, many doubted China’s commitment to free-market values, arguing that the new exchange rate policy was still akin to a managed float. Some charged that the devaluation was just another intervention, and the yuan’s value would continue to be closely monitored and managed by the PBOC.

Also, the devaluation occurred just days after data showed a sharp fall in China’s exports—down 8.3% in July 2015 from the previous year. That provided evidence that the government’s slashing of interest rates and fiscal stimulus had not been as effective as hoped. Thus, skeptics rejected the market-oriented-reform rationale. Instead, they interpreted the devaluation as a desperate attempt to stimulate China’s sluggish economy and keep exports from falling further.

China’s economy depends heavily on its exported goods. By devaluing its currency, the Asian giant lowered the price of its exports and gained a competitive advantage in the international markets. A weaker currency also made China’s imports costlier, thus spurring the production of substitute products at home to aid domestic companies.

The U.S. government was particularly incensed because many U.S. politicians had been claiming for years that China had kept its currency artificially low at the expense of American exporters. Some believed that China’s devaluation of the yuan was just the beginning of a currency war that could increase trade tensions.

Consistent With Market Fundamentals

Although a lower-valued yuan would give China somewhat of a competitive advantage, trade wise, the move was not wholly counter to market fundamentals.

Over the past 20 years, the yuan had been appreciating relative to nearly every other major currency, including the U.S. dollar. Essentially, China’s policy allowed the market to determine the direction of the yuan’s movement while restricting the rate at which it appreciated. However, China’s economy had slowed significantly in the years before the devaluation. On the other hand, the U.S. economy had improved. A continued rise in the yuan’s value no longer aligned with market fundamentals.

Understanding the market fundamentals clarifies that the small devaluation by the PBOC was a necessary adjustment rather than a beggar-thy-neighbor manipulation of the exchange rate. While many American politicians grumbled, China was doing what the U.S. has prodded it to do for years: allow the market to determine the yuan’s value. While the drop in the yuan’s value was the largest in two decades, the currency remained stronger than it had been in the previous year in trade-weighted terms.

Impact on Global Trade Markets

Currency devaluation is nothing new. From the European Union to developing nations, many countries have devalued their currency periodically to help cushion their economies. However, China’s devaluations could be problematic for the global economy. Given that China is the world’s largest exporter and its second-largest economy, any change that such a large entity makes to the macroeconomic landscape has significant repercussions.

With Chinese goods becoming cheaper, many small- to medium-sized export-driven economies could see reduced trade revenues. If these nations are debt-ridden and have a heavy dependence on exports, their economies could suffer. For instance, Vietnam, Bangladesh, and Indonesia greatly rely on their footwear and textile exports. These countries could suffer if China’s devaluations make its goods cheaper in the global marketplace.

Impact on India

For the Indian economy, a weaker Chinese currency had several implications. As a result of China’s decision to let the yuan fall against the dollar, demand for dollars surged worldwide. That included India, where investors bought into the greenback’s safety at the expense of the rupee. The Indian currency immediately plunged to a two-year low against the dollar and remained low throughout the latter half of 2015. The threat of greater emerging market risk due to the yuan devaluation led to increased volatility in Indian bond markets, which triggered further weakness for the rupee.

Important

Usually, a declining rupee would aid domestic Indian manufacturers by making their products more affordable for international buyers. However, in the context of a weaker yuan and slowing demand in China, a more competitive rupee is unlikely to offset weaker demand.

China and India compete in several industries, including textiles, apparel, chemicals, and metals. A weaker yuan meant more competition and lower margins for Indian exporters. It also meant that Chinese producers could dump goods into the Indian market, thereby undercutting domestic manufacturers. India had already seen its trade deficit with China nearly double between 2008 to 2009 and 2014 to 2015.

As the world’s largest energy consumer, China plays a significant role in how crude oil is priced. The PBOC’s decision to devalue the yuan signaled to investors that Chinese demand for the commodity, which had already been slowing, would continue to decline. The global benchmark Brent crude fell more than 20% after China devalued its currency in mid-August.

For India, every $1 drop in oil prices resulted in a $1 billion decline in the country’s oil import bill, which stood at $139 billion in the fiscal year 2015. On the flip side, falling commodity prices made it much more difficult for Indian producers to remain competitive.

Charges of Currency Manipulation

The Chinese yuan generally depreciated against the U.S. dollar between 2015 and 2019, leading to charges of currency manipulation. The U.S. Treasury Department officially named China a currency manipulator on Aug. 5, 2019. It was the first time the U.S. had done so since 1984. However, the U.S. lifted the currency manipulator label in early 2020. According to then-U.S. Treasury Secretary Steven Mnuchin, “China has made enforceable commitments to refrain from competitive devaluation, while promoting transparency and accountability.”

What Are Benefits to Devaluing a Currency?

Devaluing a currency can allow a country to correct a trade imbalance, increasing exports and decreasing imports. When a country devalues its currency, it makes its money cheaper. This boosts exports and can make the country more competitive in global trade. It also means imports become more expensive, so goods made in other countries are less appealing to consumers.

What Are Risks of Devaluing a Currency?

There are risks to devaluing a currency. As imports become more expensive, there is less competition for some domestic industries, which can make those industries less efficient. When exports are higher than imports, it can also lead to inflation, and the cost of goods and services can increase more rapidly over time.

What Is a Currency Manipulator?

Currency manipulator is a label given by the United States government to countries that it believes are intervening in the value of their own currency in a way that unfairly give them a global trade advantage. It is often seen as a negative thing. However, any country that has a fixed exchange rate could also be seen as a currency manipulator, though this designation is rarely given to U.S. trade allies.

The Bottom Line

China’s main justification for devaluing the yuan in 2015 was the rise of the U.S. dollar. Other reasons included the country’s desire to shift toward domestic consumption and a service-based economy. While fears of further devaluations continued on the international investment scene for another year, they faded as China’s economy and foreign exchange reserves strengthened in 2017. The negative impact of currency devaluations on relations with the U.S. also contributed to China briefly being labeled as a currency manipulator in 2019 and early 2020.

Pet owners consider their pets family members and want to provide them with the medical care they need. But much like healthcare for humans, pet healthcare can be expensive, particularly if a pet requires emergency care or suffers from a chronic condition.

Fortunately, there are often vet office discounts and other cost-saving options available. Read on to learn how to save money while ensuring your furry family members get the care they deserve.

Key Takeaways

• Many vets offer various programs that can make care more affordable, including referral discounts, promotions, and loyalty programs.
• Buying quality pet insurance can also be a wise investment for pet owners.

Referral Discounts

Any business appreciates current customers referring new customers, and vets are no different. Kelly Broussard, a pet care service owner, explains, “Naturally, pet owners want a vet they can trust, so they often ask me for a recommendation. One personal recommendation is worth more than ten anonymous online reviews.”

Because this type of word-of-mouth advertising is so valuable, many vets offer incentives for clients who refer new patients to their practice. The incentives can include a percentage off of your next visit, a complimentary grooming service, or a free wellness check. If you’re happy with your vet’s care, don’t hesitate to let other pet owners know. It can save you money.

Coupons and Promotions

Another way to save is to watch for coupons and promotions that some vet offices offer. Some vets run seasonal promotions during the slower business months of the year or to coincide with special events like National Pet Dental Health Month, which is February.

Be sure to sign up for your vet’s newsletter and follow their social media accounts to be alerted to promotional events and discounts. Some practices also offer discounts for first-time customers, so it’s worthwhile to ask.

Preventative Care Packages

As the saying goes, an ounce of prevention is worth a pound of cure. Many veterinary clinics offer preventative care packages with discounted rates on essential services such as wellness checkups, vaccinations, and flea, tick, and heartworm prevention.

By paying upfront, you may be able to save 10-30% compared to paying for each service individually. These care packages can be especially cost-effective for those with multiple pets, as some vets offer further discounts for multi-pet clients. Of course, preventative care can also save money over the longer term as minor issues can be detected and dealt with before they become chronic and more costly to treat.

Pet Insurance

While pet insurance isn’t a discount, it is one of the best ways to reduce the cost of vet care. “I recommend pet insurance to all my clients,” Broussard says. “It can really make a difference in the cost of care, particularly in the event of an emergency or for pets with chronic conditions like diabetes.”

Pet insurance works like human health insurance. You pay a monthly premium, and the policy covers a portion of your pet’s medical expenses, like wellness exams and routine vaccinations.

Important

Having pet insurance can save you thousands of dollars over the life of your pet and can help you avoid the impossible decision of whether or not you can afford life-saving care for your pet.

Payment Plans and Financial Assistance

If your pet has an unexpected and costly emergency or a major procedure, many vet offices will work with you to provide a payment plan or financial assistance options. Some offices work with organizations that offer grants or low-interest loans to help pet owners afford the cost of care. There are also non-profit organizations dedicated to helping pet owners cover medical expenses, such as Pet Fund or RedRover.

Loyalty Programs

The cost of retaining customers is typically lower than the cost of finding new ones. Understanding this, some vet clinics offer rewards programs for loyal customers. The programs may offer points per dollar spent or discounts after a certain number of visits. These programs are a great way to thank customers and reward loyalty.

The Bottom Line

Don’t be afraid to ask what savings opportunities are available with pet care. While many vets may offer various ways to reduce the cost of your pet’s care, they may not offer them outright. Sometimes, you simply have to ask.

By taking advantage of referral programs, discounts, preventive care packages, and pet insurance, you can reduce the cost of caring for your pet without sacrificing the quality of that care so they will be a part of your family for many years.

Reviewed by Erika Rasure
Fact checked by Kirsten Rohrs Schmitt

Cryptocurrency ETFs: An Overview

Cryptocurrency exchange-traded funds (ETFs) track the price performance of cryptocurrencies by investing in a portfolio linked to their instruments. Like other such funds, crypto ETFs trade on regular stock exchanges, and investors can hold them in their standard brokerage accounts.

A growing roster of ETFs—a type of exchange-traded product (ETP)—in early 2024 began offering investors the chance to invest in bitcoin through their holdings. After about a decade of regulatory wrangling, the U.S. Securities and Exchange Commission (SEC), under pressure from a 2023 D.C. Circuit U.S. Court of Appeals ruling, authorized the first spot crypto ETFs in early 2024.

These investments allow retail traders to gain direct exposure to crypto prices without owning the assets directly. This makes it possible to speculate on cryptocurrency prices without doing business on a crypto exchange or dealing with the costs and complexities of directly owning digital assets.

However, crypto ETFs generally have higher fees than other ETFs, and while the funds themselves are regulated, there is no such oversight in the crypto markets where the funds are invested. For example, the SEC has argued that without proper oversight and surveillance-sharing agreements with regulated markets, it’s difficult to prevent fraudulent activities and ensure fair trading practices in the crypto markets.

Below, we take you through how these funds work, what worries the SEC still has around these products, what benefits they might have, and what this all means for everyday investors.

Key Takeaways

• Cryptocurrency exchange-traded funds (ETFs) offer a way to gain exposure to cryptocurrencies without buying and storing the digital assets yourself.
• These funds track cryptocurrency prices by investing in futures contracts rather than cryptocurrency itself.
• Spot ETFs, which invest directly in cryptocurrency, face greater regulatory hurdles due to U.S. Securities and Exchange Commission (SEC) concerns about investor risk.
• The ProShares Bitcoin ETF, the first and largest U.S. cryptocurrency futures ETF, started trading in October 2021.
• The SEC approved the first 11 spot cryptocurrency ETFs for the U.S. market in January 2024.

How Does a Cryptocurrency ETF Work?

While most ETFs replicate how indexes work by holding a basket of underlying assets, crypto ETFs have a couple of ways of tracking the performance of a digital currency. Spot ETFs directly hold the cryptocurrency, building a portfolio that replicates the performance of the digital assets it contains. Other crypto ETFs invest in futures contracts, which are agreements to buy or sell crypto at a preset date and price.

Given their portfolios, these ETFs have share prices that mimic changes in the price of derivatives instead of the cryptocurrencies themselves. Therefore, the price of shares in a given cryptocurrency ETF rises and falls in line with crypto futures contract prices. Like other derivatives, synthetic cryptocurrency ETFs have an additional risk because of the lack of oversight and valuation concerns in the crypto exchanges from where the funds would be pulling crypto.

While U.S. regulators refused to approve crypto ETFs for several years—the SEC turned away some 20 proposals in spot ETFs from 2018 to 2023 alone—they were readily available to investors in Europe and Canada. The SEC approved the first crypto futures ETFs for the U.S. market in October 2021 and the first spot crypto ETFs in January 2024.

Note

The first cryptocurrency ETF, the ProShares Bitcoin ETF (BITO), started trading in October 2021. This is an ETF that tracks bitcoin futures prices.

Cryptocurrency Futures ETFs

An analysis of the ProShares Bitcoin ETF, the first crypto ETF on U.S. markets, shows how crypto futures ETFs work. The fund assigns about half of its portfolio to Chicago Mercantile Exchange (CME) bitcoin futures that expire at the end of the current month and another half to CME bitcoin futures expiring the following month.

As the expiration of the contracts in the portfolio approaches, the fund rolls over its investments, selling the expiring contracts and buying contracts for the coming month. The costs associated with rolling over the contracts may account for some of the differences between the performance of the ETFs and their underlying cryptocurrencies.

ProShares also has the Ether ETF (EETH), an ether futures ETF like the one it provides for bitcoin. The fund tracks the price of ether with futures contracts. ProShares has ETFs that track a mix of bitcoin and ether using equal or market capitalization weighting for investors looking for exposure to several crypto tokens.

There are also inverse ETFs, such as the ProShares Short Bitcoin ETF (BITI). This uses futures to generate the inverse of Bitcoin’s returns, allowing investors to profit on days when cryptocurrency prices decline.

Spot Cryptocurrency ETFs

Investment funds can also directly trade and hold cryptocurrencies. Spot crypto ETFs are funds that buy cryptocurrencies and securitize them. Investors buy and sell shares as needed, just like a traditional ETF. In a spot crypto ETF, the fund can issue and redeem shares, offering retail and other investors a stake in the crypto market.

Starting in 2014, asset managers sought approval from the SEC for spot bitcoin ETFs. From October 2022 to October 2023, the SEC received more than 3,500 crypto-related fund applications. In January 2024, the SEC approved the first 11 spot bitcoin ETFs, opening the door to more spot cryptocurrency ETFs later.

Important

In January 2024, the SEC approved the first 11 spot bitcoin ETFs for U.S. markets. On their first trading day, they had about $4.6 billion in trading volume.

In May 2024, the SEC also started to pave the way for spot ether ETFs. The SEC approved a rule change that would allow for the listing and trading of eight spot ether ETFs.

Prior to this approval, the SEC expressed concerns about Ethereum’s staking feature and its previous worries with Bitcoin for fraud, volatility, and low investor protections in crypto markets.

Staking, which allows ether holders to earn income by locking up their tokens to help validate transactions on the network, is a crucial feature of Ethereum’s consensus mechanism.

This income-generating feature, which began on the ether platform in 2022, raises questions about how staking rewards should be taxed and reported. This gave the SEC another reason to be reluctant to approve spot ether ETFs, given the lack of regulatory clarity about their tax status.

Note that the SEC’s approval of a rule change for spot ether ETFs does not mean that these ETFs can start trading. Applications from the investment managers need to be reviewed, and further approvals need to be given.

The SEC under President Donald Trump is expected to take a friendlier approach to crypto, although how that will apply to crypto ETFs remains to be seen.

Advantages of Crypto ETFs

Cryptocurrency ETFs are a developing asset class, and given the regulatory uncertainty, the market may look different in the future. Nevertheless, owning shares in cryptocurrency ETFs has some advantages when accessing the crypto markets.

Exposure Without Ownership

The most significant benefit of cryptocurrency ETFs is that they provide exposure to crypto without additional ownership expenses or exposure to the risk of owning and holding them in a crypto wallet. For example, there are custody charges for cryptocurrencies, and some secure digital wallets charge an annual fee.

These charges can add up quickly. Cryptocurrencies also come with transaction and network fees, which the ETF providers take care of, even if you pay indirectly through the fund’s expense ratio.

Lowering the Learning Curve

Cryptocurrency jargon, derived mostly from its technological makeup, is still a roadblock to crypto adoption. Average investors often find it difficult to grasp the scope and roles of cryptocurrencies. Plus, these investors might be unfamiliar with networking technology, making crypto-speak, such as halving and blockchain, even more disinviting. Investing in a cryptocurrency ETF makes learning enough to get into crypto much more manageable.

More Security for Investors

Cryptocurrency exchanges, storage devices, wallets, and some poorly designed blockchains have been hacked since they were launched, leading to constant worries in the crypto world about security. Cryptocurrency security can be a tall order for individual investors, who may not be familiar with the required methods. A cryptocurrency ETF takes care of this for you.

Lower Costs for Investors

There are more than 9,000 cryptocurrencies available in trading markets worldwide. The infrastructure to buy and sell them is becoming more sound, but it’s still relatively untamed territory compared with securities exchanges.

For example, some tokens are available on certain cryptocurrency exchanges while others are not, and exchanges can operate in some countries but not others. There are also extra costs that come with buying crypto. Cryptocurrency ETFs allow you to diversify your holdings without the fees and hassles of buying and exchanging the tokens yourself.

Disadvantages of Crypto ETFs

The novelty of cryptocurrency ETFs is one of its drawbacks, not least since it’s still unknown how regulations in this area will evolve. Given the likelihood that more crypto ETFs will emerge, it’s important to be aware of their potential issues.

Risk of Tracking Error

Crypto ETFs do not always duplicate the price moves of the underlying digital token. This is especially true for ETFs that depend on futures contracts to track cryptocurrencies, which have to roll over their positions as contracts expire.

Higher ETF Fees

While crypto ETFs help investors avoid some costs of directly owning digital currencies, they have their own fees. Since they are often actively managed, crypto ETFs can have higher expense ratios than other ETFs. For example, the ProShares Bitcoin ETF’s expense ratio is 0.95%. For comparison, the expense ratio for the SPDR S&P 500 ETF is just 0.09%.

Volatility

Although cryptocurrency ETFs simplify some of what’s involved in trading digital currencies, they are still subject to the dramatic price swings of the crypto markets. This means more risk for you, which can be even more worrying if you are more accustomed to the lower volatility of more typical ETFs.

Lack of Direct Ownership

Investors in crypto ETFs are not the owners of the digital assets. While crypto ETFs do bring convenience, you won’t have control or access to the cryptocurrency itself, and the decentralization and anonymity associated with crypto don’t apply to ETF shareholders.

Pros

• Trade on stock exchanges using regular brokerage accounts

• Provide exposure to crypto without direct ownership

• Avoid crypto custody and trading expenses

• Reduce the learning curve

Cons

• Regulatory uncertainty

• Elevated fees and expenses

• Subject to volatility in crypto markets

• No direct ownership or control over underlying cryptocurrency

Alternatives to Cryptocurrency ETFs

In addition to allocating funds to futures and spot ETFs, investors can put their money into several other ETF-like products for crypto exposure. Let’s dig into these options.

Crypto Trusts

While the SEC has only reluctantly approved a handful of crypto ETFs, a similar product has already been available for years: bitcoin investment trusts. These are closed-end funds that resemble the spot crypto ETFs being proposed. They own bitcoins on behalf of investors, and their shares trade in over-the-counter (OTC) markets.

But these are not ETFs. They are open only to investment firms, accredited investors, or high-net-worth individuals (HNWIs) and are not accessible to the retail public. They tend to have a high minimum investment amount, and each purchase of shares is accompanied by a lockup period for investors.

Crypto ETPs

ETFs are one variety of exchange-traded products (ETPs). When discussed, however, crypto ETPs refer to those that specifically hold debt securities issued by special-purpose vehicles (SPVs) that hold the underlying crypto assets. The SPV uses the crypto as collateral to issue the ETPs, which are traded on exchanges.

Crypto ETPs fall under the Securities Act of 1933 and are less regulated than ETFs. Spot crypto ETPs, in other words, are not investment companies registered under the Investment Company Act of 1940. As a result, shareholders do not have the protections associated with ownership of ETF shares.

Another difference is that crypto ETFs can create and redeem shares based on market demand, helping the share price align with the fund’s net asset value. Crypto ETPs typically have a fixed supply of shares that trade at market-based prices, which can deviate from the underlying crypto value.

Companies That Hold Crypto

Investing in companies that hold cryptocurrencies on their balance sheet is another way to invest in crypto without owning the digital tokens. Some publicly listed companies hold a large number of bitcoins. For example, MicroStrategy (MSTR) owned over 528,000 bitcoins as of April 2025. Galaxy Digital Holdings (BRPHF) and Tesla (TSLA) are other publicly listed companies with bitcoins on their balance sheets.

Crypto-Related ETFs

Plenty of ETFs offer diversified exposure to companies that engage with blockchain technology or crypto companies. For example, the Amplify Transformational Data Sharing ETF (BLOK) holds a portfolio of companies that develop and use blockchain technologies.

Is It a Good Idea to Invest in a Crypto ETF?

Crypto ETFs are designed to mimic the assets so investors can gain exposure to significant price fluctuations. However, because prices vary so much, there is more risk involved in crypto ETFs. If you’re considering adding these to your portfolio, speaking with a financial advisor about your specific circumstances and goals is always prudent.

How Do the Taxes Compare for Crypto ETFs and Direct Crypto Investments?

The tax implications for crypto ETFs often differ from directly holding cryptocurrency. In many jurisdictions, crypto ETF gains are treated like capital gains, which can be more favorable than the tax treatment for direct cryptocurrency transactions. Consulting a tax advisor about your specific circumstances is always prudent in cases like this.

Is There a Crypto Index Fund?

There are a few cryptocurrency index funds, such as the Bitwise 10 (BITW) or Galaxy Crypto Index Fund. These funds are only available to non-U.S. investors or in the United States to accredited investors.

Can I Short Crypto ETFs?

Yes, you can short a crypto ETF, as you can with any ETF. Shorting allows you to gain from the decline in an asset’s price. This strategy, especially in the volatile world of cryptocurrencies, involves elevated risks and potentially unlimited losses, so it’s crucial to understand the dangers before going ahead.

The Bottom Line

ETFs are a retail investor-friendly way to gain exposure to assets that might otherwise be too costly. Brokers want to offer ETFs that hold cryptocurrency so that average investors can participate in cryptocurrency investing. However, these funds tend to come with additional risks and expenses, so it is important to research them thoroughly before making an investment decision.

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