How to Make Your Money Work as Hard as You Do
Money Girl interviews Lorna Kapusta, head of Women Investors & Customer Engagement at Fidelity Investments. They talk about how to crush money stress, create a simple money plan, and exactly what to do with money based on how you want to spend it.
Laura Adams, MBA
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How to Make Your Money Work as Hard as You Do
Being a successful investor comes down to identifying your financial goals, setting aside money to achieve them, and treating the funds appropriately based on your time horizon. While everyone needs emergency money, keeping too much in low-interest savings will cause you to miss a massive amount of potential earnings over the long term.
According to Fidelity Investments’ recent Financial Sentiment Surveyopens PDF file , the pandemic continues to cause historic levels of stress, especially for women. The survey showed that 79% of women suffer from stress due to money and job security, up from 67% last fall.
However, there’s good news, too. Seven in ten women believe they’ll be better off financially in 2021 than in 2020 and are ready to take control of their money.
To discuss the Fidelity study and actionable tips to make your money work harder (regardless of gender), I interviewed Lorna Kapusta. Lorna is the Head of Women Investors & Customer Engagement at Fidelity Investments. Her job is to empower women, regardless of their career or financial situation, to become more actively involved in their finances.
On the Money Girl podcast, Lorna and I cover a variety of topics, including:
- Critical findings from the recent Fidelity survey.
- How to create a simple money plan that alleviates financial stress.
- Exactly what to do with your money based on its purpose.
- How to make your money reach its full potential without being too risky–even if you’re afraid of investing.
- Tips for creating a solid financial foundation.
[Listen to the interview using the embedded audio player or on Apple Podcasts, SoundCloud, Stitcher, and Spotify]
4 Ways to Help Your Money Work as Hard as You Do
Here are four tips to help your money work harder:
Tip #1: Reset your financial foundation
Having a clear picture of your overall financial situation and establishing an emergency safety net is a game-changer. It’s critical to review your saving and spending, so you know exactly where your money goes and what to plan for.
A recent Fidelity surveyopens PDF file found that more than half of women said they need at least six months of emergency savings to sleep well at night. But only 30% have saved that much.
One way to tackle a savings deficit is to use the 50-15-5 guideline. It’s a rule of thumb that encourages you to spend 50% of your monthly income on essential expenses, such as a mortgage, rent, utilities, food, and transportation.
You spend 15% on retirement. And by the way, if your employer offers a matching contribution, it counts toward 15%. You spend 5% on savings, such as building your emergency fund. The remaining 30% is yours to save or spend as you wish.
One way to tackle a savings deficit is to use the 50-15-5 guideline.
Tip #2: Map your money goals
Having a financial plan means you have a road map to achieve what’s most important to you. It includes long-term goals, such as retirement, and short-term goals, such as buying a home, car, or going back to school.
Start by mapping out what you want to accomplish with your money in the next 6 to 12 months. Then go out to three years, ten years, and then to retirement. Writing down your goals is a powerful step to making them tangible and achievable.
Tip #3: Put your savings to work
Fidelity’s research found that, on average, women save a higher percentage of their paycheck and often get better investment results than men.
Nearly half of women report having $20,000 or more in savings, outside of their retirement or emergency fund, and more than a third (35%) have at least $50,000. But many are keeping it in cash or bank accounts, earning less than a one percent return. In other words, many women are missing out on thousands of dollars of potential earnings over the long term.
Tip #4: Use free resources
There are plenty of free resources, no matter how much you earn or where you are in your financial life. Fidelity offers Women Talk Money, a weekly 30-minute interactive discussion about relevant topics for women. Join us and ask your financial question–you’ll be glad you did!
What questions do you have about saving or investing money? You can leave a voicemail for Laura by calling 302-364-0308 (it might even be used in the Money Girl podcast!). Follow her on Instagram and sign up for her weekly newsletter at LauraDAdams.com.
About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.