new year's resolution financial check-u

New Year’s Resolution Checkup

new year's resolution financial check-u

 

Did you make a New Year’s resolution for your finances? Now is a good time to check up on how you are doing with those resolutions. If you are still on track, congratulations! If you are struggling to keep your resolution, don’t give up. Evaluate where you are going wrong and resolve to get back on track.

 

According to a study by Fidelity Investments, saving money is the top financial resolution. Everyone has the best of intentions when it comes to saving money. Unfortunately, you need more than a resolution. You need a plan. The Internet is full of creative ways to save money from collecting all your change or five-dollar bills to saving an increasing amount of money each month through the year. These are all a great way to save a little extra, but they all have the same flaw. It’s easy to find a reason each month not to save that money. So, setting up an automatic deposit from your paycheck into a savings account is a much better plan.

 

If you are trying to save money, you need to spend less. Chances are that if you take a good look at where your money goes during the week, you’ll find some easy places to spend less. Keep track of every penny for the next 7-10 days. Then go back and look if your actions match your goals and intentions. Think about all the money you could save if you made your own coffee instead of buying it every day for a year. How much are you spending on meals you are not making at home? Try bringing a lunch to work and finding easy meal solutions for weeknights. You don’t have to be extreme, but utilize coupons, savings apps, and store rewards cards. Do you have a gym membership or fees for other monthly services that you are not using? Can you cut your phone or cable services? Making little changes to your spending habits can add up to big savings over the course of a year.

 

Paying down credit cards and other debt is the second most popular financial resolution. Gather information about the amount owed, payment, and interest rate on all of your debts and make a plan of attack. Credit cards should be your first priority. Rank them based on interest rate or total balance and set out to pay them off one by one. Only after you have done that should you look at other debts. Car loans and other consumer debts should fall into a second tier. If you have no other debt and are already saving and investing, focus on student loans and mortgage debt. Both of these sources of debt usually have very low interest rates, and the interest you pay is a tax deduction.

 

Only about 10% of study participants cited budgeting as a resolution. Yet, making a budget and sticking to it is necessary to finding success with any other financial goal. Make an honest assessment of your income and monthly expenses. Create categories of expenses and set a monthly spending limit for each category. There are some great computer programs and phone apps that will help you record your expenses in different categories so that you can have a real-time picture of how well you are doing sticking to your budget. It really is so much easier to stick to your budget and attain your financial goals when diligently track your progress every month.
retirement savings working women

The Gender Gap in Retirement Savings: Three Tips for Working Women

retirement savings working women
Image: Ambro @ freedigitalphotos.net

The gender gap in retirement savings is real, and there are two main culprits for this gap. The first is that on average women earn less than men. Not only is it true that too often women are getting paid less as men to do the same job, but the bigger problem from a retirement savings perspective is that women are generally employed in lower paying fields and positions. This puts women at a clear disadvantage when you look at total retirement dollars. However, the gender gain retirement savings is minimal when you compare when and men in the same position or income level.

The second component in the gender gap is that on average women work 12 years less than men over the course of their career. In particular, many women put their careers on hold or work only part-time while they raise their young children. This creates a huge loss in retirement savings early in life when that income is so critical. One of the best tips for retirement savings success is to start early because the compounding effect of your rate of return is able to do so much of the work for you.

So, I have three tips to help women with their retirement savings:
1. Educate yourself. Women are not necessarily less financially literate than men, but they are certainly less confident in their knowledge. Read, ask questions, and gain the knowledge you need to confidently manage your finances. There are so many great books and web sites specializing in personal finance and investment topics. Find a place where you feel comfortable asking questions.

2. Don’t rely on social security or your spouse’s retirement plan. Invest in yourself for yourself. Don’t skimp on putting money into your retirement account because you would rather spend it on your family. You are not being selfish but are looking out for your future needs so that you won’t be a financial burden on your children when they are grown.

3. Increase your retirement savings as quickly as possible. Max out your 401(k) contribution with your company or seek out an alternative IRA if your employer does not offer a retirement savings plan. The sooner you can start adding money to your account, the better off you are because compounding interest can do a lot of the work for you. As a matter of fact, the money you save for retirement from your first job will have a much greater impact on your retirement date than will your salary at retirement. Compounding interest is a true miracle of finance.

Are you saving for your retirement now? When did you start? Do you feel in control of your retirement account or are you completely lost? What do you wish you knew about retirement when you got your first job? 

 

Investing: The Next Generation. Five Apps Changing the Face of Personal Finance.

five apps changing personal finance and investing

 

The old world of investment involved handing your money over to a financial advisor. Investors would get a quarterly statement to check on their portfolio and had very little involvement in their personal investments. The Internet dramatically changed investment. Suddenly investors could easily access any information they wanted about a stock, bond, or mutual fund. Online brokerage accounts empowered individuals to take charge of their own investment portfolio.

 

Once again, technology is re-shaping the way investors receive information and view their finances. Mobile technology capitalizes on this information shift and makes personal investing infinitely more accessible to everyone. These are the top five new apps that are leading the way for next generation investors.

 

1. Acorns
Acorns makes the idea of investing your spare change a reality. Connect any debit card or credit card to your Acorns account, and choose one of the five investment strategies based on your personal level of risk tolerance. Every time you make a purchase with a linked credit or debit card, your transaction is rounded up to the next dollar and the change is invested into your Acorns account. Acorns is great because it is simple and literally takes just pennies to start investing. This is my favorite new app because I love how brilliantly simple it is.

 

2. Betterment
Set a long-term investment goal, set up automatic deposits into your investment account, and the Betterment financial experts set up a financial plan to help you reach your goal. You can specify your level of risk tolerance, but you do not have to pick any individual investments. Betterment allows you to set up a regular investment account, a Roth IRA, traditional IRA, or managed trust account.

 

3. SavedPlus
Like Acorns, SavedPlus takes money from your account every time you make a transaction and invests for you. SavedPlus, however, takes your specified percentage of each transaction. Money saved can be deposited into the bank account of your choice.

 

4. Scutify
Scutify is a great tool for hands-on investors because it scours social media and compiles what news outlets, financial bloggers, and other investors are posting. Users are able to interact with Scutify All-Stars through the app to seek advice on particular investments. More experienced investors can make sentiment calls and showcase their stock picking prowess to the community.

 

5. Shares 2
If you are already invested in the stock market, Shares 2 is a great way to keep track of your stock investments. You enter in your stock investment information, and the app will keep you up-to-date on the current stock price as well as your current investment gains or losses. You can’t search for other market information from the app, but it is a simple way to keep track of your stock positions.