TIME Money

Should You Start a Business?

Marty Nemko holds a Ph.D. in educational psychology from UC Berkeley and is a career and personal coach.

Do you have what it takes to start your own business? An internal debate to help you decide

While the unemployment rate is down, it’s still tough to find a stable, well-paying job. So, many people are trying their hand at self-employment. Of course, at least half of new ventures go out of business within a few years.

Should you give self-employment a shot? Perhaps this internal debate will help you decide.

Person: I’m sick and tired of working for someone else.

Alter ego: And getting laid off by someone else.

Person: But most businesses go out of business.

Alter ego: And you have no experience running a business. Your odds will be really bad…

Person: But I’m smart.

Alter ego: But are you entrepreneurial?

Person: What does that mean?

Alter ego: Do you have the knack of determining if a business idea is viable?

Person: How do I know?

Alter ego: Well, have you come up with any good ideas that you later found out that someone else turned into a successful business?

Person: No but does it have to be an original idea? Chipotle wasn’t the first burrito shop. FedEx wasn’t the first competitor to the post office.

Alter ego: But they had zillions of dollars. Last I checked, you didn’t.

Person: What about one of those cloneable shoestring businesses Marty Nemko wrote about, like a chain of flower stands near a busy train or bus terminal?

Alter ego: I’m not interested in flowers.

Person: Then how about turning garages, basements and attics into useful spaces?

Alter ego: You know I’m no skilled tradesman.

Person: How about installing and removing real-estate signs, gutter cleaning, or window washing?

Alter ego: Too de-classe. Mom and dad would kill me, and most women wouldn’t go out with me.

Person: Okay, speaking of that, how about helping people create their online dating profile?

Alter ego: How’s that cloneable?

Person: Once you’ve learned how to do it well and your schedule is full, hire someone else, teach the person what you know and make sure payments go to you so there’s no theft.

Alter ego: How do I do that?

Person: Have people pay by calling you or using your website’s shopping cart, where the money goes into your account. Then pay your employee the agreed-on percentage of the take.

Alter ego: Those businesses seem kind of lame. What about some high-tech consulting thing?

Person: The more difficult, the greater the chance of failure. If you’re worried about status, realize that in becoming self-employed, you’ve instantly gone from unemployed worker bee to CEO. Besides, grow up—you’re too old to choose a career based on whether cretins think it has enough status. If they judge you based on that, you don’t want to have anything to do with them.

Alter ego: But we’re talking about mom and dad. I can’t dump them.

Person: Explain it with confidence and do well at the business, and I promise mom and dad will come around.

Alter ego: I’m still worried I don’t have a business sense.

Person: Then hire someone to help you develop the business plan, set up the biz and help you figure out how to keep your costs down and profit up. And your consultant will be there when you have a problem. The consulting fee will be well worth it.

Alter ego: What about a franchise?

Person: Too expensive. Usually it’s the franchisor, not the franchisee, that does well. Yeah, there are some successful ones but think of all those empty Subways.

Alter ego: I’m also worried I’ll procrastinate, won’t follow through.

Person: Now we have a problem. When you’re running your own business, it’s tick-tock. Every hour you’re not working, you’re making no money.

Alter ego: Maybe the pressure will make me toe the line?

Person: Maybe, maybe not.

Alter ego: Maybe if you hire someone to handle the office details, he or she will nag you into getting stuff done. Or maybe simply having that person around will motivate you. You don’t want to look like a loser in front of someone.

Person: Maybe, I’ll think about it. But maybe I should look for a job.

Alter ego: Maybe.

Person: (sigh)

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

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TIME Money

Americans Are Optimistic About the Economy Again

Money
George Washington David M. Elmore—Getty Images/Flickr RF

Middle-income America hasn't been this upbeat in years

The days might still be short and gray in much of the country, but when it comes to money and finances, Americans today have a sunnier outlook than we have in a long time.

A new Gallup survey on how Americans feel about our standard of living hit the study’s highest-ever level since the organization began tracking the metric seven years ago.

Every month, Gallup asks Americans if they’re satisfied with their standard of living and if they think that standard is going up or down, then calculates the answers into a single-number index. In December, that number was at 50 — an all-time high. By comparison, the index was at 14 back in October and November of 2008 when the Great Recession was at its worst.

In another all-time high, 81% of respondents say they’re satisfied with their current standard of living, a jump of 12 points since hitting a recession-era low in late 2008.

And we’re even more optimistic about the future. Today, Gallup finds more than six in 10 Americans say it’s “getting better” when asked about their standard of living — the highest-ever recorded in response to this question, and almost double the one-third of Americans who selected this answer back in October 2008, a record low.

“People’s outlook for their standard of living going forward has improved much more than their current satisfaction with it,” Gallup says.

In a second recent survey, the America Saves campaign finds that our collective willingness and ability to save is significantly higher than it was last year immediately after the holidays.

“[This] suggests that Americans are now feeling better about their financial condition,” Stephen Brobeck, a founder of America Saves and executive director of the Consumer Federation of America (the nonprofit behind America Saves), said in a statement.

The America Saves data show this greater interest in and ability to save is driven primarily by households with an annual income of less than $75,000.

“Our new data suggest that low- and middle-class Americans are feeling more optimistic about their financial situation now than a year ago,” Brobeck says.

In its analysis, Gallup suggests that freer spending, perhaps helped along by low gas prices, could be contributing to our collective optimism. The America Saves data offers clues that this could be the case: Compared to a year ago, the income bracket reporting the biggest jump in how effectively they’re able to save money is households earning less than $25,000.

“Instead of being distracted by heavy holiday spending and debts, they are . . . interested and active saving today,” Brobeck says.

TIME Money

Why You Should Never Buy Stuff When You’re Sad

TIME.com stock photos Money Dollar Bills
Elizabeth Renstrom for TIME

When retail therapy backfires

If you lose out on a plum assignment or get passed over for a promotion, your first tendency might be to head to the mall or click over to Amazon for a pick-me-up in the form of some discretionary splurging. It’s a common response, but a new study says it’s not the best one.

In fact, researchers warn that those purchases could leave you feeling worse about yourself, not to mention leaving a hole in your wallet as well as make you less resistant to future temptation.

A new study in the Journal of Consumer Research finds uncovers some interesting findings about how we cope with failures. A big personal or professional disappointment disrupts how we see ourselves, and we often respond unconsciously. Say you get passed over for a big promotion. You might go out and buy the luxury watch or designer handbag you were going to reward yourself with anyway, as if to say, “See? I don’t need them to look successful,” in an attempt to bolster your bruised ego.

But there’s a catch: The researchers suggest that, instead of cheering you up, anything you buy that’s associated with whatever you’re trying to forget actually just serves to remind you of that flub or failure. Instead of being a consolation prize, it acts as a trigger that makes you feel even worse, chips away at your self-control and even impairs your ability to focus on completing difficult tasks.

In experiments, subjects were asked to think about a past intellectual failure, then choose a copy of brainy-sounding Scientific American magazine. Afterwards, they reported that selecting the magazine made them dwell on that past incident when they felt dumb. When researchers offered these subjects chocolate candy, they found that those negative feelings led to lower self-control, with subjects less able to resist the offer of junk food.

“After experiencing a setback in one area of their life, consumers might be better off boosting their sense of self in a different area of their life,” the researchers say. For instance (if you must indulge in retail therapy) they suggest following up an experience that makes you feel dumb with a purchase intended to make you feel better about your social standing rather than one aimed at make you feel better about your intellect.

TIME Money

Apple CEO Tim Cook Earned $9 Million Last Year, Double His 2013 Pay

Pay hike comes after a stellar 2014 for the tech firm

Apple CEO Tim Cook’s total pay for 2014 was $9.22 million, more than double the financial compensation he received the year before.

Cook earned a salary of $1.75 million and his non-equity incentive compensation was $6.7 million, reports Bloomberg. His 2013 pay package was $4.25 million, according to files sent to the U.S. Securities and Exchange Commission on Thursday.

The pay increase comes after a highly successful 2014 in which Apple’s company value exceed $700 billion and the price of stocks rose above $119 per share, according to Bloomberg.

The boost comes amid optimism surrounding new products such as the iPhone 6 Plus and Apple Pay.

Cook succeed Steve Jobs as head of Apple just months before the company’s enigmatic founder died of pancreatic cancer.

[Bloomberg]

TIME Money

How Millennials’ Sense of Entitlement Could Benefit You

TIME.com stock photos Money Dollar Bills
Elizabeth Renstrom for TIME

They want perks, and banks want them

The days when you could earn rewards from your bank might seem as distant as the era when you’d get a toaster for opening an account. Still, more people today — especially young adults and wealthy Americans — expect their bank to reward them.

A new Bank of America survey looks at the attitudes different groups of bank customers have towards rewards and find that young people, in particular, want rewards in some cases just for doing stuff they should be doing in the first place, like paying their mortgage on time.

Believe it or not, they might get what they want. That has the potential to benefit other bank customers, as well. “Financial institutions should pay attention to this growing demand,” says Aron Levine, head of BofA’s Preferred Banking and Merrill Edge.

Millennials are a demanding bunch. They, more than other age brackets, agree with the statement, “It’s important to me that my bank reward me for responsibly maintaining my accounts with them instead of only rewarding me for obtaining a new product or service.”

“Rewards are often as much of the value proposition as product and pricing,” says Greg McBride, chief financial analyst at Bankrate.com.

Young adults are the most confident that their money is working for them and most likely to believe that they’re financially savvy than any other age group. But they also suspect to a greater degree that banks are looking out for themselves rather than their customers.

Milllennials also are the age group least likely to say they’ve become more cost-conscious since the recession, although they’re the group most likely to say they try to save money by participating in rewards programs.

“Rewarding loyalty, both routine transactions and the volume of activity, are becoming more the norm than the exception across all customer segments,” McBride says. “This isn’t unique to financial services, but follows with what consumers have come to expect in travel and retail,” he points out.

Bank of America’s data bears out this observation.

The survey finds that millennials are far likelier than other groups to demand “rewards for everyday activities I already do,” and they’re already participants in many loyalty programs in spite of their young age. They’re more likely than any other demographic group to say they’re enrolled in banking and credit card rewards programs, and the least likely to say they don’t participate in rewards programs at all.

They’re the most likely of any age group to say they want to be rewarded for using their bank’s website, paying their mortgage on time, using a debit or credit card, contributing to a retirement account, investing or creating a financial plan. They also are the most likely to want rewards for giving their bank new business, either in the form of referring a new customer or switching a balance from another institution, opening a new account themselves or taking out a loan.

“Consumers are not looking at their financial activity in siloes. Instead, they are looking at the full spectrum of their financial activity . . . and they want their banking partners to reward them accordingly,” Levine says.

Banks do have incentive to respond to these preferences, because millennials are the most likely to have accounts with five or more banking institutions. Plus, they’re a huge demographic and still have their peak spending years ahead of them. As a result, businesses of all kinds are scrambling to butter them up now — which means customers of all ages could benefit if banks give millennials what they want.

TIME Money

Why You Might Need More Car Insurance Than You Have

Car accident
Woman on mobile phone after car accident Zero Creatives—Getty Images/Image Source

That fender-bender could be more of a headache than you think

Being in a car accident, even if you’re lucky enough to escape without injury, still stinks — especially if it isn’t your fault. But what’s even worse than the inconvenience and the hassle factor is the reality that, in many states, you might not be completely covered by insurance, even if you’re a responsible driver who carries insurance.

That’s because there’s often a gap between the minimum states require drivers to carry and the amount that would be necessary to cover the cost of an accident, especially if anyone in your car is injured. Even something as minor as taking an ambulance ride to the hospital to get checked out can run into the hundreds of dollars, and costs obviously escalate depending on the severity of any injuries.

Personal finance website WalletHub.com just put together a ranking of the financial risk you face when you get behind the wheel, analyzing all 50 states and the District of Columbia to find out the legal minimum of insurance coverage drivers must carry as well as how many drivers in that state don’t bother to get insurance.

In short, stay out of of Florida and Oklahoma. Florida’s insurance requirements are lower than most other states, and 24% of drivers on the roads there are cruising around without insurance (which, yes, is illegal). In Oklahoma, requirements aren’t as low, but a whopping 26% of drivers don’t bother buying insurance. In Tennessee, Michigan, New Mexico and Mississippi, more than one in five drivers have no insurance.

How can you protect yourself? Unfortunately, it’s likely to cost you.

“In most states, drivers can purchase uninsured motorists coverage to cover their own bodily injuries and/or property damage if the at-fault driver has no insurance,” says WalletHub managing editor Karl Eisenhower.

In fact, in 21 states, you’re required to carry this type of coverage. In some states, you have to carry this insurance to cover property damage costs, while others make you carry coverage for medical costs if you’re hit by an uninsured driver. Eight states make you carry both. Drivers also have the option — and in a handful of states, the obligation — of buying insurance for personal injury protection or medical payments. “[These] will cover your medical bills after an accident regardless of fault,” Eisenhower says. “If you carry one of these . . . you can be certain any medical bills will get paid quickly.”

In states like Florida, where the minimum liability a driver has to carry is a mere $10,000 in coverage per injured person, or $20,000 per accident, getting into an accident with somebody who does have coverage but not enough of it could be a concern, too.

“Underinsured motorists coverage will protect you if your damages exceed the limits of the at-fault driver’s liability policy,” Eisenhower says. In the states of California, Massachusetts, New Jersey and Pennsylvania, a driver only has to have $5,000 worth of coverage for property damage — hardly enough to make you whole if you’re driving a luxury car or your vehicle is totaled.

“Just because someone doesn’t have sufficient insurance doesn’t reduce that person’s responsibility if he or she causes an accident,” Eisenhower adds. Unfortunately, this means you’d have to spend the time and money suing them — and be out-of-pocket for potentially thousands of dollars in the meantime — before getting compensation. If you have extra coverage for uninsured or underinsured drivers, “suing to reclaim costs is the insurance company’s headache, not yours,” Eisenhower points out.

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