Q: I maintain my accounts at Fidelity but am really concerned about making sure I'm spending and saving my money in the most productive way. Fidelity seems to have a lot of online tools. Which ones do you feel are the best and easiest to use? -Marcy, PA
A: Marcy, you’re not the only one; many Americans are re-evaluating their savings and spending habits. In fact, recent data from Fidelity Investments found that eight out of 10 Americans are cutting back on discretionary purchases because of the economic crisis. Of those who have reduced spending, nearly half (46 percent) are managing to accumulate a median amount of $200 per month. The good news is there are many free calculators and tools available online and at Fidelity to help you manage those savings dollars.
First, every financial plan should start with a budget, but the majority of people (57 percent) operate without one. To help you create and stick to a monthly budget, Fidelity now offers a new Budget Snapshot calculator. The easy-to-use, interactive calculator allows users to bucket expenses and determine monthly surpluses or deficits. You should also check out Carmen's budget calculator for a good starting point.
The next question is where to place any savings you may have at the end of each month. Fidelity also offers a new tool - a Savings Planner that allows users to set up to five personal financial priorities, including retirement, credit card debt and college savings. The tool provides a savings path with suggestions on where to place your next dollar, after entering 10 questions regarding your workplace savings plan, age, expected retirement date and annual income. I found this tool very easy to use and visually appealing.
Now you’re ready to create a long-term savings strategy using a retirement planning tool. You can start by using Fidelity’s Retirement Quick Check to create a retirement savings plan that includes personalized guidance with clear calls-to-action. Retirement Quick Check helps you factor in specifics such as a target retirement date, investing risk tolerances, current savings, anticipated income sources, expenses and likely health care needs.
If you start with these three steps, you’re a lot closer to achieving financial peace of mind.
Bill Losey, CFP®, CSA, America's Retirement Strategist®, is the resident retirement planning expert on CNBC’s “On the Money”. He has been named one of America’s Top Financial Planners and is the author of Retire in a Weekend! The Baby Boomer’s Guide to Making Work Optional. He also publishes Retirement Intelligence, a free weekly award-winning newsletter. Bill can be reached online at www.MyRetirementSuccess.com.