Tuesday, February 5, 2013

Money Management in 15 Minutes or Less

Get your financial life in order by squeezing in a quarter of an hour for these easy but effective moves.

Stephanie AuWerter; Real Simple and Money editors

With longer workdays complicating the already Herculean task of juggling job and family, you probably don't have a minute to spare. And financial tasks all too often fall to the bottom of the to-do list. According to government time-use studies, the average American rarely gets to money-management chores; those who do will spend a scant 15 minutes a day on them.

Failure to make time for your finances, however, can be detrimental to your future. Fortunately, you don't need more than a coffee break to make some smart moves with your money—moves that can cut your expenses, potentially boost your savings and help protect your family's finances. "The key to meeting long-term goals is to break them into short-term steps that are easier to accomplish," says Carnegie Mellon economist George Loewenstein. Even if you have less than an hour to spare, these small steps may result in a big payoff.

Get on Track for Retirement

Believe it or not, you can devise a smart investing plan for retirement in just 15 minutes. And the potential reward is huge: A 2011 report from 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.

The information contained herein represents the opinions of a third party and does not necessarily represent the opinions of Platinum Financial or Susan S. Lewis Ltd. and are unaffiliated with any of the entities referenced above.

Step 1. Figure out your monthly contribution target by taking five minutes to input basic info, like your projected retirement age and current contribution rate, into an online income calculator.

Step 2. Coming up short? Use the remaining 10 minutes to pump up your 401(k) contributions on your plan's Website. If you can't invest as much as the calculator recommends, commit to automatically increasing the amount you're contributing at the time of your raise—a feature many large employers offer.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

Know the Score

The 2011 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, there are a few steps you can take to quickly boost your number.

Start by getting a free credit report from each of the three agencies that track consumer credit at AnnualCreditReport.com. Read the reports carefully, looking for mistakes. Any errors—about one in five has them, according to a May 2011 estimate from the Policy & Economic Research Council—could be costing you points. Report any problems to each of the bureaus and the lender (there's a form at each Website).

Next, call your card issuer to ask for an increase in your credit limit, because how much you tap of your available credit is a key factor in determining your score. The more unused credit you have, the better you look—ideally, you should use no more than 10% of what's available to you.

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% 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. In 2010 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. 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.

Download a Shopping Buddy

Coupons can reduce the bite groceries and other household goods take out of your budget—25% 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).

Adapted from the December 2011 issue of Real Simple. © 2011 Time Inc. All rights reserved.

For more Naperville retirement planning information, contact us today!

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