3 Budgets: Birthday Parties for Children

It’s often hard for my hosting-loving heart to remember that for my daughters’ birthday parties, they just want a fuss, fun and friends on their special day. Ultimately, this doesn’t need to cost much or take much time.


To show you how to hold a great kid’s birthday on a budget, I’ve put together budget breakdowns for three children’s birthday parties at $25, $100 and $500 price points. Keep in mind, these tips skew towards toddler parties since that’s my experience.

$25 Birthday Party

Our family has a rule that each year you can invite as many friends as your new age, which is one trick we use to keep the cost low. I have a hunch that this significantly lessens the pressure to host an MTV-style Super Sweet 16 party!

Knowing what kind of budget you want makes planning your party easier, and less expensive party certainly doesn’t mean less fun.

For my daughter Dottie’s second birthday, two friends came over for a make-your-own-pizza party. I bought refrigerated pizza dough, mozzarella cheese, toppings and sauce at the grocery store, and prepared cleverly cut up veggies to dip in dressing, so the food and entertainment were covered.

I made the tasty birthday cake from a mix on sale, and instead of goodie bags, we handed out helium balloons. The blog “A Girl and a Boy” has a great balloon trick for an even more dynamic decoration. The balloons can do double-duty as the take-home item, instead of putting together goodie bags for the guests.

Refrigerated pizza dough $2.50
Carrots & Broccoli $2.00
Ranch dressing $3.00
Cheese $5.00
Sauce $2.50
Subtotal $15.00
Mix $2.75
Frosting $2.25
Subtotal $5.00
Subtotal $5.00
Total $25.00

$100 Birthday Party

When budgeting for a child’s birthday party, my favorite money saving tip is to ask your child directly what they want.  That’s how we wound up throwing a “Pink Cupcake Donut Rainbow Princess Yoda Santa Baby Jesus Butterfly” party for our daughter’s third birthday.

Fifteen guests joined us for just about $100. We held the summer party in the late morning at a public park. As it was a potluck brunch, costs stayed down and spirits were high. I served a cost efficient eggy pie, pink donuts and pink strawberry juice. Guests supplied the rest of the food.

For decorations, we found a roll of plastic table covering to hide all the dubious park table surfaces. I spray painted a single, small tree branch, secured the branch in a vase, and clipped small butterfly clips over the branch. A stuffed Yoda did double duty as decoration and gift.

Subtotal $15
Prosecco (for the grownups) $10
Eggy pie $5
Donuts $10
Strawberry juice $20
Pink cupcakes
Mix $2.75
Frosting $2.25
Subtotal $5
Subtotal $50
Tablecloth roll (to cover park tables) $10
Stuffed Yoda $10
Rainbow temporary tattoos $3
Clip on Butterflies $7
Spray painted tree branch Free
Subtotal $30
Pink lollipops for the take-home
Subtotal $5
Total: $100

$500 Birthday Party

If I’m spending more money on a party, I make sure there’s a time tradeoff: the higher the party cost, the less time I want to spend preparing. For bigger budget birthday parties, I also like to use the extra money to hire entertainment, like a children’s birthday professional, giving the grownups a chance to mingle, and the kids an experience to remember.

Bigger budgets can also accommodate fancier goodie bags. You can bump up the quality of your goodie bag with personalization. I like to personalize decks of cards, baked goods or even little notebooks.

For 8-10 guests, this party includes a

Bakery bought birthday cake
Subtotal $50
Catered food or takeout
Subtotal $200
Subtotal $100
Pennants to hang $25
Linens (rental) $25
Subtotal $50
Plates and glassware
Subtotal $50
Goodie bags
Personalized pencils $25
Small notebooks with pencils $15
Stickers $5
Bags $5
Subtotal $50
Total: $500

Knowing what kind of budget you want makes planning your party easier, and a less expensive party certainly doesn’t mean less fun. There are party solutions for any kind of budget. Regardless of your budget, make sure you always take plenty of photos. Memories of these special times are priceless!

Destination Spas: Tips to Help You Get the Best Bliss for Your Buck

Spas are among the most popular leisure attractions in the U.S., with Americans spending $13.6 billion in 156 million day and destination spa visits alone. But, while a spa vacation sounds like a good idea, how do you choose a destination that will fit your needs—and your budget? I asked a few experts, who advise to keep in mind the following considerations:
Your Budget

A spa experience should transform you, and it’s hard to put a price on transformation. But “not everybody can spend $5,000 for week,” says Sally Fraenkel, Executive Vice President of SpaFinder Wellness. The site has a search function to find destination spas and deals. “There are options that fit all different budgets.”

In fact, nearly half of all spa vacations booked came in under $299 a night, according to SpaFinder State of Spa Travel Report. And since the base price at a destination spa usually includes meals, classes, treatments, and other activities, “you get quite a bit” for what you’re paying for, Fraenkel says. Take Red Mountain Resort, near St. George, Utah. Its “Red Mountain Essential Retreat” package starts at $270 a night and includes meals, classes, and activities.

Your Goals

Are you looking to lose weight, jump-start your fitness routine, or just relax? Make sure the spa includes the activities you need: weight-loss menus, hikes, meditation, massage, or any other features. If it’s your first spa visit, does the spa have a beginners’ program? The spa industry has gotten very good at addressing the entry-level customer, says Michelle Kinney, Vice President of Trilogy Spa Ventures, which develops hotel-based spas.

Matching the spa’s focus to your goals is a way to make sure you get the most out of your money, says Marissa Gold, Editorial Director of SpaWeek Media, a spa and wellness marketing company. Since many spa packages are all-inclusive, a mismatch means you’d pay for treatments and features that you’re not going to use and pay extra for things you do want, she says.

The Length of Your Stay

Spending a day each way flying to an exotic destination is impractical if you only have a long weekend. Consider trading a beachfront spa across the country for a lakeside resort closer to home, Gold suggests.

About half of all spa vacations booked last year came in under $299 a night.

Special Deals

SpaWeek’s site has a search function that sorts destination spas and a section with package deals. It also sponsors specials in April and October with reduced-price packages and treatments.

Another option: You can choose a hotel/resort with spa facilities, where you can book nights and treatments à la carte to fit your timeframe, says Kinney. Her company recently opened Well & Being at Willow Stream in the Fairmont Scottsdale Princess in Arizona, which offers such features.

Even after you’ve picked your spa, there are still things you can do to make you money go farther:

An Off-Season Trip

Just like hotels drop room prices during low periods, their spas also cut rates to fill treatment rooms, says Kinney. For example, according to the Park City (Utah) Visitors Bureau, spa stays in that tony ski town during spring, summer, and fall can cost half to one-third the price of a peak winter getaway. The area has a selection of high-end spa resorts including the Golden Door Spa at Waldorf Astoria Park City and the Remède Spa at St. Regis. “There is absolutely a seasonality aspect,” said Fraenkel of SpaFinder Wellness.

“Friend” the Property

Most spa locations will do either a monthly e-mail blast or a newsletter you can subscribe to for updates on goings-on, including specials, says Kinney. SpaWeek and SpaFinder also offer newsletters and deal alerts.

Newsletters are a good way to find out about last-minute travel deals, says Fraenkel. For example, she notes that the well-known spas Canyon Ranch and Rancho la Puerta recently were both offering 20% off last-minute packages, and Sparkling Hill Resort in British Columbia had an offer of 40% off a three-night stay with spa treatments.

Split the Cost

“It is always going to cut costs to go with a friend,” says Gold. “Sharing a room will cut the cost dramatically.”

For example, the Tennessee Fitness Spa in Waynesboro offers a weekly rate as low as $875 for four friends staying together. Or you can get a three-night special package that’s $425 each—including full fitness program, all meals and a beauty treatment—if two people share a room.

To simplify cost-sharing on trips, you can use Citibank® PopMoney® to pay friends directly from your existing Citibank checking, savings, or money market account. You can send money to anyone in the US with a bank account by using his or her email address or bank account information, even when you’re at the spa, by using the Citi MobileSM App.

Lessons My Kids Learned from the Lemonade Stand

It’s another sweltering summer day, and my daughters Jesse, 10, and Ruby, 7, are begging me to buy lemons so we can make lemonade. They’re not particularly thirsty. Rather, they’re anxious to make lemonade so they can set up a lemonade stand in front of our Brooklyn apartment building and make some money.


It’s a classic childhood entrepreneurial plan—and a great way to teach kids the value of hard work, not to mention some business basics.

By setting up a lemonade stand, kids can learn:

  • How to work as a team.
  • How to handle money.
  • Confidence and self-esteem.
  • Independence.
  • Responsibility.

Though they may not realize it, kids can discover their business strengths through setting up a lemonade stand. Are they good at the creative side of things, like making posters announcing the stand (advertising)? Do they like spreading the word about the product (marketing)? Or do they love keeping track of the money (accounting)?

“It gives you an example of what you could do when you grow up,” says Jesse, who says she likes to run the lemonade stand “because I can get money and then I can buy stuff.”

When we first decided to set up the stand, Jesse and her sister hadn’t considered the hard work involved. But they learned quickly that making the lemonade and setting up a stand wasn’t enough to be successful. In addition to creating a good product (in this case, freshly squeezed raspberry lemonade), it’s also important to create a budget and a business plan—or else it’s a money-losing operation. In the old days, kids charged maybe 25 cents a cup. But with the rising cost of lemons (especially organic ones!), in order to make a profit, my kids charge $1.00.

Plus, it’s important to get the word out. Parents can help their kids promote the sale via social media (your Facebook friends would love to see pictures of the kids selling lemonade!) or by putting up flyers at local businesses. Jesse and Ruby made colorful signs that they hung around the neighborhood.

Once the stand was set up, they sat quietly as people walked by, until they realized how to be effective salespeople. “You can’t just sit there,” Jesse told me. “You need to say something to people who are walking by, so they know what you’re doing.”

Kids can discover their business strengths through setting up a lemonade stand.

The girls’ hard work paid off. Though it may not be the case for everyone, Jesse and Ruby were able to recoup their initial investment in lemons and sugar, which they then split. Not bad for a few hours work! Of course, it helped that it was a particularly hot day, and we live near a popular park.

While it’s tempting to set up a business with a group of friends, Jesse advises you might want to keep the numbers small. “Doing a stand with one other person is good because you won’t be so lonely and bored sitting out there for a long time, and you don’t have to share the money with too many people.” Clearly, she’s a budding businesswoman.

Do the kids in your life have the entrepreneurial spirit? Share these tips for setting up a lemonade stand with them:

  • Draw up goals.
  • Find a good location.
  • Create a budget (including your list of supplies).
  • Make a good product (parents should help cut lemons).
  • Consider selling other products (such as cookies) along with lemonade.
  • Price reasonably (keeping in mind neighborhood standards).
  • Get the word out.
  • Be good salespeople. You’ll want return customers.
  • Have fun!

What Grads Really Need: 10 Gift Ideas

When you’re searching for the perfect present for a special college or high school grad, I suggest selecting a gift that’s either everyday useful or once-in-a-lifetime extravagant. Each time—or the one time—your grad uses the gift, she’ll remember how proud you are of her accomplishment.


Here are 10 ideas:

1. Luxurious comforter: Whether it’s down or high-quality polyester, a top-of-the-line comforter will protect your grad from the cold world—at least at bedtime. Stick with a simple plain comforter that can be thrown on a bed for a clean, white look or be dressed up with a duvet cover. (approximately $80 and up)

2. Blender: This must-have kitchen gift is great for the smoothies and power shakes that may cost an arm and a leg on campus. A nice blender will earn a place in kitchens throughout your grad’s life. (approximately $100 and up)

3. Joy of Cooking: It’s still the go-to cooking primer that should be on every kitchen shelf. Buy the hardcover version, so you can inscribe it. Each time he makes a pesto sauce, he’ll think of you. (approximately $50)

Instead of writing a big check in June, send a smaller monthly stipend.

4. Joy of cash: What grad can’t use some extra cash? Instead of writing a big check in June, give them a smaller monthly or weekly stipend—and if you send it virtually, there’s no need for them to visit the campus post office to collect their checks. For example, the Popmoney® personal payment service allows you to send money to virtually anyone’s U.S. bank account easily with your phone, directly from your bank account, using the Citi Mobile® App.

5. Travel: Maybe it’s a ticket home for the holidays. Or maybe it’s an airline or rail gift card that gives your grad a well-deserved vacation. Amtrak offers USA Rail Passes from 15 days with 8 stops ($449) to 45 days with 18 stops ($879). It’s an extravagant gift so perhaps invite other friends and relatives to chip in, too.

6. Vacuum robot: This may be the only way your grad’s new digs will stay clean. Most vacuuming robots have a scheduling feature that tells them when to clean, so you don’t even have to remember to push a button. (approximately $160 and up)

7. Single-serve espresso maker: Think of the money she’ll save when she makes her own cappuccino or latte each morning. For about $1 a day, she can drop in a coffee capsule, press a button, and have her morning coffee exactly how she wants it. (approximately $200 and up)

8. Stuffed wallet: You never know what your grad will need during his first year in the real world. So buy him a great leather wallet (he won’t have the cash to splurge on that for a while), and stuff it with gift cards that will treat him to movies, music, clothes, and a great restaurant meal. (approximately $50 and up, plus the cost of gift cards)

9. Tool kit: Every new household (no matter how temporary) should contain a basic tool kit—hammer, pliers, screwdriver, wrench—to fix a running toilet, secure a cabinet door, or stop a faucet leak. (approximately $40)

10. Single shares of stock: Buy just one share of stock and let your grad watch it grow (we hope) throughout her life. Select a company that produces something she actually uses, like computers or cross trainers. Or pick one that pays dividends that she can reinvest or use for extra pocket money.

How to Get a Mortgage: A Simple To-Do List

Deciding to become a homeowner marks a significant step in your financial life: It’s likely one of the largest purchases you’ll ever make. And perhaps unbeknownst to you, you’ve been preparing for it for years, since the way you’ve managed your credit, assets and debts up to this point will determine your loan options and what you’ll ultimately pay for your home.


Whether you’re ready to apply for a mortgage or haven’t yet begun house-hunting, the more you understand about the mortgage process, the less daunting your role as homebuyer becomes. Here’s a step-by-step guide to securing a mortgage loan:

Once you’re ready to pursue a formal mortgage loan application, be financially predictable.

Get your credit in shape

Before you decide that it’s time to buy, obtain your free credit report at a site such as annualcreditreport.com. Aside from checking for inaccuracies (and attempting to rectify those errors with the appropriate credit bureau), take note of your loan balances—including those associated with credit cards you pay in full by the statement due date. Because lenders are required to evaluate a mortgage applicant’s ability to pay based on factors including monthly income, debt balances and the potential loan obligation, reducing outstanding debt is to your benefit.

Speak with lenders

Before you start contacting realtors, consult a mortgage expert to learn more about getting pre-qualified. (Citi, for example, offers a free evaluation.) The process usually doesn’t require more than a 15-minute phone conversation, and though it doesn’t guarantee your full approval, it will let you know whether you may qualify for a mortgage based on information you provide regarding your credit, debt and income—and if so, for what amount.

Additionally, your lender can suggest loan programs for you based on factors like your credit, the down payment you can afford as well as any gift funds you intend to put toward the purchase. It’s a good idea to speak to several lenders and compare rates and loan terms.

The amount you’re approved for and what you actually borrow is a matter of your personal financial comfort level. Online mortgage tools and calculators can help you understand what your monthly payment obligations would be for a range of different loan types and scenarios.

Keep your finances consistent

Once you’re ready to pursue a formal mortgage loan application, you can streamline the process by gathering the relevant financial documentation you’ll need beforehand. It’s also critical that you become financially predictable: Do not move, change jobs, open new credit accounts, close old credit accounts, buy a new car or co-sign for a loan.

If you need to transfer money to use for closing costs or your down payment, Brian Murphy, senior mortgage planner at Front Range Mortgage, LLC, advises consulting your loan officer before you complete the transfer (and keeping the transaction record). If you receive any funds outside of your typical income during the underwriting process, be prepared to show proof of the source of the funds. “Any other irregular deposit—including gifts, or even cash from a garage sale—may need to be documented by the underwriter for loan approval,” Murphy says.

Be responsive

Once you find a home and the seller accepts your offer, you’ll typically have a month or less to complete the closing process. Respond quickly and completely to your lender’s requests for additional documentation or clarification, and be forthcoming. Loan officers are accustomed to dealing with problems that arise during real estate transactions; keep them informed and most will happily work with you to find a solution.

Value the inspection period

You’re one step closer to owning a home when your offer is accepted, but the deal isn’t final until you sign the formal closing documents. Stay open-minded throughout the appraisal and inspection process. Rolando Moreno, vice president at First Equity Mortgage Bankers, Inc., also recommends contacting your county’s building and zoning department to make sure there are no code violations or open permits on file. Evaluate the findings objectively, and consider whether these are issues that you’re financially and emotionally prepared to face, now and in the future.

11 Tips for Safer Online Holiday Shopping

Happy holidays? Absolutely—but keep in mind that when it comes to e-commerce, scammers can get extra sneaky during the festive season. Here are some tips to help you stay safe while online shopping.


1. Use a trusted site.
If you’re shopping for a particular item, consider looking for it at a major online retailer rather than doing a general Internet search. The results you get from the latter can include scam sites that offer tantalizingly inexpensive prices. Always purchase from retailers that have been verified—look on the site for contact details, customer support pages, user reviews, and sales policies.

2. Make sure the connection is secure.
Before typing in your credit card details, make sure the web address starts with “https” instead of “http.” That extra “s” means the session is encrypted with a digital certificate, keeping your personal info safe. (On most browsers, you’ll also see a padlock icon in the address bar.)

3. Check transactions carefully.
Don’t wait for your monthly bank statement to see the details of an online purchase. It’s always a good idea to log in regularly to make sure there are no suspicious charges being added.

 Make sure the web address starts with ‘https’ instead of ‘http.’

4. Choose strong passwords and update them regularly.
Instead of using words and birthdates, go for a combination of letters (upper- and lower-case), plus numbers. To make it easier to remember, you could even use the initial letters of a phrase. Don’t reveal your pet’s name, birth city, mother’s maiden name, or address in publicly accessible forums—these personal details are often used for password reminders that can end up in the wrong hands.

5. Keep your browser updated.
Software updates help to ensure you’re protected against ever-mutating malware variants. Make sure you have the latest version installed on your computer and on any mobile devices.

6. Use a VAN.
Citi helps make your credit card number virtually impossible to steal by generating a random Citi® Card Virtual Account Number that you can use instead of your real account number while shopping online.

7. For auctions, check user feedback and handling costs.
If you’re bidding at an auction site, do a little research on the seller first. Avoid users who have received negative feedback, and be sure to clarify the price of shipping. Some sellers can slug you post-purchase with exorbitant “handling” fees.

8. Use a protected, private Wi-Fi network.
If you’re working wirelessly, make sure your network is secured with an encryption protocol. Avoid shopping on Wi-Fi networks that allow a lot of users to log on, such as those at libraries and schools. And definitely think twice before using a public computer to stock up on holiday gifts; it’s always wise to keep your shopping data transactions (including credit card numbers and your home address) to yourself.

9. Read the return/exchange policy before buying.
Will you be stuck with an expensive item if it’s faulty, doesn’t fit, or isn’t what you expected? Scrutinize the retailer’s rules before buying, paying particular attention to the cost of return shipping.

10. Optimize browser security settings.
Delve into the options or preferences menu of your browser and enable protection against phishing and malware. You can also choose to disallow or delete third-party cookies, which makes it harder for your Internet activities to be tracked.

11. Click carefully.
Be suspicious of embedded links in unsolicited emails and Facebook promos. Scammers can create spoof sites that mirror those of major banks and retailers, trick you into logging in and swipe your personal data.

7 Strategies to Make Your Dream Vacation a Reality

Just about everyone has a dream trip they’ve always wanted to take but assume is financially out of reach. While some ultra-luxe hotels or destinations probably are out of reach for many of us (like staying at The Hotel President Wilson in Geneva—its best suite costs $82,000 a night!), most people could probably afford their dream vacation with the proper planning.


So how can you make that fantasy trip a reality? One of the biggest keys is knowing the right travel tricks and websites to use.

There are sites that send you an alert whenever a low airplane fare to your destination becomes available.

1. Use alerts.

Websites like AirfareWatchDog allow you to register your dream trip. It will then send you an alert whenever a low airplane fare to your destination becomes available.

2. Explore flash sale websites.

Flash sale websites specialize in short-term deals (usually only offered for 24-36 hours) that are heavily discounted. There are a number of flash-sale travel sites, such as TravelZoo, that offer significant savings. They won’t always have deals for your dream destination, but if you keep checking in, you might eventually see your dream trip offered at a life-changing discount.

3. Get a hotel-rewards credit card.

Some credit cards allow you to earn points towards free or discounted hotel accommodations—earn enough free nights and suddenly your dream trip may seem a whole lot more affordable. Citi® Hilton HHonors™ Visa Signature cardholders, for example, can earn HHonors™ Bonus Points that can be redeemed for free nights at select hotels and resorts in Hilton’s portfolio of 11 distinct brands.

4. Consider package-bundling options.

Online travel agencies like Expedia offer many deals that bundle airfare and hotel (and sometimes other things like theme-park tickets). Generally speaking, a trip purchased through one of these package bundles is likely to be significantly more affordable than one where you book each component of the trip individually.

5. Be flexible.

Regardless of which of the websites discussed above you use, the most heavily reduced trips are often ones that must be taken soon or within a predetermined window. But if you can’t be flexible, all is not lost—there are good deals to be found that can be used at a later date. While being flexible is a major plus, a willingness to wait for the deal that’s right for you can also pay off nicely.

6. Search social media.

If you “like” or “follow” the pages or sites of airlines, hotels, cruise lines, and other vacation-oriented businesses, you’ll have your ear to the ground, so to speak, and stay informed about their deals and giveaways. Searching hashtags (like #giveaway) is also a savvy technique. If you’re really lucky, you might even win a free trip!

7. Travel in the off-season.

Some of the best deals come in the off-season, so it’s a great time to consider traveling. Since they vary by region, check your destination to figure out the best off- or shoulder-season times to travel—but remember to look into the operating dates and hours for the must-see attractions on your trip as well. You don’t want to book a trip to your dream island at an off-peak time, only to find out that the majority of restaurants are closed until their official tourist “season” begins.

6 Tips for Managing Your College Student’s Money From Afar

Many of us look back at our college years and revel in that expensive—but exciting—bosom of self-discovery that left us with the best memories of our lives. Whether we learned how to stretch a case of Ramen noodles over a month, or balance our social lives with academic obligations, we learned valuable life lessons.


While we want our kids to enjoy their college years, it’s critical they also learn some basic lessons about financial responsibility and managing their money. To help them along (and make your life easier), here are some guidelines to get started.

1. Openly communicate your expectations.

You must have a conversation about the expectations you have for your student’s finances before school begins, or you’ll regret it later either when you get that first credit card statement in the mail, or a desperate call from your new freshman pleading for financial help. Be upfront, blunt and honest about what expectations are in this area. Discuss limits around spending on big-ticket items, and offer some leeway if they don’t get it right the first time. The best lessons arise from trial and error.

2. Create a realistic budget.

Now is a great opportunity to teach your child budgeting basics such as the envelope method—in which they are given spending categories and an allotment for each—or zero-based budgeting, the method that makes them account for all their spending during a certain period. Both methods teach financial responsibility and discipline, which are key to managing money responsibly.

While we want our kids to enjoy their college years, it’s critical that they also learn some basic lessons about financial responsibility, and managing their money.

3. Track spending.

Set up monthly meetings to review his or her spending habits. Discuss what went well throughout the month (paying bills on time, saving), and what didn’t. If things did not go as desired, then create a plan for your child to do things differently during the following month. Think of this as teaching your child how to ride a financial two-wheeler; you’re right behind them holding the seat until they can ride solo.

4. Go online.

There are many tools that can help you build a budget and track spending to head off any issues that might arise, such as veering off budget unexpectedly and getting charged overdraft fees. By taking charge and helping your child manage his or her account online, you can help avoid any issues before they become a problem by monitoring their activity and raising any red flags that you might see.

5. Impart discipline.

Before they leave for college, work with your child around establishing and maintaining financial discipline. This means that even if the money is in the account for that pretty party dress, paying the rent and buying course materials comes first. Remind them that proper preparation prevents poor performance!

6. Automate it and forget it.

If you’re looking for a way to connect with your kid online around their finances, Citi® Financial Tools is a free service that will allow you to track checking, savings, and credit card account balances (including those not held with Citi), in addition to your expenses, so you can create personalized monthly budgets to better balance your college finances.

Moving on to this new stage life can be daunting at first for you and your child—not to mention expensive. However, helping them learn to manage their money will give you peace of mind, and will be a lesson for them that will live on—far beyond graduation.

4 Ways to Keep Your Personal and Professional Money Straight

When you’re starting a business, you will have a number of professional challenges: writing a business plan, obtaining funds to build the business, hiring employees, finding an office or retail space to open, obtaining the necessary business licenses and permits, and so on.


I know firsthand the financial challenges of starting a company—just five years ago, Betterment was a company of only four people. Today, we have grown to a company with nearly 80 employees.

Spending too much time on administrative tasks takes away precious energy from working on your core product.

However, perhaps one of the largest difficulties for any entrepreneur is figuring out how you’re going to manage the finances of this thing you’ve worked so hard to create.

Even if your personal and professional lives overlap as an entrepreneur (and they likely will), there are some important reasons not to let your money do the same. Namely, taxes.

To make the process more efficient for you, I am sharing some of things I considered as a startup business owner. These steps can help you avoid the financial entanglement between personal and professional life that often comes with owning your own business.

1. Segregate your bank accounts.

Even if you’re funding your own business to start out, setting up separate checking and savings accounts for your personal and professional expenses is the first step in staying financially organized.

Doing this will not only help you more easily track in-and-out expenses of your business and help you to avoid intertwining them with personal expenses, but it will also make tax time a lot easier (and your accountant happier).

If the IRS ever questions whether what you’re doing is a hobby or legitimate business (make sure you know the IRS guidelines), having a separate bank account for your company is a good place to start. Plus, whatever your business owes to the IRS come tax season won’t drain your personal accounts.

2. Streamline expense reporting using technology.

One of my core values as an entrepreneur and CEO is efficiency—spending too much time on administrative tasks takes away precious energy from working on your core product. Tracking receipts and managing expenses through innovative technology is an easy way to reduce time spent on that kind of work. At Betterment, we use a receipt management software program—it’s cut the time we spend managing the process dramatically. Now we just click “approve” and employees are magically reimbursed.

Other apps allow you to create photo receipts, expense reports, and enable you to easily import your reports to many popular types of accounting software.

3. Open separate credit cards.

Using a separate credit card for your business gives you something else to show the IRS should you ever be audited. It also makes record-keeping much more efficient, allowing you to have all expenses in one place when it’s time to pay the bill. Not to mention, if you’re carrying a balance on your business credit card, your interest is tax-deductible.

4. Determine how you plan to structure your business.

How you structure your business will affect your company’s finances—particularly taxes—so consult a financial professional or do research on the structure that makes sense for you.

If you own your own business and it’s structured as a limited liability company, or LLC, your personal finances can be protected from any financial pitfalls or debts your company may experience. For example, if your business is sued, your business assets are the ones at risk, and—in most cases—no one can go after your personal expenses. (Note: It does not necessarily protect against wrongful acts by you or your employees.)

Additionally, as an LLC member, you may benefit from pass-through taxation, meaning you can personally report your LLC’s income and losses on your federal tax return. As tax laws vary from state to state, you will want to talk to an accountant about what this will mean for you.

Other common structures include:

  • Sole proprietorship, which means you are the sole owner and operator of the company.
  • Partnership, which is a business between two or more people who share ownership of the company.
  • Corporation, which is an independent legal entity owned by shareholders.
  • S corporation, which, like an LLC, allows for pass-through taxation so owners can report income or losses to owners/investors in the business, allowing the S corp to avoid double taxation. (Double taxation can occur because shareholders can be taxed on dividends, even though the income has already been taxed at the corporate level.)

Keep in mind that there are pros and cons with all these options, and it’s important to know which structure is financially right for you. (You can learn more at www.IRS.gov.)

Betterment is not a tax advisor, nor should any information in this article be considered tax advice. If you need tax advice, please consult a tax professional.

Why I Think Generic Brands Are Worth It

A basic principle that helps to manage personal finances is to cut down on unnecessary costs by getting the same product for less. I was recently hanging out with a friend who mentioned that she never buys generic items at the grocery store because she doesn’t trust them, since they’re not from brands she’s heard of. This really took me aback: The objection to generic items is largely a fallacy! Oftentimes, there’s little to no difference between name-brand and generic items that you find in stores—I’ve even heard stories about how the same factories will produce both the name-brand and generic varieties.  More than that, generic grocery items are often more than 50% cheaper than name-brand equivalents, and generic medicines tend to be as much as 80% cheaper. Going generic can help you cut costs, and go a long way toward managing bills each month.


So, think twice before going for that Quaker Oats instead of the generic. Look at the nutrition facts of both: They’re virtually (or actually) identical, as are the ingredients!

Why, then, do name-brand items cost more? It boils down to the marketing. Psychology studies have shown that people tend to gravitate toward and buy brands they’ve heard of before. Maybe it’s a trust thing, but even if they don’t know much about the brand, they’ll still gravitate toward it because they’ve heard of it. Meanwhile, generic brands don’t even try to compete in that way because – instead of spending money on marketing and pretty packaging – they pass along the money as savings to the consumer. Perhaps the companies are trying to appeal to different consumers—for one, the competitive advantage is marketing and packaging, whereas for the other it’s just price. And, if you’re like me, you’ll agree that price is the variable that may actually make a lasting difference in your life.

Meanwhile, some generic brands have products that are as good as or even better than the originals! For example, Duane Reade (a New York area drug store) has put a lot of time and energy into creating attractive generic products, with its own Duane Reade branding. For example, I always used to like York peppermint patties, but I recently bought the drug store version instead and brought them to a get together. They were different from the originals, but my friends and I all agreed that we liked the generic better!

When it comes to generic drugs, the FDA has approved the medicines to the same standards as name-brand meds. The only differences between the generics and the name-brand meds are the inactive ingredients—legally they can’t be identical, so the generic brands may be a different shape, size, or color, but the active ingredients are the same, and these are fully approved, so don’t worry about dangerous additives.

If you can get the same product for less, why shouldn’t you? You can spend the money you saved on the stuff you really care about.