Summer Financial Tune-Up

Summer is an excellent time for all sorts of improvement and maintenance projects, from losing a few pounds and getting in shape to hiring contractors or tackling DIY projects. There's a lot of planning, organizing, and work involved, but the goal is to spend the lazy days of summer enjoying the fruits of your labor now.  

Your money is no different. The mid-point of the year is a great time to identify ways to keep your financial plan moving smoothly forward toward all your goals. It's also essential to ensure the extra outlay of funds for summer projects, and that vacations are planned and accounted for, so you don't get off track.  

Start by Taking Stock of Your Financial Situation at the Mid-Point 

The first step is to examine cash flows and ensure money is flowing where it's supposed to. Are you contributing enough to your 401(k) or other tax-advantaged retirement plan? Take a minute to do the math and ensure you have enough coming in to meet your goals. How much you contribute depends on where you are in your financial journey, your salary level, and your age.  

Early career: Try to contribute 15% of your pre-tax salary to your retirement plan. If 15% is a stretch, contribute as much as possible, but at the very least, be sure you are contributing enough to qualify for any employer-matching amounts. 

Mid-late career: The maximum contribution amount in 2024 is $23,000 for those under 50. Those 50+ are allowed an additional $7,500 catch-up contribution.  

Setting up a schedule of contributions that even them out throughout the year can help you smooth out the impact of market volatility. This is called "dollar-cost averaging." Taking a quick look at your paycheck will tell you how close you are to your goal and if you need to increase or decrease the amount taken out of each paycheck.  

Next, look at your budget. Are you covering your expenses every month? Are you on track with savings goals? If not, summer can be a good time to get caught up, as lifestyle needs change with the longer days and better weather. Being active outside or staying home and cooking farm-fresh food can replace more expensive options.  

Create a Budget-in-a-Budget 

Summer fun can quickly become more expensive than you thought. Creating a master plan is a great way to manage expenses. It’s also a terrific family activity that allows everyone to have input and builds a sense of anticipation. 

Balancing expensive activities like travel, vacations, theme park visits, etc., with free or low-cost activities can be an excellent way to keep expenditures under control. Summer means fairs, parades, outdoor movie nights, visits to National Parks, and other events.  

Setting up a monthly or weekly budget devoted to summer activities and sticking to it is one way to keep one-off spending to a minimum. If you plan on taking a trip, include a budget for fun, and don’t let the vacation vibes overpower your resistance. Having a number you can spend in mind, or even putting funds into a separate account with a debit card for vacation expenses, can keep your spending under control.  

Think Ahead to Fall  - and Beyond 

The quieter days of summer can allow one to get on top of future planning. Take some time to sort through the big things you’ll face in the fall – back to school, end-of-year planning, the onset of winter. What do you need to do to be ready? Making lists and getting organized can put you a step ahead when September rolls around. Have you recently considered your long-term goals? Have they changed? Big-picture thinking can be difficult to focus on when work and life commitments are in full swing. Take some time to think about yourself, your career, and your family.  

What would you change? What is the most pressing goal? What is the most meaningful?  

Thinking ahead to the next step can help you gain perspective. Are you happy in your career? How would you make a change? For some people, this means spending money on education so they can create more opportunities. For others, taking a sabbatical or transitioning into a job that requires less commitment is the right move. For many people, the goal is to start their own business.  

If retirement is the biggest thing on your horizon, break down what your retirement will look like. Will you work at a more fulfilling job or volunteer? Where will you live? How will you stay busy and have a meaningful impact during your days? 

Once you have some insight into your true goals, review your financial plan and see if it matches them. This could entail saving, changing budgets, or restructuring debt or investments.  

Summer is fleeting, and enjoying and making memories are the top priority. But don’t lose sight of the goals you’ve set for the rest of the year. Reach out to schedule a time to discuss any changes you’d like to make to your financial plans and let us help you get back on track or plan for the changes you’d like to see for your future! 

Brandy Branstetter, CFP™