As part of our weeklong series, “What Experts Wish You Knew," we're talking about things we wish we had known long ago. And we chat with experts in different fields about things they wish their clients knew long ago.
Part 4 is all about your finances. We talked with financial advisor Brent Petty from Northwest Capital Management about his top five tips to get on track financially.
“A lot of people get intimidated just getting started. It's not a conversation most folks are comfortable with,” he told us. He said you just have to start somewhere, and then “it’s not a sprint; it’s a marathon.”
1. Create a budget: Everyone needs one!
Brent’s first tip: Create a budget, no matter how much money you make. And track your spending digitally. He recommends the website mint.com, a free personal finance manager that tracks your spending and shows you where you can cut back.
2 . Pay yourself first
Tip number 2 is to pay yourself first: Put your money into savings for college and retirement first, then build your mortgage and grocery budget around that.
“One of the household things we come across in our firm is anxiety about, ‘Are we saving too much, too little?’” Brent said. “If you pay yourself first, then you know you've saved for retirement, you've saved some money for college for kids, saved money for something you want to purchase down the road.”
“If there’s money left over at the end of the month, then you can buy your coffee, go to the movies, enjoy it, and not have the anxiety of, ‘Are we on track for what we need to do for our goals?’"
3. Save early for retirement
The third tip: Start saving early!
Brent said as a general rule, 10 to 15 percent of your earnings should be invested for retirement. If you can't start that high, start with just a 3 or 4 percent and increase it year after year.
4. Hold off on Social Security
Number four: Hold off on collecting Social Security for as long as you can.
If you can wait until age 70, your benefit will increase by 8 percent per year. And if your parents are close to retirement, sit down with a financial advisor to help them decide if they can wait to collect Social Security.
5. Update your beneficiaries
And finally, tip number five: Update your beneficiaries once a year.
This is something a lot of people forget to do, or just put off altogether, and it can cause huge problems.
Brent recommends reviewing and updating every year. And make sure you do this for any kind of savings accounts, retirement plans or investments.
Check out our Facebook Live chat with Brent right here
And here are the other “What Experts Wish You Knew” topics we've covered so far this week: