Labor day is bittersweet. The long weekend marks the end of summer for most of us, even though we have a few more weeks before the calendar officially transitions to fall. The carefree days of hot temperatures and vacations may be coming to an end, but returning to a routine may feel like a welcome change. Especially when it comes to your finances.
Now that the kids are back in class, it’s a great time for the rest of us to give ourselves a little homework too. September, more than any other month, is the time to get organized and optimistically set goals for the pending year—even if your days of buying school supplies and studying for tests are behind you. If “get back on track” is on your financial to-do list right now, here is a cheat sheet to help focus your energy.
1. Recommit to Your Budget
No one is immune from doing at least a little bit of budget damage during the summer months. Unexpected expenses like A/C repairs as well as fun things like camping trips or beach vacations eat into regular monthly expenses. Take some time to revisit your budget and cut back where you can. Need a refresher course on budgeting? Follow this simple formula:
Total Monthly Income (after taxes)
All bills and necessary spending (including saving and debt payments)
Spending money for everything else
Keep your budget on track by paying close attention to the amount you have leftover each month after the bills are paid. If the number is small, then you may have to make some extreme cuts to stay within your means. Break it down by week or even by day if you’re really struggling to stick to your budget.
2. Plan Now for Holiday Spending
The holiday season (another budget wrecker) will soon be upon us. Consider building in holiday savings as part of your budget now. If you know you are likely to spend $1,000 on gifts, start saving about $350 now so that you’re ready to hit the shops by December 1. If you can’t afford to save $350 each month, then be realistic about what you can save. If that number is only $100, that’s okay. It truly is the thought that counts when it comes to gift giving.Commit to only buying what you can afford this year. Come January, you’ll be so glad you did.
3. Start Thinking About Your Employee Review
You’ve worked hard this year and deserve to earn a bit more for your efforts—all that’s left to do is ask. Most employee reviews will happen in the next few months and that’s a great time to bring up the topic of a salary increase. Start compiling the data so you’re prepared to explain to your boss why you deserve a raise. If there are key goals you haven’t quite met, now is the time to proactively pursue them so you’re prepared during your review meeting. Perhaps most importantly, start building up your confidence—practice asking in front of a mirror if you have to.
4. Check Your Retirement Contributions
With just four months left, 2011 will be over before we know it. Of course, you can make contributions for this year to most retirement accounts until April 15, 2012, but why wait until the last minute? If you’re not sure how much you’ve contributed so far this year, contact your HR department and find out. While you’re at it, ask if you’re contributing enough to get the match from your employer. If your employer doesn’t match your retirement contributions (or even offer a retirement plan), make sure you’ve got a back up plan. Self-employed people aren’t off the hook either. Research your IRA options at a brokerage firm like Fidelity or Vanguard and start making deposits right away. You can’t graduate from the school of personal finance until you’ve got a passing grade on your retirement savings.
5. Extra Credit: Think Ahead—Think Bigger
If you’ve got your financial basics covered, it’s time to start dreaming big. Add new savings goals to the mix—if you want to buy a $350,000 home in 5 years, set a goal of saving at least $70,000 for the down payment. Use an online savings calculator to come up with a monthly savings plan, and open a new account for the money so that you can monitor your progress. If you have extra cash sitting around, consider transferring it to your new account to give yourself a head start. Taking the time to think about where you want to be in the future will help you maximize your money—and your happiness.
Whether you’re in primary school or graduate school when it comes to your personal finances, there’s no time like the present to push yourself to the next level. Just make sure the dog doesn’t get a hold of your homework.