Welcome to June! We’re halfway through the year. A time to look forward to some pleasant weather, outdoor fun with family and friends and a summer vacation getaway. But before you go all Clarke Griswold, crank up the “Yacht Rock” and head out on Kenny Loggins’ Holiday Road, a bit of housekeeping. Financial housekeeping that is.
June’s a great time to see how well you’re tracking towards your financial resolutions. You remember those ambitious promises you made to yourself back on December 31st? And even if you didn’t have any, it’s still a great time to see how well you’re tracking towards all your financial goals.
Think of it as a financial progress half-time. Time to assess what’s working, what needs tweaking and what needs a serious change in strategy or approach. Because while it may not feel like it, there’s still plenty of time to make significant progress. It all comes down to your desire, determination and prioritization.
Time for assessment — not judgement.
No doubt, with rising inflation, ongoing supply-chain-issues and lingering Covid threats, some of your priorities may have shifted. If so, don’t beat yourself up over it. Things happen. Life gets messy at times. But still you owe it to yourself to take an eyes wide open approach. And since we started down the vacation road, let’s begin there, shall we?
Was “Vacation Savings” a formal budget goal you set or is it more of an ad hoc approach of seeing what you can afford at the time? If it works for you, that’s ok to do. But as mentioned in the previous paragraph, there’s a lot of factors that have increased your cost of getting away. And even if you planned to save on vacation by driving instead of flying, you have to account for staggering gasoline prices. (Assuming you don’t drive an electric vehicle.)
And due to staff shortages, you can expect longer wait times in the hospitality services. And may have to pay a surcharge on top to offset the competitive wage hikes that are taking place. This is why a formal budget goal is so important. Because while there’s no avoiding increases in costs, you could be better prepared just in case.
Summer Fun For Less FundsSpending time away with family doesn’t have to break the bank. I just googled “budget vacation” and got 283,000,000 results in 0.67 seconds! Surely, you’ll uncover an offering that could work for your budget and your family. If you’re super flexible, check out the many offerings for last minute travel. There are often charters with open space offering incredible deals. As with any financial expenditure, a bit of upfront effort on your part can pay off handsomely.
What’s the emergency — fund situation?
The “experts” whoever “they” are have deemed an adequate emergency fund to be equivalent to anywhere between three and six months of expenses set aside just in case.
Depending upon how much you make, what your monthly expenses are and any other outstanding debt or obligations you’re carrying (and hopefully aggressively paying down), you may not be able to have that much set aside. But some is better than none. And more is even better.
Not to sound like an alarmist, but as one who was 12 years old in 1973, I felt first-hand the impact of rising inflation — (gas shortages, meat shortages and the inevitable parental patience shortages). To say nothing of the incredible financial squeeze my family lived through as the American economy slipped into a recession.
While the “experts” don’t all agree with whether we’re heading that way again or not, there’s no such thing as being too cautious or too prepared. So you sock away a bit more just in case. It’s always better to have it and not need it than to need it and not have it.
Making a dent on debt?
No doubt, you understand the importance of effectively managing and paying down debt. Not only is it great for your peace of mind during uncertain times, it has a tremendous impact on your overall credit score. And that can mean the difference between qualifying for that new auto loan, mortgage, etc. — or whatever other big financial goal looms on your horizon.
There may be times when you think you’ll never pay off a particular debt. Don’t be discouraged. We’ve all been there. Just stay the course. Do your best to pay as much as you can. If you can just manage the minimum monthly, do that. But know that will just add more time to the term and more money over the long run. And whatever you do, resist the temptation to make any further credit purchases as that will only deepen the hole you’re in.
Care to look at the long-term bright side?
The situation is not all doom and gloom. Although you had to read all the way down here to find it.
Yes, inflation is impacting the cost of goods. Yes, international incidents and a stubborn global pandemic is disrupting supply chains. And yes, all of that is impacting the stock market.
But you’re playing the long game. With regards to retirement savings, your consistent, regular contributions to a 401(k), IRA (Sep or Roth) are your best bets — even in a down market. Because your money is able to buy more shares (because their current value is down). And when the share values eventually return to something closer to normal, you’ll be ahead of the game. That’s the power of dollar-cost-averaging working in your favor! Plus, you get the added boost in value through compounding interest and automatic reinvestment of your dividends.
Net-Net & Next Steps
You’ve got six more months in the year to adjust and correct where needed. As you just read, you can leave the long-term investments in “set-it-and-forget-it” mode. Focus your attention in paying down debt and saving for emergencies if you haven’t already, and then address other important goals.
The challenge with money is we have a finite amount and an infinite number of wants, needs and desires. If you need some help prioritizing them all, Banktivity’s interactive financial planning software can help.
Designed exclusively for Mac OS and iOS, the latest release features an intuitive Goals section that you can customize to take on all your financial goals. Once your goals are set up, Banktivity will allocate and reserve funds as directed. You’ll always know where you stand and how well your tracking. And the incredibly straightforward Envelope Budgeting feature brings a no-nonsense approach to prioritizing your goals… Pay off debt, build an emergency fund, save for a down payment on a home, a college fund or even retirement. Banktivity delivers the interactive and intuitive planning tools you need.