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Six Tips to Put Your Financial House in Order

Six Tips to Put Your Financial House in Order

By Kim Lankford, Monster Contributing Writer

If you want to spend less time worrying about your money, then it’s time to get your financial act together. These six strategies can help improve your financial situation and simplify your life at the same time.

1. Put Your Savings on Autopilot

If you haven’t maxed out your 401k or other retirement plan at work, add an extra $50 or $100 every month. Increasing your contributions just a little can make a huge difference over time. By adding $100 per month when you’re 25, you’ll have an extra $330,000 in your 401k by the time you’re 65 if your investments return 8 percent annually, which is below the average long-term return for stocks. Since the investments are pretax, your $100 monthly investment will lower your paycheck by $75 if you’re in the 25 percent bracket. If your employer matches your contribution, you’ll get free money to help you save even more. And it’s the easiest way to save, since the money is automatically invested before you can touch it. If you’ve maxed out your 401k, invest $333 automatically every month in an IRA. Ask your IRA administrator to set up automatic payments.

2. Stop Worrying About Your Investments

Instead of poring over your investment options and wondering when – and what – you should buy and sell, have the experts do it for you. Most mutual fund companies, and quite a few 401k plans, now offer target funds that match your investments to your savings time frame. If you’re in your mid-30s, for example, you can invest your retirement money in a 2040 target date fund. This fund invests aggressively when you have more than a decade to go before retirement, then gradually gets more conservative as you approach retirement. These funds are diversified, so you don’t need to invest your retirement money anywhere else.

Pay Bills Automatically

Signing up to have your bills paid automatically from your bank account saves you monthly check-writing hassles and mail-delivery worries; it also protects you from costly missed deadlines. After one late payment, some credit-card companies boost interest rates beyond 31 percent and charge late fees of nearly $40. And some card companies raise your rate if you miss a deadline on another card, even if you have a spotless record with them.


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