Back to School, Back to Your Financial Plan

The days get shorter, students go back to school… and everyone works on their financial plan? Most people don’t associate finances and budgeting with the end of summer, but maybe they should. The back-to-school season is the perfect time to tackle your financial plan.

Why This Is the Best Time for a Financial Checkup

Spring cleaning is a tradition for many people. After a long winter stuck indoors, it’s time to get rid of the clutter that’s accumulated and get your home ready for summer.

Fall offers an opportunity for a different kind of cleanup, not around the house, but in your finances. The timing is ideal because summer is often filled with vacations, travel and extra spending. Late fall and winter can also be a challenging time for your budget. If you’re buying gifts, hosting family gatherings or paying for plane tickets, it can get expensive quickly.

Once the calendar turns to a new year, many financial opportunities for the previous tax year have already passed. If you haven’t maximized your retirement accounts or made smart tax moves, you’re out of luck.

The transition between summer and fall is the sweet spot for financial planning. Summer activities are winding down, the kids are back in school, and you finally have time to focus on your finances. You can reassess your budget after summer spending, prepare for holiday expenses, and make sure you’re on track to end the year well.

Your Fall Financial Cleaning Checklist

There’s a lot to accomplish, so it’s important to be organized.

Balance your household budget. Emergency expenses, higher-than-expected vacation costs and the general effect of inflation can derail your budget. Check your monthly income versus your expenses to determine whether you’re still on the right track. You may need to adjust your budget going forward.

Determine your holiday budget. It’s not too early. The sooner you start planning for your holiday expenses, the easier it will be to avoid overspending. You may also be able to take advantage of early sales and travel deals if you plan ahead. List expected expenses, including gifts, travel and entertainment, and decide how much you can realistically spend in each category before the holidays arrive.

Check your retirement contributions. Maximizing your retirement contributions is a smart way to build your nest egg. If your employer offers contribution matching, it’s also a good way to get the most out of your employee benefits. But if you wait until the end of the year, you might not be in a position to contribute the maximum amount. Waiting until year-end may leave you without enough time to reach your contribution goals. Check your contributions now to see if you’re on track.

Assess your taxes. Tax season is still a long way off, but the financial moves you make between now and the end of the year will affect your tax bill or refund. Check your tax withholdings to make sure they’re right. Also think about any deductions you want to take or charitable donations you want to make. Finally, make sure you’re keeping your records in order. Your future self will thank you.

Check your financial protection strategies. A solid financial plan doesn’t just take care of you when times are good. It also provides for you when things go wrong. If your family depends on your income, life insurance and disability insurance are critical for financial protection. If you don’t have coverage, consider obtaining it now. If you do have coverage, check your benefits to see if they still meet your needs. If your income and obligations have increased, you may need to raise your coverage levels. Also see if there are any clauses or benefits that you’ll need to act on soon, for example, a term life insurance policy that can be converted to a permanent policy within a certain window.

Set goals for the end of the year. You don’t have to wait for New Year’s Day. Think about the goals you want to achieve before the year ends. Do you want to build your emergency savings? Cut down on your monthly spending? Diversify your investments? Once you have a goal, think about the little steps you need to take to achieve your objectives.

Need help getting your finances in order? The weeks between summer and the holiday season provide a valuable opportunity to strengthen your financial position before the end of the year, but you’ll need to act quickly. Whether you’re reviewing your retirement savings, updating your wealth protection strategy or refining your long-term financial plan, Heffernan Financial can help. Contact us to schedule a consultation.