ROCHESTER, Minn. - Getting better with money is a common resolution when a new year comes around.
"The new year right around the corner is the perfect time to do that. Set some goals, write them down, put them in a place where you can see them on a daily basis and that will help you remember that, that's what you're striving towards," Dan Charlesworth, a financial advisor at Advanced Financial Consultants, said.
A good way to start getting finances in order is by establishing a budget.
"An easy way to do it is just download your last six months of bank and credit card statements, divide by six, and say, 'hey this is about what my monthly expenses are,'" he said.
Then it's easier to see where you can save and make smarter choices, even if it's just one fewer coffee each week. He said a little can go a long way.
"Just starting out is by far the hardest part...opening an account whether it's retirement or just a savings account at the bank, and putting money in there consistently will have huge effects long term and mentally, " Charlesworth said.
He suggests putting 10-15% of income in savings each month. But as with many of his younger clients just starting out and possibly with student loans, Charlesworth said it's just good to start somewhere.
"Start at something small. Start at 50 bucks a month or 100 bucks a month," he said.
Then he suggests developing a goal to proportionately increase the amount until reaching that 10% level.
Here are a couple strategies when it comes to handling debt:
- start by paying the debt with the highest interest rate
- use the "snowball effect", start by paying off the smallest loan then move up from there
With tax season just after the new year, it's also good to know your tax status. Charlesworth said accountants and CPAs will have the most knowledge on this and will often sit down to have initial conversations free of charge.