The Financial Times (Sept 2017)

Total Money Makeover by Dave Ramsey | Animated Book Review



Low-income families spend 40% of their money on luxuries

 Published: June 29, 2017 12:12 p.m. ET

Emotions can drive spending on necessities

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Do you need it or want it? Americans of all income levels spend big chunks of their incomes on luxuries.




It turns out that all Americans, regardless of income, spend a large percentage of their income on luxuries.

People who make the most money spend the biggest chunk of their incomes on luxury goods, but even the poorest households spend a significant amount for luxuries, according to an analysis released this week by Deutsche Bank Research.

The wealthiest families (the top fifth of earners) spend around 65% of their incomes on luxury goods and 35% on necessities, according to the study, which looked at spending habits between 1984 and 2014. Middle-income households weren’t far behind: They spend 50% on luxuries and 50% on necessities.

Even the lowest income families (the bottom fifth of earners) spend 40% on luxuries and 60% on necessities, according to the study’s author, Torsten Slok, chief international economist for Deutsche Bank Securities.

The median household income in the U.S. recently rose to $59,361.

The bottom two fifths of earners made $47,300 or less in 2014, according the Tax Policy Center. The middle two fifths made between $47,300 and $134,300 and the top fifth made more than $134,300.

The Deutsche Bank Research report defined luxuries as “goods or services consumed in greater proportions as a person’s income increases” and necessities as those goods or services that make up a smaller proportion of spending as a person’s income increases.

Read more: The less some Americans make, the more they spend on prom night

While we tend to think of spending on luxuries as an indulgence driven by emotions, recent research suggests consumers’ feelings play a key role in spending on necessities as well. “Consumers who experience a loss of control are more likely to buy products that are more functional in nature, such as screwdrivers and dish detergent, because these are typically associated with problem solving, which may enhance people’s sense of control,” the authors of an April 2017 study in the Journal of Consumer Research wrote.

Still, the richer you are, the more likely you are to overspend on unnecessary purchases with your credit card, a January 2017 NerdWallet survey found. Nearly half of Americans (49%) say their emotions have caused them to spend more than they can afford, it concluded.

Most Americans (86%) say it’s OK to go into credit card debt to pay for necessities such as emergency purchases, medical expenses and expenses related to unemployment. But about even more people (87%) said they would be embarrassed to go into debt to pay for unnecessary purchases they can’t afford, non-emergency travel expenses or cash advances, NerdWallet found.

Women are more likely than men to overspend because of stress (35% vs. 24%) while men say excitement leads them to spend too much, the NerdWallet survey found. Households at the bottom of the income ladder (less than $50,0000) are more likely to overspend because of stress than households who make $100,000 or more (34% vs. 24%)


Here’s How Much Businesses Pay To Get On Those Big Blue Exit Signs


Drive down any major interstate in the U.S., and you’ll see big blue signs decorated with business logos near most exits. Here’s who decides which businesses make it on the signs, and how much it all costs.

Called interstate logo signs or specific service signs, these ubiquitous big blue billboards are godsends to weary travelers searching for gas, food, or lodging close to the highway. Unsurprisingly, the signs aren’t solely there to help out motorists, as they also provide monetary benefit to businesses and, crucially, to the state.

Roadside advertising programs are administered by individual states, though specific service signs like the one in the picture above tend to be farmed out to contractors. One of the biggest of these contractors is a company called Interstate Logos, which works with transportation agencies in 23 states to not only install the huge blue panels, but also to work with businesses to run the programs.

Who’s Eligible To Be On The Signs?
If you own a business that falls into one of these groups—attraction, pharmacy, camping, lodging, food and gas—and your business is located near a controlled-access state highway, then you’re eligible to get your company on the big blue sign. This could be a great opportunity to bring in more customers.

But not everyone is eligible to display their firm’s logo; that’s because the state’s requirements are rather strict, specifying things like distance from the highway, operating hours, required amenities, and number of parking spots available.

For example, as shown in the image above, Michigan requires that any gas station on a specific service sign be within six miles of the highway, and be open at least 16 hours a day, seven days a week and 360 days a year. In addition, the gas station must offer water, gas, and oil for various types of vehicles, as well as public restrooms and a public telephone.

Requirements for food facilities are similarly specific, stating that facilities must operate continuously for 12 hours a day and six days per week. In addition, restaurants on the service signs must be within six miles of the highway, and offer 24 seats for patrons, a public bathroom, and a public telephone.


Other states are even stricter; Colorado specifies that restaurants must offer drinking water and be open continuously between 7 a.m. and 11 p.m., and Kentucky limits restaurant and gas businesses to within three miles of a rural interchange or within only one mile of an urban interchange.

But even if your business meets all the requirements, and you’ve submitted your online application, there may be competition from other nearby businesses. As for which of those businesses get to be on the signs, that depends on the state’s policy. Colorado rotates the businesses at the end of each contract year, but other states like Michigan give preference to businesses nearer the highway, while still others like Washington use a first come-first serve (with waiting list) approach.

Types Of Signs





Here’s how much you should have in savings at every age

Katie Brockman

Video by CNBC

Let’s face it: Saving money is hard. When you’re young, you tell yourself you’ll start saving once you start earning more. Then when that happens, you may have a mortgage or kids or other expenses that make it harder to save. Then all of a sudden you’re ready to retire and have little to no money in your retirement fund.

If that sounds like you, you’re not alone. According to a study by the Economic Policy Institute (EPI), the median amount saved by working-age families (defined by the EPI as those aged 32 to 61) is just $5,000. Even for people nearing retirement age (56 to 61 years old), the median savings is a mere $17,000.

Needless to say, most people are falling behind on saving for retirement. But how much should you have saved at each age to be on track to retire?

The track to retirement

First of all, it’s important to note that there’s no single savings number that everyone should strive for. In addition, the amount of savings you’ll need in retirement will depend on a variety of factors, such as the age at which you plan to retire, the kind of lifestyle you want to lead, and how long you expect to live (not a cheery thought, but an important one).

That said, a recent report by Fidelity lays out a simple path to a financially secure retirement, complete with savings targets you’ll need to reach along the way. Fidelity’s figures are based on a number of assumptions, so your goals may differ based on your situation. For example, Fidelity assumes you’ll retire at age 67 and need income until age 92. They also assume that your savings will provide 45% of your annual pre-retirement income and that between those savings and your Social Security benefits, you’ll be able to maintain your current lifestyle. Finally, Fidelity assumes that more than 50% of your retirement portfolio will be invested in stocks, which have historically returned about 7% per year, though future performance will vary.

Bearing in mind that your retirement plan should be tailored to your financial situation and your goals, Fidelity’s simple retirement roadmap should give you an idea of whether you’re in the ballpark.

By age 30

Although it’s tough to start saving in your 20s, it’s crucial, because it allows you to take advantage of compound interest. At this age, you’re probably just starting your career and opening a 401(k) or IRA, and you need to start using them immediately.

By the time you reach your 30s, you should try to have the equivalent of your annual salary saved for retirement. So if you earn $45,000 per year, that’s how much you should have saved. That money can come from different places, too, and it includes any matching employer contributions, the interest you’ve earned in savings accounts, or whatever extra cash you have saved here and there.

You can reach this goal by saving around 15% of your annual income each year. Say, for instance, you started saving at age 22 with a salary of $35,000 per year, increasing your savings by 3% each year (which is considered the average raise at U.S. companies) until age 30. Here’s what you’d be saving each year, along with the total amount you’d have saved:

22 $35,000 $5,250 $5,250
23 $36,050 $5,408 $10,658
24 $37,132 $5,570 $16,228
25 $38,246 $5,737 $21,965
26 $39,393 $5,909 $27,874
27 $40,575 $6,086 $33,960
28 $41,792 $6,269 $40,229
29 $43,046 $6,457 $46,686
30 $44,337 $6,651 $53,337

So if you save 15% of your annual salary every year and receive a 3% raise each year, you’ll actually come out quite a bit ahead of your goal of saving the equivalent of your salary. However, life isn’t usually that predictable. Emergencies, job losses, and salary cuts happen, and sometimes you just can’t scrape together 15% of your income to save. This savings goal leaves you some wiggle room in case life throws you a curveball.

By age 40

At this stage of your life, you should start kicking your savings into high gear. Both men and women reach their peak earning years around this time (with women peaking at age 39 and men at 48, on average), so take advantage of your increasing salary by saving as much as you can.

At this stage, you should have around three times your annual salary saved. Keep in mind that because your salary is likely increasing as you age, you should be saving more, too. And as your retirement fund grows, you’ll start to see more of the benefits of compound interest taking effect.

By age 50

Similar to your 40s, your 50s are a time to save heavily and put as much as you can toward your retirement fund. By age 50, you should have about six times your annual salary saved.

This may sound like a crazy high number, but remember that you have compound interest on your side. So if you’ve saved, say, $200,000, and you’re earning a 7% annual return on your investments, that’s $14,000 you’re earning per year even without contributing extra money of your own.

By age 60

At this point, saving for retirement is serious business. You’re getting closer to retirement age, and you should have a good idea by now if what you have will be enough to last you through the next few decades.

By age 60, you should have about eight times your annual salary saved. Again, this sounds like a lot, but if you’ve been diligent about saving up to this point, compound interest should be doing a lot of the work for you.

It’s also important at this stage not to let your guard down. While you can (and should!) pat yourself on the back for getting this far in the retirement game, you should also continue to save aggressively until the day you retire.

Finally, keep in mind that these are only guidelines. Everyone is different in regards to how much they’ll need during retirement, and not everyone saves money in the same way. What works for one person may not work for another. But by using this guide as a rough estimate, you can get a better idea of how much you’ll need when you retire and how close you are to meeting those goals.

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12 Best Apps for First-Time Investors

The best investing apps for beginners make investing easier to learn and do.

First-time investors have greater access to information about the stock market than ever before thanks to the proliferation of personal finance apps. Although investing can seem overwhelming the first time around, modern technology makes it easier to find and make smart investments. The best apps offer a combination of investment research, data, low cost and user-friendly interfaces.

These 12 investment apps can help you learn how to invest money so that you can achieve long-term financial goals.



SigFig is an investment portal that offers customized portfolios. If you choose to let the managers at SigFig run your investments for you, they’ll allocate and manage your money for 0.25 percent annually — and that includes access to an investment adviser. If you invest between $2,000 and $10,000, SigFig will design a portfolio for you for free.

Known as a robo-advisor, SigFig makes the process of investing money simple and straightforward. Enter your age, how long you plan to invest, income information and risk tolerance, and SigFig will suggest an appropriate portfolio for you.

Even if you don’t invest with SigFig, you can use the app to track your portfolios. Whether you’re creating a sample portfolio to get the feel for investing or actually have stocks with another company, SigFig allows access to its portfolio tracker to help monitor your investments. You can also access external portfolio analysis, reporting dashboards and a live sync of your investment accounts, making SigFig one of the best investing apps for beginners.

Related: 10 Tips for Women to Start Investing



Motif is a unique money manager that invests thematically using “motifs.” Each motif represents a particular investment concept and includes up to 30 stocks or exchange-traded funds. Unlike other apps, Motif allows you to buy all the stocks or ETFs in a single motif for just $9.95. If you want to trade on an individual basis, each stock or ETF transaction will cost you $4.95.

Motif offers over 150 professionally created motifs, but you can also create your own or invest in the 180,000-plus motifs that have been created by other investors. Motif can be a good app for first-time investors because it allows you to choose a multi-investment, thematic portfolio, such as “Connected Cars” or “All American.”

Motif also offers an investment option known as the “Impact Portfolio.” As with other robo-advisors, this option allocates your money based on your age, income, time horizon and risk tolerance, but with a twist — you can choose what to invest in based on your personal values, such as fair labor or a sustainable planet.



The Bloomberg app is a powerful source of information from one of the most respected names in financial reporting. Although you can’t invest using the app, it provides a lot of information that a first-timer can use to get started.

Bloomberg actually provides a number of apps for investors, ranging from the standard Bloomberg app to Bloomberg Professional, Bloomberg Radio+, Bloomberg TV+, Bloomberg Businessweek+ and Bloomberg Markets+. These apps provide varying approaches to global news as well as current news on the markets and finance.

The standard Bloomberg app allows customization and is free to use, making it particularly suited for first-time investors. If you grow as an investor and need more features, you could migrate to Bloomberg Professional or one of the other apps.



Acorns is a robo-advisor that offers micro-investing. Rather than commit large sums of money to an investment program, the Acorns app gathers up your loose change for you and puts it in an investment account.

The Acorns investment process is simple: Every time you make a purchase, the price is rounded up to the nearest dollar amount, and the difference is put into your Acorns account and invested. For example, if you buy a cup of coffee for $2.64, Acorns will round that purchase up to $3.00 and invest the additional $0.36. If you prefer, you can set up automatic investments from your checking account or make additional contributions to your account at any time.

The Acorns investment platform is more affordable than several other apps. You’ll pay $1 month if your investments are under $5,000, with annual fees rising to 0.25 percent for accounts over $5,000. Acorns is free for college students with a valid .edu email address for four years.

Related: The Best Finance Apps You Should Try in 2017

©Yahoo Finance

Yahoo Finance

The Yahoo Finance app takes the formula behind the general Yahoo news app and applies it directly to financial information. Although it’s not an investment platform, it provides links to numerous articles and analyses that can help you make investment decisions, covering everything from personal finance to technology news.

The app also allows you to link your brokerage accounts so you can monitor your portfolio in the app, and you’ll see news stories that are relevant to your holdings.

Yahoo Finance and all its amenities are free to use. If you’re already used to the standard Yahoo News site, the Yahoo Finance app can provide a level of familiarity that can be comforting to a first-time investor.



The CNBC app offers direct access to the popular news network. Like other financial news outlets, CNBC provides daily financial news coverage and real-time stock quotes. It also provides access to relevant videos, podcasts and full-length CNBC programs that you can’t find on other apps.

Because CNBC is a globally televised news organization, the CNBC app offers clips of broadcasts from regions such as the Asia-Pacific and Europe, giving it an edge over some competitors. For more advanced information, you can subscribe to the “Pro” version of the app, which provides exclusive investment tips and analysis, emails, alerts, ad-free video clips, and live TV from around the world.



The Benzinga app provides market news, similar to Yahoo Finance, CNBC and Bloomberg. Benzinga goes one step further by providing actionable market intelligence on a daily basis. While still providing broad-based market news, Benzinga features current market tweets and shares articles and news on social media. Benzinga also provides information on financial technology news.

As a first-time investor, it can be a good to have an app such as Benzinga that provides free, nearly real-time market data and information that might not be featured on other news sites.

Related: 9 Fintech Startups to Watch in 2017



Betterment is one of the best robo-advisors on the market, using algorithms to generate recommendations for where to invest money. Betterment uses Nobel Prize-winning research to construct portfolios that try to optimize investor return while balancing out risk. The resultant diversified portfolio can consist of up to six stock ETFs and six bond ETFs.

Although the initial process is the same as with other robo-advisors — enter your age, income and other financial information to generate a portfolio — Betterment offers three types of plans:

  • Digital: costs 0.25 percent per year with no minimum investment
  • Plus: annual phone consultation and ongoing monitoring from a team of financial professionals, including certified financial planners, for 0.40 percent per year, with an account minimum of $100,000
  • Premium: unlimited access to Betterment’s financial advisors for 0.50 percent per year, with a $250,000 account minimum

First-time investors can get started easily with the Digital plan and later transition to the other accounts as they become more experienced or decide to increase their investments.

©TD Ameritrade

TD Ameritrade

TD Ameritrade offers beginner investors access to a variety of investable assets. Unlike robo-advisors, which might limit you to 12 fund choices, with the TD Ameritrade app you can buy everything from stocks and bonds to futures and Forex assets. It can be a good fit for anyone who wants to create a diversified portfolio.

Getting started on TD Ameritrade is easy, especially because it has no account minimum. To buy stocks, you pay $6.95 per online trade. If you’re mainly interested in ETFs and mutual funds, TD Ameritrade can be one of the best deals. You can invest in over 100 ETFs for no commission, and you also get access to thousands of mutual funds with no transaction fees or commissions.

Once you become a more advanced investor, you can graduate to TD Ameritrade’s more sophisticated investment platforms, such as thinkorswim and TradeArchitect.



Robinhood is exclusively an app. For first-time investors seeking free trading and easy-to-use, mobile-friendly apps, Robinhood might be the best stock app option.

Once you open an account on the Robinhood app, you don’t have to worry about paying a commission for a stock trade, having an account minimum balance or paying account maintenance fees. Mandatory trade-related fees imposed by regulatory agencies like FINRA and the SEC, however, still apply.

You can trade stocks and ETFs right on the app in real time, but it does not yet offer the ability to trade mutual funds, bonds or options. Additionally, the app is lacking in terms of in-depth research, analysis and financial information that other apps offer. You can overcome this limitation by pairing the Robinhood app with other apps that provide financial information, such as a news network app.



Wealthfront is a robo-advisor and financial planning services provider that offers standard investing services as well as more specialized services such as tax-efficient brokerage holdings transfers and direct indexing. The company’s app can be a good option for first-time investors who would rather hand off the management of their account to a professional.

The Wealthfront app requires a minimum deposit of $500 and invests that money for you for free as long as your account balance is under $10,000. Once your account reaches $10,000, you’ll be charged an annual management fee of 0.25 percent. You can have an additional $5,000 managed for free if you refer friends to Wealthfront.

When you open your account, the Wealthfront app will ask you to complete a questionnaire to determine which investment portfolio is best for you based on your style and your risk tolerance. After you take the questionnaire, Wealthfront assigns you a risk score and suggests a portfolio for you to review before you decide to invest.

Wealthfront also offers a mobile-friendly financial-planning platform called Path that connects and reviews your accounts to tell you how much you should be saving to afford your current lifestyle in retirement, what you net worth is and more.

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OpenFolio is an app that provides a comprehensive look at all of your finances. Successful investing can depend on the overall health of your financial portfolio, so OpenFolio takes a look at your finances to serve as an investing and financial management resource.

OpenFolio, which dubs itself “your digital financial assistant,” compiles all your financial accounts in one place, including bank accounts, brokerage accounts and online-only accounts such as Betterment, Wealthfront and Robinhood. The app offers projections and tracking, helpful updates and tips, and a complete view of your financial affairs. OpenFolio can also link you with a fee-only financial advisor if you need additional guidance.

OpenFolio compares your portfolio performance with that of 70,000 other investors. This feature can give you a clear picture of whether the investments you have chosen — or that your financial advisor has chosen — are underperforming in case you need to update or change your portfolio.

Up Next: 6 Small Investing Ideas When You Have Less Than $500




10 New Ideas for Making Money on the Side

Image credit: Hero Images | Getty Images


Every year we make the same resolutions, like losing weight or to quit smoking. What about making more money?

While there proven ways to make extra cash on the side, even if you have a full-time job, if those haven’t worked-out for you in years past, then consider these 10 new ideas for earning some additional money on the side.

1. Join the sharing economy.
“The sharing economy is growing at an exponential rate,” says Nigel Wilson, managing director at Hitwise. “Thousands of sharing economy companies have sprouted up around the world, and consumers are actively engaging in collaborative consumption.

According to PwC, 44 percent of all adults in the U.S. are aware of the sharing economy and 19 percent have engaged in a sharing economy transaction. It is imperative for brands to consider how to support and participate in collaborative consumption, rather than compete against it.”

The sharing economy is exploding and the largest demographic in the country, millennials, have embraced it. For 2017, look beyond Uber, Lyft and AirBnb when looking to tap into this market. You can rent out your car on Turo, camera equipment on Cameralends, snowboard or bike on Spinlister and, if you own one, your sailboat on Sailo. Besides renting out the stuff that you already own, you can deliver home-cooked meals with Umi-Kitchen.

2. Launch a box subscription service.
If you want to tap your local or niche market then a box subscription service is the place to start. Over the last couple of years we’ve seen an explosion of box subscription services in niches ranging from beauty to food to gaming to novelty gifts. Since the goods or services are delivered to the customer each month, and it has a recurring billing model, it can quickly become a lucrative and passive source of income. Here’s a list of possible box service ideas to get you started.

3. Take over a mobile food truck.
More and more people, especially those between the ages of 18 to 34, are patronizing food trucks and that’s why the food truck industry is expected to surpass $985 million by 2019. For savvy entrepreneurs, food trucks are an appealing business because it’s inexpensive to start, isn’t strapped down to a one location, can be a part-time side gig and you don’t have to start from scratch. Every day thousands of baby boomers retire. If you know any baby boomer looking to get out of the food industry, consider purchasing their established business, which should include customers, recipes, and equipment at the very least.

My friend Keith Crossley was able to purchase several food trucks and recently opened several restaurants. It took him almost four years but over that time he was able to build a thriving business for himself. It all started trying to make money on the side and turned into his full time thriving business. It’s possible for you to do the same. His original investment was less than $35,000.

4. Earn cash by downloading apps.
I’ll be honest, you aren’t going to make a fortune downloading the following apps but you can make some extra cash each month by doing very little. Here’s some of my personal favorites:

  • The Swagbucks app pays you for answering simple survey questions.
  • Media Insiders pays you for watching television.
  • Stash gives you $5 to start investing.
  • Clink will give you $5 to start saving
  • When you walk, Bitwalking will pay you in a virtual currency called Bitwalking Dollars.
  • Nielsen Homescan gives you cash for scanning your grocery receipts.
  • Achievement pays you for completing healthy activities.
  • MobileXpression will give you cash, gift cards, and merchandise for surfing online.
  • The Ibotta app pays you for taking pics of your receipts.
  • Paribus scans your emails for receipts and will issue a refund if there’s a price drop.

5 Write to Congress.
Writing has long been a favorite side-gig for people. However, with the 2016 presidential election, don’t be surprised to see an influx of letters to Congress. And, you may be able cash-in on this trend. DDC Public Affairs and NextWave are bipartisan advocacy groups that launch grassroots political campaigns on issues ranging from energy, healthcare, taxes, and defense.

All of these hire people to call all constituents or advocates and then transfer their opinions into written letters. You’re assigned campaigns, but you can reject them if you want. They expect you to work 20-25 hours per week and you start-off at $12 to $15 per hour.

6. Invest in real estate.
If you aren’t working full-time or are already strapped for cash, then becoming a landlord probably isn’t the wisest decision. But, if you’re looking to make some extra cash, then you could consider invest in real estate. The reason? The housing market is looking strong for the foreseeable future.

Best of all, sites like Realty Mogul allow you to invest in commercial real estate for as little as $5,000.

7. Become an Instagram consultant.
Instagram had an incredible 2016. And, expect 2017 to be even better. Thanks to the Facebook-owned platform getting serious about attracting businesses, and launching exciting features like live video and Instagram Stories, a lot of brands are going to start promoting themselves on ‘the gram.’ If you’re a frequent Instagram user, have a passion for photography, and are a social media whiz, then you can start your own Instagram consulting business on-the-side.

8. EMV security consultant.
There are now around 300 million chip-card in-use by consumers with 1.2 million merchants accepting chip cards. Even though the transition to EMV is in full-swing, it’s expected that there will be an increase in fraud.

If you have security experience, or are knowledgeable in EMV, then you could start your own EMV security consulting business where you can instruct small business owners and their employees how to properly use EMV readers and inform them on the latest security measures.

Related: 5 Ways to Participate in the Bitcoin Revolution

9. Invest in bitcoin.
Bitcoin had a very good 2016. That should carry over into 2017 and beyond. In fact, some experts believe that the price for bitcoin will reach $1,000 within the next year, which would be a 40 percent increase. This is because of an increase in usage, more adoption, an increase in investments, and remittance in emerging markets like India.

10. Go green.
Millennials are extremely conscious about the environment. For example, 61 percent of millennials want to sign up for a digital application which can allow them to track their energy usage and control their household climate. That means that there’s a huge demand for “green” businesses in the near future.

Looking for a place to start? Here are a additional ways to make money on the side!



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