Summer’s End is Financial Planning’s Restart

I enjoyed the summer heat!   But the pocket book can get a little sun burnt from all the vacations, BBQs, children activities, renovations and whatever else occupied our time over the summer.  And the financial burdens continue into September, as along comes the costs of schooling, child care or sports for the kids, or the residual credit card and line of credit balances from the summer.  And dare I say…Christmas is coming!!  That is why September is a great month to get back on track with your Financial Goals.

First step, what were your Financial Goals?  Was it early repayment of credit cards, line of credits or mortgages, or catching up RRSPs or RESP contributions?   Was it starting to save for next year’s vacation or renovation?   Whatever your goals, make sure you write them down and have a priority list.  This helps considerably when we are getting back on the financial planning bandwagon.

Next, take stock of where you are currently.  What is currently in your bank account, RRSPs and RESPs, and what are the new balances of your debts.     This snapshot may reshape the priority of your goals – for example, a credit card balance with your summer vacation that cannot be paid off on the due date should become a top priority.  Taking stock helps pinpoint idle cash that can help alleviate some short-term debt (your idle cash is generally making less money than the interest savings available if you used the cash to pay down your debt).  A review of the RRSPs and RESPs may identify the need to rebalance your current investments (see my Rebalancing Blog ) or plan for the short-term reduction in contributions to tackle your credit card and line of credit balances (read more here –RRSP vs Debt Blog).

Taking stock is also the time to ask a tough question:  What if I were to pass away prematurely or be unable to work?  Can my family  take on our current financial situation without any help from me and any available insurance?  Risk management is the foundation upon which our financial house is built. So, like a real house, you should inspect this foundation to make sure all has been considered and plans are made for the worst case scenarios (Read more about The Cost of Doing Nothing).

Final step involves a review of your cash flow, particularly where your money is being spent.  This is an opportunity to grind down those 1-3 expenditure items that tend to get a little inflated over the summer, such as vacations, gifts and entertainment, and renovations.   Establish monthly budgets to bring those expenditures down, with the goal of freeing up some new cash flow to re-tackle your financial objectives.  You can also start assessing Christmas gift budgets in advance, so as to keep the cost of Christmas in line.

What we know is managing your Financial Plan is a month to month exercise.  We also know that it is very easy to be distracted from your Financial Plan in any given month.  The summer distraction is a typical one, but one that can be easily remedied with a September Financial Planning Restart.

Need help?  Call me at 604-789-3888.