Remember when you decided in January to spend less and save more in 2023? Financial advisors say the summer could be a good time to revisit those goals. Says. Think of it as “New Year’s in July.”
Now that the pandemic has finally paused, take a quick review of your finances because you still have time to adjust if you’re falling short on your goals, whether it’s building an emergency fund, reducing credit card debt, or resuming student loan payments. makes sense (really) !) ending.
There are many events that will lead to spending, such as back-to-school (needs and clothing), Halloween (costumes and treats), Thanksgiving (food), and winter break (gifts). “So now is a great time to prepare for spending later this year,” says Yannery Espinal, author of his book Mind Your Money.
Youth-focused Nate Hoskin, a certified financial planner in Denver, recommends a personal “audit.” If that sounds too much like what the Internal Revenue Service does, think of it as a financial health “diagnosis.”
Mr Hoskin tick tock He then urged them to rigorously evaluate the goals they set at the beginning of the year. Let’s say your goal is to save $500 a month, but you only save $200 a month. “Be really critical and ask yourself, ‘Why didn’t we hit this target?'” he says.
Did you estimate that you could make more money than you actually did? (Maybe your side hustle wasn’t as lucrative as you expected.) Or did you go out to dinner too often? Inflation may have increased costs, but they are now settling.
Hoskin recommends printing your bank or credit card statements and highlighting with a highlighter any “frivolous” items that represent money you didn’t need to spend.
To get back on track, build up gradually toward your goal. If you’re saving $200 a month, that’s great, Hoskin said. Next month he will save $250 and aim for $300. “Try to hit $500 a month by the end of the year,” he said.
If you had a vague plan to save what was left over at the end of the month, but you didn’t seem to have any extra cash, try the “save first” strategy. Automatically deposit 15% of your salary into your savings account (your bank, employer, or various money apps can arrange this for you) and plan to spend the rest of your money.
“Switching could help a lot,” Hoskin said.
Espinal said make saving more habitual and try sending money weekly or even daily to reach your goals.
Jesse Mecham, founder of the You Need a Budget app, advises you and your partner, if you’re a couple, to first make a list of what you want your money to do for you. Will you pay for international travel? Create an emergency fund?
Then turn to your account statement and scroll through your transactions over the last few months. He suggested that at most he would take 20 minutes. Many banks and credit cards automatically classify your purchases, giving you a rough idea of where your money is going. Be careful with your prioritized spending. But don’t blame yourself for shopping that wasn’t prioritized.
“No one is perfect,” he said.
With that knowledge, Mecham said, set a goal for the cash you have in your bank account by asking, “What do you want to do with this money until it’s paid again?” You can plan using a budgeting app or a basic spreadsheet.
If you are aware of both your available cash and your goals, Mecham says you can better manage the tradeoffs. Instead of thinking, he said, “I Can not Let’s spend money on this,” you can say to yourself. than that spend money on it. “
Paying off credit card debt is especially timely this summer. card balance and average card interest rate It is high. Free Online Debt Repayment Tools: calculator.net Espinal said it helps them know how much extra they can afford and how long it will take to clear the balance.
Debate over whether to adopt a “snowball” approach that prioritizes paying off debt at the highest interest rate or a “snowball” approach that focuses on building balances by paying off the smallest balances first Don’t get caught up in A sense of success.
“Most people should use a hybrid approach,” says Espinal. Start by paying off small balances to gain confidence. Then, you can save the most money by switching to repaying the high-interest card (continuing to make minimal payments to other cards toward the highest interest rate until the first card pays off).
Rob Williams, Charles Schwab’s managing director of financial planning, said choose a specific date for the health check-up to ensure an inspection is complete by the end of the summer. “By putting it on your calendar, you can be financially healthy,” he said.
Here are some questions and answers about how to conduct a summer financial checkup.
How do I know if my payroll withholding is accurate?
Summer is a good time to review your withholdings (the amount of tax withheld from your paycheck), especially if you’ve gotten a raise or had a major change in your life, such as getting married or having a baby. If you withhold too little, you may be charged an unexpectedly large amount of tax next April. The IRS provides online quote Here you can answer a few questions to see if your tax withholding needs to be adjusted.Submit an update file to make changes Form W-4 with your employer.
How do I check my credit report?
Checking your credit report, which records your borrowing history, is a smart step and can usually be done online relatively quickly. Three major credit bureaus – Equifax, Experian and TransUnion – are offering free reports every week until at least the end of this year. www.annualcreditreport.com. If you notice an error, contact both your credit bureau and the financial institution that provided the incorrect information. Federal Trade Commission Say.
Are there special opportunities to save money on shopping this summer?
Many states have summer sales tax “holidays.” This is a few days or weeks when the state sales tax is exempted on the purchase of certain items, such as clothing and back-to-school supplies. new jerseyFor example, the event is scheduled for August 26th through September 4th, including a tax exemption for computers priced under $3,000. Some tax experts downplay the event as a political gimmick, but it remains popular among shoppers. The Federation of Tax Administrators list by state on that website.
