Finance

Taiwanese ethnicity man looking at the home budget and sorting out bills using his laptop in his cozy living room
SrdjanPav | E+ | Getty Images

If you’re trying to get control of your finances, most financial advisors will start with one simple step: establishing a budget.
The coronavirus pandemic and ensuing economic recession and recovery has made a budget more important for many Americans. Some 80% of those surveyed in 2021 have a budget, according to Debt.com, a 12% jump from 2019.

Having a budget or spending plan is one of the first steps towards financial wellness because it acts as a guide for your money.
“I look at budgeting as being the principal thing in order to help you get from financial point A to financial point B,” said Frederick Standfield, a certified financial planner and founder of Lifewater Wealth Management in Atlanta. “It’s going to inform some critical decisions.”
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It’s important for everyone to have a budget, regardless of how much money they make, according to Tania Brown, a CFP and coach at SaverLife, a nonprofit focused on helping low-income Americans save.
“A budget tells your money where to go and what to do so that you can have the life you want,” she said. “The less money you have than the more critical it is you prioritize where that money goes.”

How to make a budget
The first step in creating a solid budget is to define your financial goals, experts say. Financial advisors recommend different ways of doing this, such as thinking about your big picture goals or identifying your core values.
Once you have a clear picture of what you’re trying to accomplish, you’ll need to take a financial inventory of where you are, including income, expenses and any debt. Then, you’ll take your monthly salary and allocate parts of it to your essential expenses first, then your financial goals. If you still have money left over, you can apply it to spending in more fun categories, such as travel or eating out.
If you don’t have enough income to cover all your wants, needs and save for long-term goals, you may have to cut back on spending or consider a longer time frame to save. These choices help shape your financial plan.

“Making a conscious decision on how much to spend, how much to save and what to reduce or let go provides tremendous direction,” said Jerel Butler, a CFP and founder of Millennial Financial Solutions in New Orleans.
Once you’ve determined a budget, the next part is automating parts that you can, such as paying bills and saving, and tracking your spending.
There are many ways to do this, from using a simple spreadsheet to using an app such as Mint, Personal Capital or You Need a Budget (YNAB.) What’s important is finding the money-tracking method that works best for you so that you’ll continue to use it.
Set yourself up for success
To be sure, some people will struggle to stick to their budget, especially at first. There are a few things that can help you get back on track.
The first may be changing your mindset about budgeting in general, according to Julie Quick, a CFP and founder of Cultivate Financial Wellness in White Lake, Michigan. Instead of using the word “budget,” which she says people associate with the financial version of being on a diet, she helps clients develop a spending plan.
The idea is the same — it’s a plan for how you’ll allocate and spend money — but the difference in vocabulary helps people feel like they’re in control instead of restricting themselves.
“I tell all my clients, ‘I am not going to tell what you can and can’t spend money on, only you can do that,'” she said. “But it’s about understanding what’s important to you and aligning your dollars accordingly.”

You can also try a new method of budgeting or tracking your spending, said Brown. If using an app that tracks your spending all the time is too stressful, you can try something like doing a monthly check-in with your own spreadsheets, for example.
Experts also say that a solid budget generally takes a few months to perfect, because people usually forget some expenses at first or overestimate how much they’ll save.
To combat this, Brown suggests giving yourself a lot of grace at the beginning and set yourself up for success by choosing reachable goals at least for the first few months.
For example, if someone’s goal is to save $100 a month, she’ll recommend that they start with $50. When you meet or exceed a goal, it gives you the encouragement to keep going, she said.  

When to consult a professional
Many people can set and maintain a budget on their own, but if you’re really struggling after a few months, it may be time to consult with a professional.
Those who need help with the basics of budgeting or have a spending problem may want to work with a financial counselor, coach or even a financial therapist. If you’re looking to invest long-term or need help with goals such as buying a house, retiring or saving for college should look to work with a financial advisor.
Couples especially may want to work with an expert to have the help of an objective third party in working towards their goals, said Kevin Lao, a CFP and founder of Imagine Financial Security in St. Augustine, Florida.
“They might have different philosophies, or one might be a stronger personality than the other,” he said. “I see a lot of value in that process of sitting down and talking to married couples about their goals.”
A professional will also help with one of the most important parts of budgeting – just getting started.
“If you don’t take the first step and start, you can never get there,” said Standfield. “So just get started.”
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Check out the companies making headlines before the bell:
Merck (MRK) – Merck shares surged 7.5% in the premarket after it announced that its experimental Covid-19 pill cut the risk of death and hospitalization by 50% in a late-stage study. Merck plans to file for emergency use authorization as soon as possible.

Lordstown Motors (RIDE) – Lordstown struck a deal to sell its Ohio plant to Taiwan’s Foxconn for $230 million, with Foxconn taking over the manufacturing of Lordstown’s full-sized electric pickup truck. It was reported earlier this week that a deal between the two sides was near. Lordstown rallied 6.3% in premarket trading.
Coty (COTY) – The cosmetics company’s stock gained 2% in the premarket as it announced a deal to sell another 9% stake in its Wella beauty business to private equity firm KKR (KKR). In return, KKR will redeem about half its remaining convertible preferred shares in Wella, reducing Coty’s stake to about 30.6%. Coty had sold a 60% stake in Wella to KKR last December.
Zoom Video Communications (ZM) – Zoom and Five9 (FIVN) have terminated a nearly $15 billion deal by mutual consent. Zoom had struck a deal to buy the contact center operator, but it was rejected by Five9 shareholders. The two sides will continue a partnership that had been in place prior to the proposed transaction. Zoom jumped 4% in the premarket while Five9 slid 1.4%.
Walt Disney (DIS) – Disney and Scarlett Johansson have settled a lawsuit involving the “Black Widow” movie. Johansson had sued Disney over the release of the movie on the Disney+ streaming service at the same time it was debuting in theaters. Terms of the settlement weren’t disclosed.
Wells Fargo (WFC) – Wells Fargo will have to face a shareholder fraud lawsuit involving its attempt to rebound from years of scandals. A judge rejected the bank’s moved to have the suit dismissed, saying it was plausible that statements by various Wells Fargo officials about the recovery were false or misleading.

Exxon Mobil (XOM) – Exxon Mobil said in an SEC filing that higher oil and gas prices could boost third-quarter earnings by as much as $1.5 billion. Exxon profits have been improving amid the rising prices as well as cost cuts by the energy giant.
Nio (NIO) – Nio reported deliveries of 10,628 vehicles in September, a 126% increase over a year ago for the China-based electric vehicle maker. Nio added 1.8% in the premarket.
International Flavors (IFF) – The maker of food flavoring and cosmetic ingredients said Chairman and Chief Executive Officer Andreas Fibig plans to retire, although he’ll remain at the helm of the company until a successor is found. Shares added 2.5% in premarket action.
Jefferies Financial Group (JEF) – Jefferies reported a quarterly profit of $1.50 per share, beating the 99-cent consensus estimate, with the financial services company’s revenue also topping Wall Street forecasts. Jefferies saw its results boosted by a strong performance in its investment banking business. Jefferies gained 1.4% in the premarket.
MGM Resorts (MGM) – Susquehanna Financial downgraded MGM to “negative” from “neutral,” saying the DraftKings (DKNG) bid for British gambling company Entain weakens MGM’s prospects in the digital gaming and betting market.

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Upgrade, the fintech start-up founded by former LendingClub boss Renaud Laplanche, is working on a buy now, pay later-style product.
Fast, a start-up backed by payments giant Stripe, also plans to offer BNPL as a payment method through its platform.
It highlights growing interest from companies big and small in the $100 billion BNPL market.

Upgrade CEO Renaud Laplanche speaks at a conference in Brooklyn, New York, in 2018.
Alex Flynn | Bloomberg via Getty Images

U.S. fintech start-up Upgrade is set to enter the increasingly crowded buy now, pay later market.
Upgrade, which was founded by former LendingClub boss Renaud Laplanche in 2016, is a digital banking start-up that offers people payment cards along with personal lines of credit.

Unlike a credit card, which lets consumers revolve their balance, Upgrade takes all the purchases someone makes in a month and creates an installment plan for paying down the debt. The payment plans are typically long-term, ranging anywhere from six to 36 months, and charge a fixed interest rate.
Now, Upgrade plans to launch a buy now, pay later-style product that lets users pay off their debt in four months, without accruing any interest. The company expects to debut the new service in the coming months, Laplanche told CNBC.
“We are working on a version of the Upgrade Card that’s better suited for smaller expenses,” Upgrade’s CEO said in an interview. “In that case, we don’t need to charge interest because it’s a smaller amount.”
Buy now, pay later, or BNPL, has boomed to become a $100 billion industry thanks in large part to the coronavirus pandemic which accelerated the growth of online shopping.
BNPL services let shoppers spread the cost of their purchases over three or four months. Rather than charging consumers, BNPL companies make their money by taking a small fee from merchants on each transaction.

Upgrade’s product will be different to those offered by firms like Klarna, Affirm and Afterpay. Instead of adding a checkout option on merchants’ websites, Upgrade will lump a user’s card purchases together and invoice them what they owe over a four-month period.
“What we like about embedding the product into a card is the broader acceptance,” Laplanche told CNBC. “BNPL often relies on partnerships with merchants.”

“It’s starting to get mainstream online,” he added. “But not so much in-store.”
Prior to starting Upgrade, Laplanche helped grow LendingClub into the world’s largest peer-to-peer lending platform, connecting investors with borrowers through its marketplace. However, he was ousted in 2016 amid irregularities with loan practices and Laplanche’s alleged lack of disclosure over a personal investment.
Last year, LendingClub shut down its peer-to-peer loans platform and signaled a push into banking with its acquisition of U.S. lender Radius.
Laplanche has come a long way since his exit from LendingClub, with Upgrade reaching a $3.3 billion valuation in August. The French-born entrepreneur said it would be a while yet before Upgrade goes public, but he wants to make sure the company is IPO-ready in the next 18 months.
“We clearly have the size,” he said. “We’re growing very, very fast. We’ve been profitable now for more than a year, which is rare for a company that is growing that fast.”
“We can hopefully be ready sometime in the next 18 months. Then we’ll make a decision at that time on what’s best for our shareholders and our team members.”

Fintechs jump into BNPL

Upgrade isn’t the only fintech jumping on the BNPL bandwagon. Fast, a start-up backed by payments giant Stripe, plans to offer BNPL as a payment method through its platform. The firm, which lets users purchase items in one click across a range of websites, is aiming to roll out the feature in the first quarter of 2022, CEO and co-founder Domm Holland told CNBC.
“It’s a payment method that we need to support because a certain amount of consumers want to use it a certain percentage of the time,” Holland said. “For me, it’s just a way of addressing a larger share of wallet for our merchants.”
In the U.K., digital bank Monzo has begun offering a BNPL-like product called Flex, which lets customers split payments into monthly installments, either interest-free for three months or at a 19% rate for six to 12 months. Rival firm Revolut is also planning to introduce a BNPL feature.
It highlights growing interest from companies big and small in the booming BNPL market. PayPal debuted its own version of the service, called Pay in 4, last year. Meanwhile, Twitter CEO Jack Dorsey’s payments processor Square reached a deal to acquire Australia’s Afterpay for $29 billion, and Mastercard jumped into the space this week with an installments program for banks and fintechs.
Still, the BNPL sector has become the subject of much scrutiny lately. The British government is planning to impose tougher regulatory checks on the fast-growing industry amid concerns that services like Klarna are encouraging shoppers to spend more than they can afford. The U.K. Treasury department is expected to release a consultation on the reforms next month.

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ROBERT KAPLAN had a busy 2020. As a voting member of the Federal Reserve’s monetary-policy committee, he participated in its decisions to ramp up stimulus. As head of the Dallas Fed, he made two dozen public appearances, speaking at chambers of commerce, think-tanks and conferences. And as a wealthy individual, he traded millions of dollars’ worth of stocks in companies from Apple to Chevron.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

Henry Curr, our economics editor, won the Society of Professional Economists’ Rybczynski Prize for economics writing.This article appeared in the Finance & economics section of the print edition under the headline “null” More

Traders work on the floor of the New York Stock Exchange (NYSE), September 21, 2021.
Brendan McDermid | Reuters

Stock futures inched up in overnight trading on Thursday after the S&P 500 notched its worst month since March 2020.
Futures on the Dow Jones Industrial Average rose 40 points. S&P 500 futures were up 0.1% and Nasdaq 100 futures edged up 0.2%.

The market just capped a tumultuous September as inflation fears, slowing growth and rising rates crept up. The S&P 500 finished the month down 4.8%, breaking a seven-month winning streak. The Dow and the Nasdaq Composite fell 4.3% and 5.3%, respectively, suffering their worst months of the year.
“A combination of slowing growth, less accommodative monetary policy, China headwinds, fading fiscal stimulus, and nagging supply chain bottlenecks all conspired to weigh on investor sentiment as we head into fall and 4Q21,” Chris Hussey, a managing director at Goldman Sachs, said in a note.
Ten of the 11 S&P 500 sectors suffered losses in September, led to the downside by a 7.4% monthly drop in materials stocks. Energy is the best performer of the month, gaining more than 9%.
The S&P is now 5.2% below its all-time high reached in early September. The broad equity benchmark is still up nearly 15% on the year.
Investors await key inflation data due Friday to gauge the state of price pressures as the economy recovers from the pandemic. The core personal consumption expenditures price index, the inflation measure the Federal Reserve uses to set policy, is expected to rise 0.2% in August and 3.5% year over year, according to economists polled by Dow Jones.

The inflation measure jumped 3.6% year over year in July, which hit the highest level since May 1991.
“As we wrap up the third quarter and look ahead, investors will likely need to remain nimble as the economic recovery continues in a zig zag,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial.
Congress was poised to prevent a government shutdown Thursday. The Senate and House both passed a short-term appropriations bill that would keep the government running through Dec. 3 and sent it to President Joe Biden to sign.

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A shopper walks past a Bed Bath & Beyond Inc. store
Andrew Harrer | Bloomberg | Getty Images

Check out the companies making headlines in midday trading.
Bed Bath & Beyond – Shares of the big-box retailer plunged 22% after the company slashed its revenue and earnings outlook amid supply chain challenges and inflation. Bed Bath & Beyond cited a steep drop-off in shopper traffic in August. The stock has wiped out its jaw-dropping meme-stock rally in 2021, falling over 4% on the year. Other retail stocks including Gap, Newell Brands and Bath & Body Works declined as well.

Kohl’s – Kohl’s shares sunk over 12% after Bank of America double-downgraded the stock to an underperform rating from buy, citing persistent supply chain problems. The firm also slashed its price target to $48 per share from $75.
CarMax – Shares of the used vehicle retailer tanked more than 12% after reporting disappointing quarterly earnings. CarMax reported earnings of $1.72 per share, while analysts expected earnings of $1.90 per share, according to Refinitiv. Used car same-store sales rose 6.2%, lower than the 7.3% forecast.
Virgin Galactic – Virgin Galactic shares soared more than 12% a day after the Federal Aviation Administration cleared the space travel company to resume launches after concluding a probe of an incident during a flight July 11. The FAA determined Virgin Galactic’s flight deviated from its assigned path and had not communicated the change to the agency as required.
Philip Morris International, Altria – Shares of Philip Morris and Altria fell about 5% and more than 6%, respectively, after the U.S. International Trade Commission ordered the two companies to stop the sales and imports of their Iqos tobacco device. The agency made the ruling due to a claim by rival R.J. Reynolds that the Iqos product infringed on its patents. The case is moving to administrative review.
Lordstown Motors – The electric truck maker’s shares jumped about 8% after Bloomberg reported it’s close to a deal to sell its Ohio car factory for an undisclosed amount to Taiwan’s Foxconn Technology. Lordstown had bought the plant from General Motors less than two years ago.

McCormick – McCormick shares retreated 1.8% even after the spice maker’s quarterly earnings report beat Wall Street expectations. The company posted adjusted quarterly earnings of 80 cents per share, topping estimates by 8 cents, with revenue slightly above projections. However, McCormick also cut its full-year earnings forecast due to inflation and logistics issues.
Paychex – Payroll services company Paychex saw its share price increase about 5% after it reported strong quarterly earnings and revenue as clients’ employees began returning to in-office work. It also raised its business outlook for the year.
Nvidia, Electronic Arts – Shares of Nvidia and Electronic Arts rallied about 1.2% and 3.9%, respectively after the companies announced Electronic Arts would put more of its video games on Nvidia’s cloud gaming service.
Advanced Micro Devices – Shares of AMD gained 2.5% after the semiconductor company announced it would expand its collaboration with Google Cloud.
Starbucks – Shares of Starbucks fell 1.7% after Atlantic Equities downgraded the coffee chain stock to a neutral from outperform. The firm said wage inflation and growth concerns in China could weigh on Starbucks’ profit.
— CNBC’s Maggie Fitzgerald, Yun Li and Tanaya Macheel contributed reporting

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