In 2006, recent Harvard grad Alexa von Tobel was headed for a job at Morgan Stanley. But though she would soon be managing the bank’s investments, she realized she didn’t know the first thing about her own finances. Most financial guides seemed to be written for middle-aged readers with millions in assets, rather than recent college grads. "I was reading every book I could find, but none of them spoke to me," she says. So she came up with the idea for LearnVest, an online personal-finance resource for young women like her, and ended up writing an 80-page business plan.
After two years at Morgan Stanley, von Tobel entered Harvard Business School in 2008. But upon winning a business plan competition held by Astia, a non-profit that supports women entrepreneurs, she took a five-year leave of absence and invested $75,000 of her Wall Street earnings to start LearnVest in November. She quickly enlisted advisors, including Betsy Morgan, the former CEO of the Huffington Post, and Catherine Levene, the former COO of DailyCandy, to help develop the site’s content and technology. In January 2009, she secured $1.1 million in seed funding from executives at Goldman Sachs.
LearnVest’s site launched a year later and has since signed up more than 100,000 members. It offers online budgeting calculators, video chats with certified financial planners on the company’s staff, and free e-mail tutorials on topics such as opening an IRA. The company earns revenue from advertising and by referring its users to companies such as TD Ameritrade. In April, after just four weeks of fundraising, von Tobel closed a $4.5 million investment round led by Accel Partners, which has also invested in Facebook and Etsy. (Incidentally, Facebook CEO Mark Zuckerberg lived in the same dorm as von Tobel at Harvard.)
Von Tobel likens LearnVest to an online version of The Suze Orman Show, but with the goal of reinforcing positive finance habits early on. “Suze Orman helps 45-year-old women get out of debt,” she says. “Why not reach 20-year-olds to keep them from getting into debt?”
What a fantastic basic concept.
Hitler lost the second world war because he attacked Russia too soon. udervise ve vood all be speeking Deutsch now.
We employed the alternative massively effective budgetting tool.
Be a self employed Engineer for 15 years with take home pay of £50K a year and spend it all (and more besides, because ‘I want one of those NOW’) because ‘my jobs safe’.
Watch as the banks destroy the worlds finances.
Suddenly realise that over 90% of British industry is ultimately owned by Japanese investment banks, who suddenly have no money to fulfill their legal obligations to complete legislation driven improvment projects.
Watch as my £50K a year take home falls to ZERO.
Start a brand new business with Kleeneze (sorry not available in the USA) Which although it’s building really well is , after all, a business and needs time.
Suddenly HAVE to live on £18K a year GROSS.
Best Motivation for re-inventing your budget that anyone can have LOL.
We used to spend about £1,000 a month on groceries, now we spend around £300 a month, AND we eat more healthily.
Fortunately the finance on my car ended a month after our income disappeared saving us £375 a month.
We’ve sold my wifes’ car (THAT hurt) it was a really nice car, but it was costing us £489 a month in finance.
We’ve moved to a cheaper house saving us £400 a month in rent.
We’ve cancelled everything that wasn’t absolutely essential - including SKY and the TV license (It’s true, you don’t die if you turn the telly off!)
We still have creditors who we’re negotiating reduced payments and frozen interest with, but basically we are starting again from scratch.
We won’t fall into the credit trap again
Certainly not in the next six years or more ‘cos no-one in their right mind will give us credit now anyway!!
The one thing that keeps coming back to me though is
WHY aren’t our schools teaching kids how to budget? It’s a thousand times more important than even the basics.
Who cares if you can’t spell budgit if you can make one and stick to it.
It CAN’T be one of the things that are left to parents because nobody ever taught us!
Back to subject,
Your article is brilliant and if it helps one person (which I’m sure it already has) to get out or stay out of debt then you’ve done a service to humanity.
Keep it up &
we’ll see you
OVER the top
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Whether you're a shopaholic or a conservative spender, there's always room for improvement when it comes to your finances. Even thought the word 'budget' might have you cringing, there are some easy and effective ways to create one that works within your lifestyle, and won't compromise your habits-not too much, anyway.
A personal budget can have you spending freely and with confidence; if you've been nurturing a habit of overspending, all it takes is a little planning and focus to get you on the right track. Budgeting doesn't have to mean a gloomy existence; many people avoid it entirely just like dieting. If you're not enjoying the process, you've likely got yourself stuck in a plan that doesn't work for you. Here are eight ways to make a personal budget that actually works:
1. Create a spreadsheet. Some simple columns and even colors can spruce up your outline, and help you track expenses and revenue. You'll get to play accountant with some simple tables, and can go full force with color coding and even images as you get more comfortable tracking those figures. Writing things down and keeping records is the first step in making sure you're being realistic about your projections and your actual spending. Draft up a spreadsheet with a simple monthly breakdown of your expenses and income. Section it off by month, and add a formula that shows your 'profit' after all money has been allocated. This can be a real eye-opener, but is a necessary first step.
2. Be as realistic AND outlandish as possible. Create two separate budgets if you need to. The idea is to remove any doubts you might have about what you spend, and what you would like to spend. The 'like to' budget can be broken down in exactly the same way as your actual estimates, and you'll be able to see at a glance what is preventing you from spending the way you want. The 'current' budget can help you see the reality of your spending habits.
3. Identify the problem areas. Now that everything is in writing, take a look, a real look, at what's going on. Can you skip that Netflix subscription for the next three months and put it into savings instead? Are your grocery expenses out of control? Take a look at the numbers, and prioritize your real needs.
4. Play around with the numbers. What would happen to your bottom line if you removed your credit card debt completely? What would be available for savings if you cancelled your magazine subscriptions? Trial and error in each expense account will bring you some perspective on what's important, and having the numbers right there in front of you can make this a very simple and effective process.
5. Allocate a Savings Expense. This is one of the easiest ways to build your savings account with minimal stress. When you know how much income you can expect at month's end, calculate 15% of this as a savings 'expense.' Put this amount into your expense column, and forget about it! Once you get into the habit of doing this, you'll see how easy it is to build a savings account.
6. Set some goals. This is the hard part, but you need to understand that each goal you accomplish is a step in the right direction. If you plan on spending $150 this week for groceries, tally up those receipts and put it into the spreadsheet. Over time, you'll have a track record of meeting your budget goals in every line of expenses, and just doing this can help boost your confidence to achieve the next goal.
7. Become number friendly. Believe it or not, financial gurus do have specific percentages outlined for allocating all of your income. CNN Money defines the following amounts as 'ideal'.
- Housing and debt (including personal loans, auto loans, child support): 30%
- Taxes: 25%
- Insurance: 4%
- Savings: 15%
- Living Expenses: 26%
8. Be patient! Any lifestyle habits and patterns can be hard to break, and you'll need to be patient when you don't feel like you're making progress. Budgeting itself isn't difficult to do, it's the process of relearning how to manage money that makes it difficult. Take your time, and focus on one specific area each month. Over a few months, you'll be well-equipped to handle the entire budget at once!
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