Every year, people around the world make promises to themselves to become better people.
We swear we will lose weight, or finally get that new job we are dreaming of. We vow to find the love of our lives (because this year is different)and commit to learning something new.
Sadly, only eight percent of people who make resolutions are statistically likely to keep them.
But, if saving money and making a few financial tweaks is on your resolution list fear not, we have your back.
Elite Daily called up Kristen Robinson, the SVP of Women and Young Investors at Fidelity Investments, to ask her advice on how we can all save a few dollars for the future, spend a little more wisely, and stick to our New Years money saving resolutions.
Follow the 50/15/5 rule
When it comes to investing, Kristen says, the biggest mistake a young investor can make is to do nothing at all.
Theyre making money, they might have their first job, or maybe even their second and they are not really planning how they are going to allocate and spend their money, Kristen says. She adds, Its easy not to stick to your budget, but establishing a budget and putting a plan in place and sticking to it is very important.
Need help making that plan? Just live by the 50/15/5 rule.
Fifty percent of your income should be to essential expenses, these are the things that you need, the roof over your head, car, food, childcare, healthcare, all of those things that are non-negotiables.
Next up, Kristen adds, 15 percent of your income needs to go straight to retirement.
Fifteen percent of your income should be to retirement, now this could include a company match.
Cant hit that 15 percent just yet? Dont fret. Simply do what you can and challenge yourself one percent extra every year.
Finally, Kristen says, beyond squirreling away three to six months worth of your salary for an emergency savings, you should also put away five percent as short-term savings. She says,
At some point youll be done saving for your short-term emergency fund and then make sure you take that money, and this is your money for other one-time expenses.
Kristen says to categorize the five weddings you have to go to this year, or the mini-vacation you want to take, as short-term savings.
Build a budget
So you have your 401 (k), or IRA all set up, and youre banking money for your future and for your short-term goals. Now, how do you stick to those budgets? Luckily for you, you live in 2016 where there are budgeting apps galore.
To set up a budget, Kristen says, there are four numbers you need to know.
You need to know, whats coming in, whats going out, what you want to allocate, so whether youre paying down debt, whether you have a savings goal or want to backpack through Europe, and then the last number that is really important is, what do you have left?
Once you know your four numbers simply head over to MyMoney.Fidelity.com and use its budgeting tool. Or, go to the app store and download Mint, GoodBudget, Mvelopes, Pocket Expense, or any number of apps to help you start visualizing whats coming in, whats going out, your savings goals and what you have left.
Ladies: Have confidence in your choices
All of Kristens advice goes double for the ladies. Kristen says women investors need to realize their own power and start gaining a little confidence. She says,
… generally, there is a confidence gap when it comes to women and their money and there shouldn’t be because at the end of the day women are great savers. When they do invest, they perform very comparably to men and the primary reason there is a confidence gap, one is they don’t have enough experience and two is they dont think they know enough.
And this advice, Kristen notes, should extend far beyond the dollars and cents women save. She adds,
When you think about those reasons, they show up in other parts of women’s lives … say for example, theres a job opening. There are 10 qualifications, a man will look at it and think I have 5 out of the 10 Im going to go for it, I’m a great fit. Where a woman will look at it and say, well, I only have 8 out of the 10, I dont have enough experience, or I dont know enough, and they wont go for the job. I do really think we need to change that paradigm.
Start thinking about retirement (no, really)
And if you cant handle any of this advice, do this one small thing Kristen advises:
Take a portion of your check or a dollar amount and you can allocate it into an account that you never touch and that you dont see on a regular basis. You wont feel the pain because you never see it.
In the end, Kristen says, you need to think about saving for the future in the same way you think about paying rent. She adds,
Its really saving for retirement just like you pay your expenses. Its just a part of your life. If you start early, compound interest really pays off significantly.
Finally, if you were too lazy to read any of this article, heres a TL;DR version in six easy steps.
–Establish an emergency savings (three to six months of pay).
–Put away 15 percent of your wages to retirement (this can include your companys matching policy).
–Pay down your highest interest rate debt first (car, student loan, credit debt, etc).
–Use technology like Fidelitys MyMoney.Fidelity.com, Mint.com, or any other apps to help you build a budget.
–Ladies, dont be afraid, get in there and learn about investing.
–Save for your retirement like youre paying your bills. Youll thank us when youre older.