Go Banking Rates Use the 15% Splurge Rule to Avoid Financial Burnout

We've talked about how anunrealistically tight budget can backfire. To stay motivated and stick to your financial goals, allow yourself some breathing room. Money site Go Banking Rates offers a creative way to do this: set a savings goal, then use 15 percent of it on a splurge.

Certified Financial Planner Christopher V. Kimball suggests saving a portion of your weekly income in a regular savings account—nothing too crazy about that. But Go Banking Rates explains his spin on this traditional bit of advice:

"Once the fund reaches a certain amount (say, $1500), you then take 15 percent of what you've saved and blow it on something totally frivolous. The rest gets dumped into a long-term savings or investment instrument, like a certificate of deposit. This allows you the best of both worlds: Spending money on things that you want while planning for your financial future."

Kimball adds that the "incentive of guilt-free spending" can keep people motivated to continue saving. For more money saving strategies, read the post in its entirety.

5 Uncommon but Easy Money Saving Strategies | Go Banking Rates

Photo by Ken Teegardin.

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The First Financial Investment You Should Make is in Yourself

We all know the importance of investing. When we get to the point that we can start saving, it's instinctual (and rightly so!) to start looking at financial investments like stocks or 401(k)s. One reddit user, however, suggests that the first investment to make is in yourself.

The same principle of compound interest that applies to your financial investments applies to your personal investments: the earlier you start, the greater the impact later on. Even something as simple as buying a nice wardrobe can pay huge dividends if your professional-looking appearance catches the eye of a potential employer:

I told him he isn't really making enough money to justify an investment at his age. (20 yrs old) and that he needs to take his $11 an hour and invest it in himself. He needs to ensure that he looks professional (clothes/appearance/take care of himself) and improve his educational background/experience to find a better paying job later in life. $5,000 on a trade school IMHO is better money spent then $5,000 in the stock market at 20 yrs old.

What this means for you will vary greatly depending on where you're at in life, but maximizing your earning potential early on will greatly affect how much you have available to put in that retirement plan in five years. While it might be easy (and tempting) to go overboard, we've discussed before how not all purchases are frivolous if they can boost your career.

My opinion on low income earners wanting to make more money | Reddit

Photo by Simon Cunningham.

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Use These Four Numbers to Measure Your Financial Success

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So you've been building up your credit score and saving decent percentage of your income. Want to know whether your financial situation is desirable? Here are a few numbers to help gauge your financial success.

Money site Financially Blonde runs down some basic measurements of financial success. According to the site:

"I have compiled a list of qualities that I think a financially sexy person has, and just as the Commodores tried to define physical sexiness in 1977 as 36-24-36, I like to say financial sexiness looks like 750-35-15-35."

The measurements, according to the site:

• A credit score of 750 or higher
• Credit card utilization of 35% or lower (using only 35 percent of your available credit)
• Saving 15% of your gross income
• A debt-to-income ratio of 35% or less
• A healthy emergency fund is also important (Financially Blonde recommends having three months of living expenses saved)

While Financially Blonde presents these measurements cheekily, they're a decent aim for your finances. For more detail, check out the full post.

Are You Financially Sexy? | Financially Blonde via Budgets Are Sexy

Photo by David Defoe.

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Place a Reminder of Your Long Term Financial Goals on Your Credit Card

Many of our tricks to save money are designed less to solve math problems and more to trick our brains. To that end, financial blog And Then We Saved suggests placing a picture or reminder of your long-term savings goals directly on your credit card to discourage frivolous purchases.

Whether it's a vacation, a gadget, or a gift, we all have things we want to save up for. We also forget the long-term plans when faced with short term benefits. By taping a picture or writing a reminder on your card directly, you can coax yourself to maintain perspective when you're tempted to indulge:

I've been saving for a trip to Key West this summer. I can't tell you what a guilt trip it is to see a picture of your long-term goal when I'm about to make an impulse buy. By wrapping my credit card and debit card in a picture of my end savings goal, I'm constantly reminding myself that afternoon trip to the vending machine won't get me closer to my saving goal.

It obviously won't prevent you from spending money, but hopefully that little reminder will be all the motivation you need. Check out And Then We Saved for more little mind tricks you can play on yourself to save money.

Money Saving Mind Tricks | And Then We Saved via Rockstar Finance

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Amid Reports Facebook Is Eyeing Up Financial Services, TransferWise Hits £1 Billion In Transfers

A million pounds isn’t cool, you know what’s cool?

In the midst of reports that Facebook could be about to get into financial services, one of the startups it’s rumoured to have talked to, the European P2P money transfer service TransferWise, has hit a major milestone today: Its platform has processed £1 billion of customers’ money, an eight-fold increase — £125m to £1bn — since May last year when the company raised a $6 million series A round led by Peter Thiel’s Valar Ventures.

And whilst a better metric would be actual revenue, this undoubtedly demonstrates significant traction for the London-based company. It’s also more evidence of the money transfer space heating up right now, with a plethora of startups, especially in Europe, aiming to disrupt the banks and legacy players such as Western Union — hence Facebook’s interest.

Just last month, Dublin-based CurrencyFair hit the $1 billion money transfer mark — that’s dollars not pounds — claiming to be the leading P2P money transfer service, although presumably TransferWise would now dispute this. And in the same month, the UK’s Azimo — which the FT reported was a potential acqui-hire target for Facebook — raised a $10 million series A round, and WorldRemit received a $40 million investment from Accel Partners.

In a call, TransferWise Executive Chairman and co-founder Taavet Hinrikus refused to be drawn into speculation regarding whether or not it had been approached by Facebook, except to toe the line that, were the social network to get into the business of money transfers, it would be validation of the need to bring greater transparency to financial services.

That’s in reference to TransferWise’s modus operandi: to expose the hidden fees charged by the banks when sending money abroad. By employing a P2P model, the startup’s platform is able to undercut incumbent players — it claims to have already saved customers over £45 million.

“If someone as big as Facebook comes into the space, then I think that’s only going to be beneficial to everyone,” he says.

Hinrikus was willing to wax lyrical on the opportunity as a whole, however, stressing that TransferWise was just getting started. “If I look at the world right now… money transfer is such a humongous market. Even though we have transferred a billion pounds so far, we’re just touching the beginning of it,” he says. “We’re focused on building and growing and we’re having a ton of fun every day”.

That’s likely coded talk for “it’s far too early to think about selling” and another way to pour cold water on any TransferWise/Facebook speculation. And whilst founders speak in those terms all the time, judging by how passionante Hinrikus is when talking about the opportunity and startup life as a whole, I’m inclined to take him at his word.

To coincide with that £1 billion milestone, the company is launching an Android app today, adding to its existing iOS offering. Hinrikus says mobile offers another — and different — opportunity and that TransferWise is thinking about “what more can you do on mobile?”.

“Given that the phone is something you have in your pocket all the time, there is much more that money on mobile should mean to people and ways they can be in control,” he says. “It caters for a different usage experience.”

Finally I asked Hinrikus — who recently invested in Bitcoin exchange Coinfloor — if and when TransferWise will support the crypto-currency. “When you can do something useful with Bitcoin,” he says, noting that the engineer in him is still very excited by the technology, but that it’s a technology “that doesn’t really have an application yet.”

“I’d love someone to build a killer application for Bitcoin, and once that happens we will surely support it,” adds Hinrikus.

Break Down the Cost of Your Financial Dream to Help Achieve It

Most of us have big dreams. But maybe your dream is so expensive, you think it's impossible. With some planning, it might be more attainable than you think. Sean Kim of Ask Men suggests breaking down your dream into numbers.

Kim says we often chalk up our dreams as impossible, because we don't actually know how much they cost:

"We constantly tell ourselves, 'If only I had more money, I could do X.' ...we're led to believe that life can't be lived until we have a seven-figure number in our bank account. We fall victim to this trap because we've never taken the time to break down how much we actually need to fulfill our dreams."

Kim uses his own dream of backpacking in Southeast Asia for three months as an example. He calculates the cost of flight, travel insurance, accommodations and more. Then, he figures out how long it will take him to save. After doing the math, Kim suggests you write down the immediate steps to take today, tomorrow and in the next few weeks to accomplish your dream.

Overall, the main point is taking action and making your dream available. Once you start moving, Kim says, your momentum can surprise you. Of course, if you have an especially wild dream—owning your own country, for example, it's probably going to take a little more than number crunching.

But for those dreams that seem just out of reach, get started by breaking them down. Then, make small, attainable goals in the right direction. For more of Kim's advice, check out his full post.

How To Quit Dreaming Your Dreams - And Start Achieving Them | Ask Men

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The Financial Moves You Should Make in April

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Happy Financial Literacy Month! We go through the financial moves you should make every month, but April—being tax month and Financial Literacy Month—is a great time to start as any. Here's what you should be doing in the next few weeks.

You can simply set calendar reminders for yourself, and start thinking about your "financial calendar" the way you do your social calendar. You'd never neglect to send your mom a birthday card after jotting it down on your calendar—so treat important tasks like saving for retirement, preparing for taxes, and donating to charity in the same way. Get ready for a much more organized month (and year)!

Here's what you should do in April...

This post originally appeared on LearnVest.

Book Summer Travel Plans

Let's start with a fun one: If you've been budgeting for a trip this year, now's the time to settle on your summer getaway. To help keep costs down, it's usually best to book airline tickets three months in advance—and on a Tuesday. Itching to get out of dodge, but aren't sure where to go? Browse our 2014 travel report of some of the best budget-friendly trips (all under $2,500!) to see if any catch your eye. Argentina, anyone?

Re-Evaluate Your Budget

If you were hunkered down inside during the Polar Vortex, you probably found it a little easier to stick to a lean budget. But does your breakdown still make sense for spring? Warmer weather can equal more temptations to splurge (think: dining alfresco and the onset of outdoor entertainment). Is your budget ready for it?

Go on the offensive by heading to the free LearnVest Money Center now. Pinpoint where you've been overspending in the past, and where you could potentially cut back or reallocate. After all, we want you to enjoy your summer getaway—not stress about the credit card bills awaiting your return.

Put the Finishing Touches on Your Taxes

Already filed your forms and cashed that refund check weeks ago? Congrats! But if you're, well, a little behind, no worries: You have until the middle of the month to finalize your taxes. And we'll help you get there with our easy-to-digest tax guides (like the ins and outs of filing as a freelancer and the tax breaks every parent should know). April 15 is also the deadline to request an extension, if you need a little more time. Just remember it's a six-month extension to file, not to pay.

Give Your Insurance Polices a Once-Over

'Tis the season for reviving—everything from your overstuffed closet to your cluttered e-mail inbox. Guess what: It's also a good time to consider reevaluating your insurance coverage. Peruse quotes online to make sure you're still getting the best rate, or get in touch with your current agent. Tied the knot or welcomed a little one this year? It's even more important to make sure you've got the right coverage. Learn which policies you may need, and get the 101 on life insurance and homeowners insurance.

File Your Financial Documents

Remember what we said about April being the month for organization? Same goes for your financial documents. If you've been going by the stuff-it-into-the-kitchen-drawer method for everything from bank statements to health records, now's the time to think about shifting course. Start with our guide to financial filing for the ultimate breakdown on which pesky papers to keep—and which to toss (or shred). And if you're feeling inspired, don't stop there: Tackle these six ways to spring-clean your finances. Here's to a fresh start!

Your April 2014 Financial To-Dos | LearnVest

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Startup Financial Services Companies Come Of Age

With one eye on businesses abandoned in the wake of the financial crisis and the other on a new generation of investors, startup companies are now raising significant sums to challenge the hegemony of big banks and investment firms.

Since the beginning of 2013, venture investors committed over $800 million in new funding to develop businesses providing new investment, lending, mortgage and real estate, and wealth management services in the U.S. These startups have had their best quarter so far in 2014, when 13 companies raised $238.2 million in later stage funding — with at least $162 million committed in March alone.

Meyer “Mickey” Malka, the founder of the venture investment firm Ribbit Capital, raised $100 million at the beginning of 2013 to invest behind this thesis.

“We only invest in companies that are disrupting the experience for consumers in financial services,” Malka said. “Over the next ten or fifteen years we are going to see a whole new field of financial services brands that are being built.”

The opportunity to carve out new businesses in vast swaths of traditional financial services firms’ operations means new billion dollar businesses can be made, according to investors and entrepreneurs. “This is one of the only markets that’s actually measured in trillions,” said Adam Nash, the chief executive officer of Wealthfront, a startup investment management firm.  ”The market can be massively inefficient for hundreds of billions of dollars and somehow that is still not enough for the incumbents to go after.”

“Financial services industries are gigantic and are the least suited to making transformational changes in their own businesses,” said one venture capitalist whose firm invested in the $77 million round for OnDeck, a new small business lender.

Meanwhile, peer-to-peer consumer lending company Lending Club is entering the small business lending market, with its own offering. “Since the recession small business lending has contracted,” said Scott Sanborn, the chief operating officer at Lending Club. The company is working on a private offering to a select group of investors to help bankroll the new initiative.

Other startups like CommonBond and Upstart are pitching ways for students to receive or refinance college loans.

On the flip side of the lending and debt market, sits the Ribbit Capital portfolio company Credit Karma, a provider of credit reporting and eventually optimization services. That San Francisco-based company raised $85 million in its own later-stage funding round in March.

“If you think about financial services products over the past twenty years not much has changed. Applications have come online and things have gotten faster, but we think there’s a lot more transparency that we can create and a lot more efficiency,” said CreditKarma chief executive Ken Lin.

Investors are also looking at providing these services to the underbanked with investments in companies like the credit and financial services tracking tool InVenture.

Credit management and lending offerings sit on one side of the ledger, on the other are a host of new wealth management and investment services tools for a new generation of investor. “Over 46% of income in the country will go to Gen Y [the millennials] by 2025,” said Nash. His company, and others like Betterment have seen significant growth on the back of new demand.

“Today we manage about $420 million in investor assets,” said Betterment chief executive Jon Stein. “We grew 4x over the last year… and four times the year before that. We’ve grown about four times just about every year that we’ve been around since we’ve launched.”

Their growth, and that of other wealth management services is partially explained by the fact that the U.S. is on the cusp of an enormous transfer of wealth.

“We’ve got the largest generational transference of wealth ever, happening,” said Jarrett Lillien, the founder of Bendigo Partners and chief executive officer at its portfolio company Kapitall — a new online trading platform. “$40 trillion is going to change hands.”

Kapitall received a $14 million commitment from Lillien’s firm, Bendigo, to try and capture some of that wealth. Unlike Wealthfront, which expects millennials to take a passive approach to investment management, Kapitall wants to engage active retail traders on its platform. It’s the same business that Lillien pursued as an executive at Etrade. “It’s taking something old and making it new again,” he said.

Financial Firms Looking To Linux, Windows 7 As XP Support Dries Up

In an unsurprising move, ATM operators and other financial organizations are beginning to look to Linux as a replacement for their outdated Windows XP installations. That these organizations are deciding to move from XP only now is a testament to the staying power of the OS and a certain conservatism in financial circles.

“Windows XP currently powers nearly 95% of ATMs around the world,” wrote ComputerWorld reporter Jaikumar Vijayan. The operating system, which Microsoft will stop supporting on April 8, was a popular choice for embedded systems and ATMs for most of the decade as countless references to the Blue Screen Of Death in odd places would suggest.

New ATM operating systems must be Payment Card Industry Security Standards Council (PCI SSC) compliant and hardware updates may be necessary to upgrade current ATMs – which have a five to ten year lifespan – to next generation OSes like Window 7. Linux, obviously, is a solid choice because it is open and can be hardened even on legacy hardware. However, as the “PIN and chip” style cards begin appearing in the US the need to update nearly every POS terminal and ATM may be far more pressing.

Presumably financial firms can keep their old machines running for a few more months or even years, but in the end XP is dead and, despite pleas to maintain support for the embedded OS, Microsoft is intent on pulling the plug. Which means, of course, the BSOD may soon be a thing of the past.