7 Investment Accounts All 30-Somethings Should Have

You're in your 30s now. If you're finally looking to get settled in your financial life, you may want to consider ways to build wealth over the long term. But that checking account alone isn't gonna cut it. It's time to examine the options out there for someone in their 30s who finally has a little bit of money to invest.

Here are seven essential investment accounts all 30-somethings should have.

1. 401K, If Available to You

If you're employed full-time, your company may offer a retirement plan that gives you access to a number of mutual funds and other investments, plus the great tax advantages that come with it. Under a 401K, 403B, or similar plan, contributions are deducted from your pre-tax income, and most employers will match a certain percentage of what you put in. Now that fewer employers are offering pensions, the 401K has become the primary vehicle for saving for retirement. Pumping cash into this account while you're still relatively young gives your investments plenty of time to rise in value and give you a sizable nest egg. Even better, your investment is tax-deferred until you begin making withdrawals.

2. Traditional IRA

You don't necessarily need a traditional Individual Retirement Account if you have a 401K with an employer match. But if you have 401K from an old employer, it might make sense to roll it into an IRA, because you have a much broader choice of investments to choose from — many with lower fees. With an IRA, you can invest in practically anything, including individual stocks, mutual funds, bonds, and even commodities. Traditional IRAs are also great for people who are self-employed or otherwise don't have access to a 401K. Like a 401K, your contributions are deducted from your taxable income. You can open an IRA at most discount brokers such as Fidelity, TD Ameritrade, and E*TRADE.

3. Roth IRA

This account is a little bit like a 401K in reverse. The tax advantage is on the back end, when you can withdraw money upon retirement without paying tax on the earnings. That's because contributions to a Roth IRA come from earnings after tax, unlike 401Ks, which draw on pre-tax income. Under a Roth IRA, you can contribute up to $5,500 annually, and you can withdraw contributions (but not your gains) before retirement age without paying a penalty.

4. Taxable Brokerage Account

While your main focus should be investing in tax-advantaged accounts that are designed for retirement, it's good to have some investments available in this type of account due to the flexibility. You don't need to wait until retirement age to access funds in this account, for one thing. That means you can use it to boost your income now, through the sale of stock or the gain of dividends. If you hold on to investments in a taxable account for a long time (generally over a year), you'll pay only the long-term capital gains tax (mostly likely 15%) when you sell.

5. 529 College Savings Plan (If You Have Kids)

College is pricey, so nearly every state enables people to save for college by investing money for education in a tax-advantaged way. A 529 plan is similar to a Roth IRA, in that investments will grow tax-free until they're withdrawn, as long as they are spent on higher education. In many states, you also get a tax break from the contributions. It's possible to open a 529 for your child as soon as they have a social security number. Even if you don't have kids yet, you can designate a beneficiary now — such as a niece or nephew — and change it to your own child later. (See also: The 9 Best State 529 College Savings Plans)

6. High-Interest Savings Account

Everyone knows you need a basic bank account, but if you want to boost your savings, it's helpful to have a savings account with a higher-than-average interest rate. These days, interest rates are extremely low, but you can still find returns of above 1% in money market accounts and online banks such as Capital One 360. (See also: Best Online Checking Accounts)

7. Peer-to-Peer Lending Account

In addition to making it easier to invest in stocks, the Internet age has also made it possible for individuals to invest in other people's debt. There are thousands of people who have hopped onto sites such as LendingClub and Prosper and report consistently solid returns. These sites generally work in the same way as banks, except that those in need of money are borrowing from individuals, who are seeking to make money on the interest. In most cases, people can invest based on the risk level of each borrower; those who aren't as creditworthy promise a potentially higher return — but more risk — to the investor. Popular personal finance blogger Mr. Money Moustache has reported more than an 11% annualized return since 2012, and many others report similar gains. (See also:How to Make Money with Prosper)

6 ways men and women differ when it comes to money

Women account for more than half of the consumer spending in the U.S., manage a growing share of investments, and are increasingly the primary breadwinners in their households.

Yet despite their influence over American household dollars, women still lag in other, related, areas — from wages to their confidence about their own financial wherewithal.

These differences have taken on increased importance in today’s conversations about American culture, with President Barack Obama calling in January for the Equal Employment Opportunity Commission to start gathering information on pay by gender, presidential candidates discussing the issue during the current campaign, and some arguing that paying women more could significantly reduce poverty.

Here are six ways men and women differ when it comes to money, according to sources including the Census Bureau, financial services institutions and a credit score company.

Men make more for the same work

Women make about 79% of what men do for the same work, according to a 2014 comparison of the median earnings of full-time, year-round workers. (That’s the most recent year for which the Census Bureau provides data.) Black and Hispanic women make a smaller percentage of what their male counterparts make than white women do.

A gap exists for highly educated workers: A 2015 Bloomberg analysis found that while men and women made similar salaries when they graduated from business school in 2007 — $105,000 for men and $98,000 for women — by 2014 those same workers had seen their salaries diverge. The men were earning $175,000, compared with $140,000 for the women.

Reasons generally cited for the “pay gap” include women being less likely to work in higher-paying fields, hold high-ranking positions and negotiate for salaries and raises.

(There also appears to be a gap in perception: In the U.S., 78% of men believe men and women at their company are paid equally for equal work, while 60% of women believe this, according to a 2015 survey from job site Glassdoor.)

Because women earn less than men overall, they tend to fall behind on other important aspects of their personal finances, including their credit scores and savings.

Women are better at managing personal debt

Although women earn less than men, there is evidence they are better at managing personal debt.

According to an analysis of 2015 data from credit-score company Experian, women had slightly higher credit scores than men — 675 for women, compared with 670 for men. Men also had slightly more average debt (including credit cards, auto loans and personal loans, but not mortgages) than women, at $27,627 for men and $26,610 for women.

The median U.S. credit score is within the “good” range of 670 to 739, according to Experian.

Income isn’t directly a factor when it comes to credit score, but lower wages can make it harder to pay bills, leading some to use more of the credit available to them. (And credit score isn’t the only factor lenders consider, according to consumer credit expert Beverly Harzog: Other aspects of financial health, including employment history and savings, also matter.)

Women also had more credit cards open in 2015: Women had 3.7, while men had 3, according to Experian.

Credit cards can actually help credit scores, when they’re paid in full each month and the bearer uses a small proportion of the credit available to her.

Men pay off their student debt faster

Three years after graduating from college, women had only paid off 33% of their student debt on average, compared with 44% for men, according to an analysis of 2012 data released by the American Association of University Women. African-American and Hispanic women paid off even less — 9% and 3%, respectively — during that period.

Wages play an important role in those statistics; when you earn less, paying off loans is harder.

Student loan debt, meanwhile, tends to take up a larger share of women’s income than it does men’s, according to Washington-based Institute for Women’s Policy Research.

Student loans can have lasting effects for both men and women, from making saving for retirement more difficult to driving the postponement of major life decisions such as homeownership and marriage.

Men save more in their ‘rainy day’ funds

Americans are notorious for having little money saved.

According to a BMO Harris Bank survey of about 3,000 Americans in January 2015, 69% said their current rainy-day fund — or, money saved for future emergencies — would last less than a year; 29% said it would last one month or less. Experts recommend having enough emergency savings to last three to six months.

The picture is bleaker for women. For those with rainy day funds, the average was $46,362. Men reported funds of $58,061 on average, compared with $33,558 for women. That’s a big difference — nearly 58%.

When emergencies arise for people without savings, the BMO Harris research pointed out, they often turn to liquidating their retirement accounts, which comes with financial penalties. They may also take on more debt, sometimes at high interest rates.

Women use sounder strategies, but with less confidence

Although women may have less to invest, they often employ better investing strategies with the money they do have, according to online investing company Betterment.

Women change their fund allocations and monitor their accounts less frequently than men do, according to Betterment — behaviors the company says are generally better for retail investors because more frequent changes in portfolio allocations tend to diminish returns — as do the short-term capital gains tax hits they can lead to.

But women are also less confident then men when it comes to their belief in their knowledge of financial matters.

According to a 2013 Prudential study, women were much less likely to say they felt confident about their knowledge of financial products, including IRAs, estate plans, stocks and bonds, long-term care, mutual fund and annuities.

They were also more likely, at 13%, to say they were a financial “beginner”, compared with just 3% of men; While 45% of men said they felt “very well prepared” to make important financial decisions, just 20% of women did.

Men save more for retirement

Women are more likely than men to set up retirement savings accounts, according to 2014 data from investing company Vanguard, but men have more money in theirs.

Women are 14% more likely to participate in their workplace savings plans than men, according to Vanguard, and they save at higher rates than men at all income levels. But because men’s average wages are significantly higher, they have account balances that average more than 50% higher than women’s.

That contributes to women having substantially lower retirement incomes than men, according to an analysis released this month by National Institute on Retirement Security — and, in the worst cases, leave women 80 % more likely to be impoverished at age 65 or above.

That said, Vanguard notes that even someone saving at a low rate can see their investments perform more effectively than someone with more savings with a better-constructed portfolio.

But the contribution amount certainly matters: As Americans live longer, their retirement savings are starting to stretch thin, and some experts have suggested that Americans should stay in the workforce longer than they have to make sure they have sufficient income later in life.

5 Romantic Ideas That Won’t Break Your Wallet (Much)

Some weekends are minefields, and for lovers, this coming Valentine's holiday is one of them. Expensive candies, flowers, dinners and trinkets can add up to a credit card hangover in a hurry. While it's easy to think that spending more money will help you win affection from your significant other or love interest, maybe there are ways to impress that special someone without draining your wallet.

There are a few secrets to spending less money. Think about other assets to spend on your relationship than money. Consider spending time, being creative and sharing experiences. If you start with those ideas instead of just taking out your wallet, you'll find that your hard-earned money can stay in your pocket and you'll still express yourself without looking cheap.

Here are five great ways to make Valentine's less expensive while maybe even making the holiday more special than if you'd overspent.

1. Create homemade cards with photos of the two of you together. Woo your Valentine by taking the time create a card that includes photos of the two of you and maybe a phrase you found online. I always throw away generic, store-bought cards without thinking about the printed message. However, if my Valentine took the time to write out a simple, heartfelt note? In that case, I'm excited and thrilled.

2. Instead of cut flowers, how about a trip to the place where the flowers grow? Hiking, walking or (if the weather is warm), a bike ride together can be a fantastic gift. Sure, there aren't flowers in most places during winter months, but my Valentine and I used to take long winter hikes talking about our plans and dreams and enjoyed the fresh, crisp air. Here's how to supersize the idea: Find a way to hide a picnic, special snacks or a small gift to present halfway through the hike. Too snowy? Head out sledding and pack hot chocolate. Is it warm where you live? Find a new trail or nearby town you haven't visited to explore.

3. Bestow random acts of kindness on strangers. Here's an idea for those of you who think Valentine's Day is a sinister act by greeting card and chocolate companies to get us to empty our wallets: Make the day about someone else completely. Isn't Valentine's Day about showing love? Well then, here's a unique idea. Enlist your special someone to help you complete helpful tasks for other people. Run errands for shut-ins. Make dinner for the family who just had a baby. Volunteer at a soup kitchen. Make Valentine's day unique by both showing the world how fun it is to help other people who are less fortunate than you. While the actual events of the day might not sound romantic at first, you'll both be glowing with the thrill of giving back when it's over.

4. Cook a special meal for two (or more) at home. Expensive restaurants are nice, but the thought that you worked hard on a meal goes farther and can be much less expensive and healthier. Find out your Valentine's favorite meal, light some cheap candles, load up your iPod with romantic songs from their favorite artist and you've just beaten the expensive restaurant soundly. Plus, for many, there's nothing more romantic than taking the time to cook something special that's exactly what they wanted … even if you burn it a little. Trust me.

5. Spend the day together at home playing board games. Valentine's Day is even special for nerds, and if your special someone is as nerdy as we are, nothing is more romantic than spending time together. While it's not a surprise that a list I put together ends in board games, the point is to spend time together doing an activity at home that you both enjoy instead of showering each other with expensive gifts. I understand that not everyone's a board game nerd, but at our house, spending time with just the two of us enjoying each other's company and maybe a little Tokaido or Ticket to Ride? That's something we don't get to do often enough. For you, it might be reading books or watching Netflix. The point is, if you're busy, get un-busy enough to notice that special someone.

Overall, no matter what you like to do, there are a few keys to pulling off a successful and inexpensive Valentine's Day. While spending money might make an impression, spending richer assets like time and energy to create something unique can turn another "Hallmark holiday" into something truly special for both of you.

The Meteoric Rise and Fall of Proprietary Gas Cards

Gone are the days when the only credit cards gas stations would take were their own private-label cards. Nowadays, most people buying gas on credit are using general-purpose credit cards. And it's no wonder: Proprietary gas cards, which can only be used at certain gas stations such as Shell, Chevron or BP, often come with mediocre rewards, high interest rates and an array of restrictions.

The number of gas card accounts has been falling. In 2012, there were only about 7.3 million active proprietary gas card accounts, according to Nilson Report data. Compare that with the nearly 188 million active general-purpose credit cards that year. In 2013, the number of active proprietary gas card accounts slid to about 6.7 million, with 17.7 million circulated cards in total. The number of cards circulated is greater than the number of accounts because in some cases more than one card is tied to each account.

If you have fair or poor credit, and don't plan on carrying a balance, these private-label gas cards might be an OK option. But general-purpose cards, which usually come with higher rewards rates, less-confusing terms and lower APRs, typically offer more overall value. That could be one reason so many people have switched.

"If the price of gasoline stays low, and the amount of debt Americans owe on credit cards stays the same, I think it's going to be a very cold period for gas credit cards," says David Robertson, publisher of the Nilson Report.

These cards used to be a big deal. In fact, as recently as 1987, there were more than 100 million in circulation in the U.S., writes economist Lewis Mandell in "The Credit Card Industry: A History."

When Proprietary Gas Cards Were Popular

The rise of gas cards started with the Arab oil embargo of 1973 and 1974, when OPEC stopped selling oil to the U.S. The cost of a barrel of oil almost quadrupled, according to the Federal Reserve, which in turn drove up the cost of gas. Even after the embargo was lifted, gas prices remained high, causing many consumers to lean on credit. But to save on merchant fees, many gas companies stopped accepting any credit cards but their own.

"Consumers applied for many oil company cards, and the oil companies began to refuse bank cards," Mandell writes. "In the late summer of 1979, both Mobil and Texaco dropped bank cards, and others soon followed."

With gas stations rejecting all credit cards except their own, proprietary gas cards became more valuable, especially to those who couldn't afford gas upfront. But when companies started restricting the issuance of these cards, the number of outstanding cards dropped from 126 million in 1978 to 110 million in 1980, Mandell writes. By the early '80s, gas stations began accepting general-purpose credit cards again, and proprietary cards continued to fall out of favor. Consumers in search of the best deal began opting for cards that offered rewards everywhere instead of only certain gas stations.

Rewards Shrink as Prices Rise

It's not surprising that people started choosing general-purpose cards over private-label ones, once they had the option. For one thing, private-label cards were more complicated and usually less rewarding. They typically earn rewards in cents per gallon, rather than cents per dollar like general-purpose cards.

"It's confusing. You've got to do some math. But the cents-off-per-gallon thing really resonates with consumers," says Gray Taylor, executive director of Conexxus, an industry group that develops and implements new technologies for convenience stores and gas stations.

Take the Shell Drive for Five Card, for instance. You get an unlimited 5 cents off per gallon of gas you purchase at Shell. That's a 2.5 percent rewards rate when gas is $2 a gallon – a decent deal. But that rewards rate gets lower as the price gets higher. When gas is $3 a gallon, the rewards rate drops to 1.67 percent. At $4 a gallon, it's 1.25 percent.

Here are some other things you should watch out for with these cards:

● Minimum purchases. The Valero card advertises that you can "earn up to 8 cents per gallon on fuel purchases." But in the fine print, it notes that you'll only begin earning rewards – starting at 4 cents per gallon – after you purchase 50 gallons of Valero gas in a billing cycle.

● High interest rates. Most proprietary gas cards have interest rates north of 25 percent APR. Carrying a balance on these cards is very expensive.

● Confusing policies. Compared with general-purpose cards, proprietary gas cards tend to have far more restrictions listed in their terms and conditions, including discount expirations, exclusions on purchases and maximums on rebates.

Mandell, now an economics professor and dean emeritus at the University at Buffalo, notes that complicated rewards systems often give the illusion of offering more value. "In terms of behavioral economics, it has great appeal to certain people who really like lotteries," he says. But if you can't easily understand the redemption policies on your card, he says, there's a good chance you aren't getting the best deal.

The main upside to proprietary gas cards, Taylor notes, is that you can generally qualify for them with fair or poor credit. "They're definitely going after the underserved. And that, I think, is a valuable thing," he says. But personally, he says he hasn't carried one of these cards since 1982.

For Many, There Are Better Options

Among the proprietary gas cards branded by the top 11 gas companies – including offers from Shell, Chevron, Valero and Speedway – the Exxon Mobil card, which updated its rewards system on Feb. 1, currently offers the most generous terms: You get 6 cents off per gallon in the form of an automatically applied statement credit. At gas prices of $2 a gallon, that's a respectable 3 percent rewards rate, with no limit on rewards.

The downside? You can't use it anywhere but Exxon Mobil, and it carries an APR of 25.24 percent. Sunoco, Citgo and Shell all tie for second-place; each offers a 5-cent discount on each gallon of gas. If you have subpar credit, or your gas station offers additional benefits to private-label cardholders, such a card might be a fine deal.

But for many, general-purpose rewards credit cards consistently offer the best value. Here are just a few general-purpose cards that offer excellent rewards both at the pump and at the grocery store – rewards based on the dollar value of your purchase, rather than how many gallons you buy:

● PenFed Platinum Rewards Visa Signature Card: Offers an unlimited 5 points per dollar spent on gas purchases and 3 points per dollar spent on supermarket purchases. Points are redeemable for 1 cent each. There is no annual fee.

● Blue Cash Preferred Card from American Express: Offers an unlimited 3 percent cash back at gas stations and department stores, and 6 percent cash back at supermarkets for the first $6,000 in supermarket purchases each year. The annual fee is $75.

● BankAmericard Cash Rewards: Offers 3 percent at gas stations and 2 percent at grocery stores, up to $1,500 in gas and grocery store purchases each quarter. There is no annual fee.

4 People Who Created the Modern Shopping Experience

If you were to walk into a general store in the early 1800s – the store from which most people bought things – it would seem almost alien to you today. You'd generally find a very small storefront with a proprietor behind the counter, with whom you would negotiate a price for whatever goods he or she might happen to have on hand, and you would have no expectation of the store having anything you wanted. In some cities, you might find larger stores in a sense, even ones where there were different departments, but you would still find yourself having to ask people at desks whether they had goods that you wanted and negotiate for prices.

Contrast that to today, where you can wander through enormous well-lit stores with goods on display everywhere with clear prices and you can find them in almost every city and town of any size in the country, and if they don't have what you want, then you can just go online and find practically anything you can imagine.

Who were the innovators who took us from the general store of the 1800s to today's climate of discount stores, supermarkets and online shopping? Four people stand at the forefront of these changes and, believe it nor not, you've probably only heard of one of them before.

The first person worth noting is John Wanamaker, who founded the extremely influential Wanamaker's department store in Philadelphia in the late 1800s. His store was the first to have fixed prices on goods throughout the store. He also innovated the idea of newspaper advertising and grocery fliers so you would know the goods that were for sale at Wanamaker's, as well as the prices. His store also introduced the concept of seasonal sales, with different items seeing reductions in their fixed prices at various times during the year.

Still, the experience at Wanamaker's would be unusual to most shoppers today. You would have to couple Wanamaker's innovations with those of another person, Harry Gordon Selfridge, who managed the Marshall Fields department store in Chicago in the late 1800s and then moved on to open the very influential department store Selfridges in London in the early 1900s.

What did Selfridge bring to the table? His store was the first to display everything for sale in the store. Before this, many stores would only display a few examples of the items for sale, if any, and you would have to ask a clerk to retrieve the items for you. Selfridge put all of the items out on the floor so that customers could see the actual item they were buying and take it to the cashier themselves. Selfridges was also the first store to have an internal telephone system, so departments could easily contact each other.

These innovations formed the basic model of the department store, grocery store and the "five and dime" as they existed throughout most of the 20th century. The next major leap came in the form of discount department stores, and the person behind most of the innovation there was Sam Walton, the proprietor of Wal-Mart.

Although several discount stores came into prominence at roughly the same time in the years immediately following World War II, Walton offered many innovations beyond the other discount stores, innovations that others copied to varying degrees of success.

Walton's biggest innovation was behind the scenes: Rather than relying on companies to deliver products for him, he developed his own fleet of trucks, enabling him to buy goods from manufacturers more cheaply because he handled all of the delivery to individual stores.

This allowed a great deal of control over what was on sale in each store. The end result? Wal-Marts everywhere began to feel very identical, from their layout to the goods they carried. This type of "cookie cutter" store was something that didn't really exist before, as individual stores often had very different layouts and different goods on the shelves. Since stores now had a very specific "recipe," Walton began to move his stores into progressively smaller communities, ones that would never have been able to have a department store in the past.

The fourth innovator worth noting is Michael Aldrich. Aldrich was largely responsible for the invention of online shopping. He developed a system for online shopping in the late 1970s and early 1980s in the U.K., coupling it with several computer innovations. People using Aldrich's various systems experienced something not too different from online shopping today – they navigated a series of menus until they found items they wanted and then used a credit card to order items that could either be picked up locally or even delivered. Virtually all e-commerce today is merely a modification of the system Aldrich invented.

No matter where you shop these days, you're experiencing innovations brought to you by these four individuals. Things as common as having a standard price on an item, being able to see the items you're buying, having consistent items from store to store and being able to buy an item using your smartphone all trace their origins back to these four people.

5 Cardinal Rules of Lending Money to Friends and Family

It's a touchy subject, and discussing money matters with friends and family is usually in poor taste. However, there may come a time when somebody close to you needs financial assistance and asks for your help. Whether that someone needs to take care of this month's bills or pay off a creditor quickly, you may end playing the role of bank to someone you care about.

But when it comes to lending money, it pays to make sure you set healthy boundaries and are prepared for a potential shift in the dynamics of your relationship.

Here are five cardinal rules to stick by when lending money to friends and family.

1. Set Clear Terms

It's easy to be less formal when dealing with friends and family members but create some type of written agreement that explains all details of the loan – the complete loan amount, date the loan will be paid back in full and interest you wish to collect (if any). Make it clear that this arrangement comes with some rules and that you expect to be paid back without any hassles. You need the other person to take it seriously so that you aren't going to be taken for a ride. Setting clear expectations will also help you stay on good terms with your loved one during the course of the loan repayment plan and after the loan is paid in full.

2. Keep It Private

Offering to help someone dealing with a financial crisis is kind and generous. Still, playing lender doesn't give you license to share your good deed with the world. Respect the other person and the situation she's in by keeping the entire conversation and the amount you are giving confidential. Don't inform other family members without the person's permission and don't advertise your generosity on social media. If you are genuinely helping this person out, the reward is in the giving and not what other people will think about it. Keeping things private also establishes trust between you and the person in need as she gets back on her feet.

3. Don't Expect to Get Your Money Back

When you are in a position to share the wealth with friends and family members, you may not end up getting your money back – no matter how close they are to you and what terms they have agreed to. Expectations change when somebody owes you money, and when that someone is a family member or a close friend, that debt can create tension in the relationship. Unless you really aren't that close to the other person or are prepared to take the other person to court, consider that you may have to walk away from the loan at some point. Review your budget carefully to make sure you won't be stretching yourself too thin if the loan isn't repaid. If you can afford it, treat the gesture as a gift. This way, you won't end up turning from friend or family to foe over a money dispute.

4. Set Boundaries

Lending money to someone close to you can make you feel good and help someone in distress get a better handle on his financial life. However, you will want to avoid being the go-to person every time the person needs money. Set clear boundaries by devising reasonable monthly payment terms and an expectation that he will follow through on his promise. When you do agree to lend the other person money, make sure this is a one-time arrangement so he understands you won't always be there to bail him out at a moment's notice. You're still helping him, but also making appropriate financial decisions for yourself in the process.

5. Simply Say 'No'

If you have a hard time setting boundaries or always find yourself in a position to keep giving, you may struggle with simply saying "no" without feeling guilty. You have the right to deny the request and can do it politely. Simply state that you have a personal rule not to lend money to friends and family members, or mention that you don't have the budget right now. You don't have to explain yourself in any great detail but you do need to be firm about your stance on the subject so the other party is free to explore additional options.

5 Financial Risks Startups Have to Take

Everyone seems to be jumping on the startup bandwagon; people are coining themselves entrepreneurs in hopes of one day inventing the next Facebook or Pandora and becoming billionaires. We're all familiar with the rags-to-riches stories many entrepreneurs experience, but not all of us understand the financial risks involved.

The startup life is brutal. Founders are expected to take extreme pay cuts and sacrifice certain luxuries in order to keep their startup afloat. In the eyes of entrepreneurs, putting everything on the line is what it takes to get ahead and succeed in the long run. Capital is tight and needs to be spent efficiently, but sometimes taking the occasional risk is necessary to get a project off the ground.

Here are five financial risks all startups should take if they're serious about growing their business.

1. Minimize outside funding. Many new businesses focus on securing capital from outside investors like venture capitalists, but before you seek out an investor you might want to consider pulling out your wallet. Dig a little into your savings and retirement accounts to acquire the necessary funds to get your business venture started. It sounds incredibly risky (because it is!) but you'll be hard-pressed to find an investor who will invest capital into your startup if you haven't put some of your own money in first. 



2. Hire a tax advisor. Nobody likes filing taxes, but the last thing you want on your mind while running a business is wondering if you're meeting your tax obligations every month. As revenue begins to flow into your company, there will be various taxes your business will need to file. Hiring a tax advisor, while it's an additional cost, will ensure your startup is following all the proper tax regulations to stay compliant. It's a small upfront cost in the grand scheme of things. 



3. Pay your employees. Recruiting your family members or hiring unpaid interns might sound like a great cost-saving tool at first, but remember that your long-term goal is to build a profitable business. It's not enough to ask employees to forego pay in exchange for equity; if you're serious about growing your company and keeping the talent you have, you'll need to find room in your budget to pay your employees. But keep in mind: Paychecks aren't the only things employees are looking for in the workforce. "Compensating employees well is not sufficient as a single tool to retain talent," says Leon Ginsburg, co-founder of Chairlift.io. "Today's workforce generation also looks for employment with organizations whose talent-management and development processes are light, intuitive, meaningful and user-friendly."



4. Bring your developers in-house. It's no secret that developing costs are expensive. If you're building an online or mobile application, finding the right developers who are committed to your business will cost significant financial capital. However, long-term growth is virtually impossible without it. Outsourcing development needs can help in the short-term, but it's not a viable option as your company scales. You want team members who are dedicated to your mission and believe in your vision; freelancers split their time between multiple projects and might not be able to focus on your needs 24/7.



5. Secure a physical office space. You can't work out of your room forever, and there comes a day when you have to invest in a proper office space. "It's a terrifying task to handle because the implications are huge - it means your startup is actually happening, and the scope of responsibility increases tenfold," says Trina Felber, CEO of Primal Life Organics, which develops Paleo skin care products. Further, because the future is always blurry, investing in an office space is a leap of faith. The rising popularity of co-working spaces has helped companies with rental costs, but it's still an investment that will grow as your company brings on more hires. With that said, it's also one of the most important investments, acting as a milestone for entrepreneurs.

Money is a big concern for the majority of startups, but there's more to entrepreneurship than worrying about finances. Startups encourage individuals to learn and grow as business individuals, and that includes taking risks with your business' finances. The majority of the time, we're taught to save our money and spend frugally to maximize our personal capital, but there's no playing it safe in the business world. If you want to get ahead of your competitors and stand a chance at making it in your industry, your startup needs to take a financial leap of faith.

6 Ways to Reduce Your Taxable Income in 2016

As the new year kicks into gear, it's time to get a jump start on maximizing your savings by taking advantage of ways to reduce your taxable income in months ahead.

By implementing the money-saving tips below where applicable, it's possible to shave tens of thousands of dollars off of your taxable income in 2016. Let the savings begin!

Charitable Contributions

With charitable contributions, you can tag team your efforts by reducing your taxable income and making the world a better place. According to the IRS website, it's possible to deduct giving amounts of up to 50 percent of one's adjusted gross income when donating to a qualified organization.

Bonus: You can give either cash or property items and take the fair market value of the property item as a reduction of your taxable income.

Medical Expenses

Opening an account such as an HSA (health savings account) or an FSA (flexible spending account) can be a great way to reduce your taxable income, provided you have upcoming medical expenses that will accrue during the year.

A variety of medical expenses qualify for use with an HSA or FSA, such as impending surgeries, prescription medicines, doctor visit copays or dental expenses.

Both HSAs and FSAs can help you to reduce your taxable income. However, there are some differences between the two accounts you'll want to consider:

• HSAs are only available to those who have a high-deductible health plan, whereas the FSAs have no eligibility requirements.

• HSA contributions are capped at $3,350 per individual and $6,750 per family annually, and FSA contributions are capped at $2,550 per year for both individuals and families.

• HSA contribution amounts can be changed at any time during the year, whereas FSA contribution amounts can only be adjusted during open enrollment periods or with a qualified change in family status or employment.

Whichever type of account you choose, there are significant savings to be had when choosing to reduce your taxable income this way.

Interest Payments

According to the IRS, five types of interest payments can be deducted from your taxable income if you file using the long (1040-A) form:

• Interest paid on your home mortgage

• Interest paid on student loans

• Interest paid on your business loans

• Interest paid on money borrowed to purchase an investment property

• Interest on investment income (limited to your net investment income)

Talk with your certified public accountant about what types of interest payments you may have that can be used to reduce your taxable income.

401(k) Contributions

For the 2016 tax year, the IRS has approved 401(k) and 403(b) contributions of up to a whopping $18,000 a year for those age 49 and under. Those 50 and over get the option to add an additional $6,000 to their retirement accounts, giving them the ability to reduce their taxable income by up to $24,000 with just 401(k) contributions alone.

By maxing out your 401(k) contributions, you not only work toward preparing a more secure future for yourself, you work to minimize your 2016 taxable income by as much as possible.

IRA Contributions

IRA contributions can be used on top of 401(k) and/or 403(b) contributions to further reduce your taxable income. For those under age 50, a traditional IRA can be used to reduce taxable income by up to $5,500. Those over age 50, they qualify for a traditional IRA contribution of up to $6,500.

Bonus: IRA contributions for the prior year can be made through April 15 of the current year, so there's still time to reduce your 2015 taxable income by making a qualifying traditional IRA contribution.

Business Tax Deductions

Estimates show that as much as 30 percent of American jobs are held by the self-employed and those they hire. In order to minimize your taxable income as much as possible, it's important to take full advantage of the tax deductions available to self-employed individuals if you own your own business, no matter how small.

If you're self-employed, talk to a qualified CPA who specializes in preparing taxes for self-employed individuals to see if you can reduce your taxable income with deductions for things like your home office, Internet and phone expenses, travel expenses and health care premiums.

Learning how to take full advantage of the tax deductions available for your specific tax situation can be a smart way to reduce your taxable income and increase the amount of money you save and invest each and every year.