Personal Money Management Tips in 15 Minutes
Get on Track for Retirement
Yes, you really can devise a smart savings plan for retirement in just a quarter of an hour. The potential reward is huge: A survey by banking giant HSBC found that people who have even a rudimentary plan for reaching retirement goals are ending up with up to three times as much money as those without one.
Step one: Figure out your monthly savings target by filling in basic info like your projected retirement age and current savings rate at T. Rowe Price’s Retirement Income Calculator (troweprice.com). Time needed: five minutes.
Step two: Coming up short? Use the remaining 10 minutes to pump up your 401(k) contributions on your plan’s website. If you can’t put away as much as the calculator recommends, commit to automatically increasing the amount you’re saving at the time of your raise; half of large employers offer this feature, according to Aon Hewitt.
Small Change, Big Impact
Financial experts recommend saving at least 10 percent of income a year for retirement. Sound impossible? Increase your savings by just one percentage point a year until you get there and you’ll hardly feel a pinch. Below you can see the difference over time, assuming you start with the average 7 percent contribution.
401(k) Balance After 30 Years
On a $50,000 Salary
7% contribution: $685,700
Dialed-up contribution: $869,000
On a $100,000 Salary
7% contribution: $1.4 million
Dialed-up contribution: $1.7 million
Notes: Assumes 3% annual raises, 7% average annual return, and 50% employer match up to 6% of salary. Source: Tim Maurer, CFP
Target Your Savings
Want to save money for a rainy day or a sunny vacation week but never have enough leftover cash to stash for these goals? Have the money taken directly from your paycheck, so you’ll never miss it. Only about 20 percent of workers split their paycheck among multiple accounts, though many employees with access to direct deposit can do so, reports electronic-payments industry group NACHA. The association found that those who take advantage save $90 more a month than those who don’t.
How to do it: If you don’t have dedicated savings accounts for each of your goals, set them up. Discover Bank (discoverbank.com) is a good option since it consistently pays higher-than-average rates, recently 1 percent a year. Opening accounts online takes 10 minutes tops. Next contact your payroll department to see if you can split your paycheck; if so, figure on filling out a form, adding another five minutes. Not an option? Set up automatic transfers from your checking account so that the money is moved on payday.
Know the Score
The National Foundation for Credit Counseling reports that only four in 10 Americans know their credit score. A good reason to be among them: This number determines what interest rate you’ll get on loans and credit cards.
How to check: Pony up $20 to get your score at myfico.com. The FICO scoring model, the one most commonly used by lenders, ranges from 300 to 850. A score of 740 or higher entitles you to the best rates; if yours is lower, see Juice Your Score for quick ways to raise it.
Download a Shopping Buddy
You know that coupons can reduce the bite groceries and other household goods take out of your budget—25 percent of take-home pay for the average family—but you can’t spend hours perusing the Sunday circulars. Fortunately, there are apps for that. Download these:
Coupon Sherpa: Delivers coupons to your phone for in-store scanning (free for iPhone and Android).
CardStar: Stores your merchant loyalty cards on your phone, so you won’t miss out on points or discounts (free for iPhone, Android, BlackBerry, Windows Phone).