GOLDEN VALLEY, Minn. — Ghosts and goblins can be scary, but not as frightening as the ghoulish habits haunting our finances. Justin Halverson from Great Waters Financial joined us to share four hair raising habits and how to turn them into financial treats!

Q: WHAT ARE SOME OF THE WORST HABITS HAUNTING OUR FINANCES? 

1. Spooky Spending

  • Our spending habits will haunt us if we don’t track where our money is going.
  • Only one-third of Americans maintain a formal household budget, tracking their income and expenses each month.
  • If you don’t have a budget, now is the time to make one! You can use a pen and paper, an online spreadsheet or a budgeting app.
  • Calculate exactly how much income you are bringing home every month. Then, write your expenses. Include bills like your mortgage, car payment, and credit card bills. Also, include discretionary spending like your daily coffee and entertainment.
  • Take it one step further by setting aside a certain percentage each month to put into your savings. Consider paying yourself a bill, too.
  • If you are spending more than you make, look over your budget and find areas to cut back.

2. Decomposing Credit Scores 

  • In Minnesota, the average credit score is 713. Which is considered good, but we don’t want to go backward.
  • You should be checking your credit score every year. You can get a free credit report from each of the three major bureaus annually.
  • You also want to make sure the information on your credit report is up-to-date and accurate and there aren’t any mistakes.
  • Some of the most common errors include incorrect personal information, accounts that don’t belong to you and closed accounts reported as open. Also, keep an eye out for duplicate accounts and missing payments.

3. Ghosting Retirement Savings

  • You will be haunted if you put off saving for retirement.
  • The sooner you start saving, the better off you’ll be, thanks to the power of compound interest. If you want to crunch the numbers yourself, I have a compound interest calculator on my website, greatwatersfinancial.com. This will show you the power of saving early.
  • Start saving for retirement by enrolling in your company’s 401(k), and set up automatic contributions. I recommend my clients save 10 - 15% of each paycheck.
  • Your 401(k) is a great place to start, but don’t stop there! Consider opening an IRA or Roth IRA to save even more.

4. Mysterious Markets

  • Although we can’t predict the stock market, we shouldn’t be afraid of it!
  • Check-in with your portfolio and make adjustments. Depending on how well your investments have performed this year, you could be over weighted.
  • For a quick self-assessment on your risk, try the rule of 100. Take your age and subtract it from 100; that should be the percent of your portfolio in stocks. For example, if you are 30, 70% of your portfolio can be in stocks, and if you’re 70, only 30% of your portfolio should be in stocks.
  • It’s important that you are taking the appropriate amount of risk for your age and how close you are to retirement.
  • Talk with your financial professional before making any major investment changes.