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A Money Beginner’s Checklist for Women 50+

How to get started investing and managing your finances

Part of the Women Over 50: Take Control of Your Money Special Report

Editor’s note: This article is part of a Next Avenue special section about women age 50+ managing their money.

If you’re a 50+ woman who hasn’t managed money before, here’s a checklist to help you get started. Click here for a dowloadable version of this checklist.

☐ Bone up on the basics. Two excellent books are Carrie Schwab-Pomerantz’s The Charles Schwab Guide to Finances After Fifty and Jonathan Clements Money Guide. Online, visit The National Endowment for Financial Education’s Smartaboutmoney.org, whose free guides explain stocks, bonds and mutual funds. Two good money sites oriented toward women: DailyWorth and LearnVest. Also, check out WISER, from the nonprofit Women’s Institute for a Secure Retirement, especially its Investment 101 tutorial.

☐ Get a snapshot of your spending. Sites like Mint.com and YouNeedABudget.com help you track your personal finances and discover ways to save.

☐ Build your emergency fund. Most advisers suggest you set aside six months of living expenses; if you can gradually build up to a year’s worth, do. A money market mutual fund or a bank savings account are smart, safe places to stockpile this money.

☐ Focus on paying down debts. Whittle down high-interest credit card debts, college loans and car loans. You might begin by paying off the smallest balance first, for a sense of accomplishment.

☐ Give yourself an insurance checkup. If you still have dependent children, you may want to buy a term life insurance policy. In your 50s, you may also want to research long-term care insurance policies. Also, review your needs for disability and liability insurance.

☐ Take advantage of your employer’s 401(k) or similar retirement plan. If possible, invest enough to qualify for the full match (what your employer kicks in). Why refuse free money? The maximum contribution for people 50+ in 2015: $24,000.

☐ Set an annual target savings amount. Ideally, you should save at least 15 percent of your salary every year, which includes any employer match.

☐ Start learning about investing in the stock market. Over the long haul, stocks have outperformed bonds, bank savings accounts and CDs. A general guideline: for retirement savings, take 100 and subtract your age for the percentage of your portfolio to hold in stocks. If you’re 55, you’d want 45 percent in stocks. As you get older, gradually shift toward a higher concentration in safer bonds.

☐ Start investing in stocks. The best way is through a diversified mutual fund. Morningstar, the investment advisory firm, has areas on its site about funds geared toward novices. You might want to join the National Association of Investors Corp. to learn more about the stock market through online classes, webinars and research reports. This group can also help you set up an investing club and point you to ones near you.

☐ Learn about index funds and Exchange Traded Funds (ETFs). They’re low-cost, diversified ways to own a basket of stocks that matches the overall stock market or a slice of it.

☐ Contribute to an Individual Retirement Account (IRA). This is a retirement plan, sold by banks, brokers and mutual funds, whose earnings grow tax-deferred. In 2015, the maximum contribution for traditional or Roth IRAs is $6,500 if you’re age 50 or older.

☐ If you’re self-employed, set up a self-employment retirement plan. The self-employed can contribute to SEP-IRAs, putting in up to $53,000 in 2015. Two other alternatives are the Solo 401(k), which also has a $53,000 maximum this year, and the SIMPLE IRA, with a $15,500 limit for people 50 and older.

☐ Estimate how much money you’ll need in retirement.  Many mutual fund companies also have good retirement calculators on their sites.

☐ Start a money book club or a money-circle discussion group. A club can force you to read useful books you might never have picked up on your own. A money-circle group lets you and your friends hold regular conversations about finances and help each other.

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