Plan 2010 Finances with Mellody Hobson

Mellody Hobson's financial tips and advice for starting the new year right.

ByABC News via logo
January 3, 2010, 6:11 PM

Jan. 4, 2010— -- In this economy, everyone's saving more, so much so that savings have hit a record high.

In addition to putting money away in a savings account for a rainy day, there are several other ways to save yourself money and vastly enhance your financial outlook for the new year.

Mellody Hobson, president of Ariel Investments and "Good Morning America's" personal finance contributor, dropped by the show to share her five tips for starting 2010 on the right financial note.

Tip No. 1: Invest in the stock market, and do it long-term.

Since the stock market hit bottom in March, it's gone up an astonishing 57 percent, Hobson said, adding that she believes it will continue to climb. One of the reasons for this recovery is that there is a record amount of cash in money market funds, and Hobson said individual investors will return to the stock market as the economy improves.

"One of the reasons I am very encouraged is not only the continued economic recovery but the fact that so much money is sitting on the sidelines. $4 trillion in money market accounts," Hobson said.

So what does that mean for you? Get in on it now. According to Hobson, one of the easiest ways to start saving more is to increase your 401(k) contribution, even if it's only a few dollars. You should make it a practice to save more each year. Most employers match 50 cents for every dollar that you contribute, up to 6 percent. Since this is free money, Hobson says you should definitely take advantage of it.

But many companies have stopped matching their employees' 401(k) contributions because of the down economy. If your employer has done this, Hobson said it's a good idea to keep contributing. For one thing, many employers stopped matching contributions because business was bad, but they'll start matching again once things improve.

Also, contributing to your 401(k) -- even without the match from your employer -- is always a good idea because you're enhancing your own long-term financial security.