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Money management: It's never too late to start

Not enough savings and too much debt? Don't despair. TODAY financial editor Jean Chatzky shows you how to get started at any age.
/ Source: TODAY

You're over 40 and you haven't started seriously saving for retirement. You have more debt than you'd like to admit, or less investments. And, believe it or not, it's now too late to pretend that you're waiting until you grow up to start.But, despite what you might think, it isn't too late to get on track. You can catch up, as long as you're willing to change your bad habits and play the game.

Your savings, investing, and spending patterns will have to be revamped. So will other habits that are preventing you from building wealth and financial security.

The first thing you have to change, though, is your mind. Give yourself a second chance at attaining wealth, and commit to doing what it takes to get there. Get over that feeling that it's too late to save for retirement because your future is far too important to throw in the towel.

And know that as an older saver, you have more than a few reasons to replace your negative attitude with an optimistic one: The majority of baby boomers say they expect to keep working, and therefore earning, in retirement. At your age, you're probably in your peak earning years, your kids are older, and your house may very well be close to paid off. And your emotional maturity means you'll have the wisdom to protect your hard-earned cash from the next market turndown.So go ahead and start now. It'll be worth it. Save more. Since you won't be able to rely on the magic of compounding interest, you've got to sock away more money each month. The key to saving more money for tomorrow is knowing where your money is going today. Take the time to track your spending for at least a few weeks, and then make some cuts. Slashing the amount of money you're putting toward debt repayment — by calling your lenders and asking them for interest rate reductions — can leave you with a gold mine. If there comes a point when you realize that, despite your best efforts, you just can't free up extra money, then you may have to look at some harder choices. Can you live somewhere less expensive? Drive a cheaper car? Send your children to public, rather than private, school?Earn more. Do it by either adding more hours, or moonlighting alongside your current job. These days, baby boomers seem to be redefining the idea of retirement. Many expect to keep working full-time for five years, or longer, after they hit retirement age. Tacking on a few extra years in the workforce can really pay off for late savers, and give your portfolio added time to grow. It'll also cut the number of years you'll need to draw on that money, and give you a shot at hanging on to some valuable health-care benefits.Make that money last. With all the emphasis on saving for retirement, it's easy to lose sight of the importance of managing your money during retirement. To do that, you need to keep a lid on withdrawals. Remember this magic number: 4 percent. As long as you keep the amount of your profile that you withdraw each year at or below that amount (adjusted for inflation), your money has a good chance of lasting as long as you do. Remember, though, that the balance in your retirement account is a moving target — if the market soars, you'll have a little more freedom; if it falls, you have to tighten up your purse strings to compensate.If you need to, get help. You may decide you need a financial professional to offer personalized advice. But with all the different certifications — CPA, CPA/PFS, ChFC — it can be hard to choose one who's right for you. Know that the letters after the names are not nearly as important as one question: How does the planner get paid? You want to hire a fee-only planner if possible, not someone who earns commissions. These advisers are paid a flat fee for their services, meaning less conflict of interest. They won't be tempted to sell you something simply because they make money on the deal. Check out the National Association of Personal Financial Advisors (, which is an organization of fee-only financial planners.

Jean Chatzky is an editor-at-large at Money magazine and serves as AOL's official Money Coach. She is the personal finance editor for NBC's "Today Show" and is also a columnist for Life magazine. She is the author of four books, including "Pay It Down! From Debt to Wealth on $10 a Day" (Portfolio, 2004). To find out more, visit her Web site, .