Level: Can a budgeting app change the way we bank?

Originally in Forbes“Level is dedicated to rewriting the financial rulebook to create a secure future for the next generation.” That’s budgeting app Level Money’s stated mission, which can be found on their website’s “About Us” page. But even as lofty as that objective sounds, co-founder and CEO Jake Fuentes says the company’s sights are set even higher.

“Basic everyday money management,” he suggests, could be “the first step toward changing—or creating—the next generation’s banking structure.”

An app that hopes to change the way the next generation banks? I’m listening.

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A Misleading Moniker: Financial Literacy Month

Originally in ForbesApril is National Financial Literacy Month, and while I would never argue against financial literacy, I have a fundamental problem with the moniker. Who, after all, would willingly step forward and proudly announce themselves illiterate—at anything?

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Unfortunately, I believe that’s what fully embracing the financial literacy movement requires. It positions financial educators as the Dickenses of currency and those who struggle with money as the collective Oliver Twist. Yes, it’s unfortunately true that too many Americans lack optimal—and perhaps even sufficient—personal financial education. But a sweeping declaration that labels the majority of the country financially illiterate does little to advance the cause. And it may even slow the progress we seek.

‘The One-Page Financial Plan’—Simple, But Not Simplistic

Originally in ForbesSimple is hot, even fashionable. But in many cases, it’s for all the wrong reasons. Simple is easier to pitch, explain and sell, and therefore also easier to receive, understand and buy. But when simple devolves into simplistic, becoming a one-dimensional end instead of a user-friendly means, it’s no longer an advantage and may actually be doing damage. Not everything can be turned into a tagline, a rule of thumb or a short cut.

Therefore, when my colleague and New York Times contributor Carl Richards first asked me a couple years ago to think about what a financial plan might look like if it was constrained to a single page, I was skeptical. After all, I’d dedicated my life and work to helping people, primarily in their dealings with money, wholly through the written and spoken word. The fullness of that education seemed impossible to responsibly confine to a single page. Then I read Carl’s new book, The One-Page Financial Plan

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At 208 pages, it may be a tad shorter than most personal finance books, but it’s obviously longer than one page. There is, however, a single page in it that I believe will help you understand why the book was written and how it could benefit you. On page 11, toward the end of the book’s introduction, Richards shares with us his family’s first attempt at an actual one-page financial plan.

3 Ways To Write Your Own Story, Like Baseball’s Daniel Norris

Originally in ForbesYesterday, a bearded 21-year-old surfer who lives in a 1978 VW bus, and on a self-imposed annual allowance of $10,000, mowed down my beloved Orioles with a 96-mile-per-hour fastball.

Blue Jays pitcher Daniel Norris isn’t striving to make a statement with his apparently Spartan existence. He’s simply choosing to live life according to his priorities. He’s writing his own story.

According to ESPN, Norris’ values system is strengthened by generational ties and rooted in the topography of Johnson City in northeast Tennessee: “Play outdoors. Love the earth. Live simply. Use only what you need.”

The point of this article is not to compel you to adopt Daniel Norris’ values, but to convince you to live by your own. Here are three ways to do so: 

3 Ways To Gain From Market Losses

Originally in ForbesEven if you get your daily news from one of those celebrity tabloid shows, you have probably still heard that the market has been more than a little crazy in recent weeks.

Indeed, the typically overstated “surge” and “plunge” headlines have been less hyperbolic of late, as the Dow Jones Industrial Average burps out daily gains and losses in the hundreds of points. But over the past several trading days, the results have been all red, and since Sept. 18, the market has taken back more than 6% of what it’s given so far this year.

Is this volatility the precursor to another market gutting? Or perhaps it’s just a momentary ebb in advance of a continued upward flow?

The answer is yes.

The market is in the business of rising and falling, and of making fools of those who attempt to predict which it will do next. But be sure that we will feel both the pain of another big drop—perhaps sooner rather than later—and the euphoria of another unprecedented gain.

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Whether this very recent pullback happens to be the beginning or the end of something, most investors have already lost enough to benefit from it.

Benefit? Yes, you did read that correctly. Here are three ways to gain from market losses:

3 Reasons to Avoid ETFs: Advisor

Originally published CNBCExchange-traded funds—commonly referred to as ETFs—are all the rage. While there are several excellent reasons to use an ETF over the seemingly archaic traditional mutual fund, they are not a universally preferable solution.

First, to be fair, let’s review a few reasons why ETFs can be a better solution than mutual funds.

ETFs generally have lower associated costs than comparable mutual funds. This isn’t news, I know, but since costs are one of the few variables over which we have control as investors, I don’t mind flogging this deceased ungulate.

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The expense ratio is the most obvious cost reduction. For example, the legendarily inexpensive Vanguard 500 Index Fund has an expense ratio of 0.17 percent, while Vanguard’s S&P 500 ETF has a barely noticeable expense ratio of 0.05 percent. This makes ETFs an ideal choice for investors making a sizable, broadly-based, one-and-done purchase.

What Is Your Fool’s Gold?

Originally in ForbesMy son gave me a present. To be fair, I don’t think it was until after he realized the gift was monetarily worthless, but I appreciated it nonetheless. It’s a big hunk of the mineral pyrite, also known as fool’s gold. My son’s gift has value to me far beyond its function as an excellent paperweight. And, ironically, its worth to me is continually rising. It’s become a constant reminder to orient my life away from that which only appears valuable and towards that which truly is.

We all have our own versions of fool’s gold. It’s generally the stuff that, while largely worthless, receives an undue amount of our time, attention and investment. What’s yours?

Fools Gold

Here are three ways to spot it:

1)   Fool’s gold consumes time you’ve dedicated to other things. Not more than one paragraph into writing this post (on this topic, no less!) I found myself entering this Google search—“what is the best banjo ukulele”—and then navigating to this page, then this one.

The Real Danger In Overstating Returns (Like PIMCO)

Originally in ForbesAs if PIMCO needed any more bad press, The Wall Street Journal reported this week that the Securities and Exchange Commission is investigating whether the bond giant “artificially boosted the returns of a popular fund aimed at small investors.” While we should all be attentive to the results of this probe—because I’d bet my lunch money that its implications will be felt beyond just PIMCO—there is an even deeper issue to consider. And this issue has a more direct impact on our individual portfolios and money management choices. The real danger in overstating returns, and indeed the root of most financial missteps, is self-deception.

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“How’s your portfolio?”

Who among us wants to feel like a failure? We’ll generally avoid experiencing this sensation at all costs. So, absent conspicuous success, we permit ourselves to believe that we’ve at least not failed, frequently through self-deception.

Back to School — Back to Financial Fundamentals for 3 Generations

Originally in ForbesAs kids head back to school, adults spanning several generations set their sites on getting their financial house back in order.  What are the most important financial planning considerations in three major demographics—Millennials, Generation X and Empty Nesters?

Millennials:  First things first – Before making any big financial commitments, like buying a house, figure out what you want life to look like.

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  • Are you in a relationship and looking to “settle down,” or do you highly value freedom and flexibility?  If the latter, you shouldn’t be buying a house or committing to a job that is geographically tethered.
  • If you’re in your twenties, the primary factor that will influence your financial success is how well you establish yourself in a career.  Invest in yourself, and that will likely help you invest more money in the future.
  • Save as much as you can in tax-qualified retirement accounts at this phase of life, because once you get settled down and have kids, your expenses will rise dramatically.
  • Don’t default to 100% equity portfolios just because you’re young.  After getting burned by the market crash of 2008, many Millennials got scared away and didn’t benefit from the subsequent market rise.  Your portfolio should likely be predominantly stocks at this age, but consider some fixed income exposure to keep from losing your shirt (and abandoning your strategy) in a downturn.

Dealing With the ‘Personal’ in Personal Finance

Originally in MoneyTo really help people, financial planners have to delve into the the feelings and emotions that drive their clients’ financial decisions. One planner explains why that’s so hard.

While most of us financial advisers want to do the best for our clients, we often struggle at the task.

The main problem, as I recently wrote: We don’t know our clients well enough. We may say that a client’s values and goals are important, but most of us don’t adequately explore these more personal (a.k.a. “touchy-feely”) parts of a client’s life.

Why is this? 

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One reason we avoid deeper discovery with clients: No matter how we’re paid—whether by commissions or fees—most of us don’t get compensated until the financial planning process has neared its end.