After a summer spent likely throwing a bit too much financial caution to the wind — all those al fresco dinners out! — chances are your budget may be in need of some TLC.
What's that, you say? Autumn is eons away? Well, we're here to tell you that fall is filled with a surprising number of financial doozies — so it's best to start reviewing that budget now.
When it comes to fall-specific expenses, you may already be counting on shelling out money for back-to-school shopping, college tuition, and maybe even an uptick in your utility bills.
But did you also account for the extra babysitting you may need, thanks to parent-teacher conferences; the higher gas bills you'll probably foot for road-tripping older kids to college, or the added cost of prepping your car for the winter?
Pop-up expenses like these are exactly why planning ahead — and considering adjusting your spending now — is so important. Fortunately, our one-number strategy for budgeting makes this task pretty simple.
Here's how it works: Divide your take-home pay into three categories — fixed expenses (like rent or your cell phone bill), financial goals (say, building up your emergency fund, paying off debt, or saving for a vacation) and non-monthly expenses (think: school tuition or quarterly tax payments). Once you've allotted a portion of your paycheck to each of these priorities, you're left with a single amount, known as your flex-spending number, that you're free to spend as you like — totally guilt-free.
Now that you have the basics down, it's time to work on fitting autumn's most common expenses into your budget framework. And what better way to do this than to tap financial advisers across the country for their own budget-minded tips for fall.
Optimize fall open-enrollment season
Mary Beth Storjohann, CFP® at Workable Wealth, LLC, San Diego:
As crazy as it sounds, August is the perfect time to start planning for the holidays if you don't want those expenses to surprise you come Thanksgiving.
I remind all of my clients that gifts aren't the only holiday expense they should save for — there's often also travel costs to consider, as well as all the extra cash you might mindlessly shell out for party-hostess gifts and happy-hour drinks with co-workers. When you think about how $20 here and $50 there adds up from Thanksgiving through New Year's, it's likely hundreds of dollars more than you'd guess.
So if you haven't figured these costs into your annual budget's non-monthly expenses, try and start setting aside money now. Even if you can only commit to just stashing away a small amount, like $25 each week, you'll have about $450 to spend once the holidays roll around.
Something else to consider this time of year is that your company's open-enrollment period — when you get to re-evaluate your health insurance and benefit options — will likely happen in October.
Unless you've experienced a life-changing event — like getting married or having a baby — this time typically rolls around only once a year, so it's a good idea to review your options soon. So many of us overlook benefits: There's an abundance of paperwork, and all of the fine print can seem too complicated. However, if you don't take the time to really understand your options, you can miss out on financial perks and insurance cost savings.
First, take a look at your retirement strategy and make sure you're contributing to your company's 401(k) if you are able to — especially if there's an employer match — as well as other savings options that may give you a tax benefit, such as a flex spending account.
You'll also want to consider life insurance and long-term disability insurance. Sometimes all you need to do is check an extra box to opt-in for coverage — and the price often won't make a big difference in your budget.
And don't forget to review your health insurance premiums to ensure they're staying the same next year. If they're increasing, calculate how it'll affect your cash flow and make any necessary tweaks to your budget now.
Barter your way to a better budget
Matt Shapiro, CFP® at LearnVest Planning Services, Scottsdale, Arizona:
One of the best things you can do at the start of fall is to go over your credit card and bank statements from the same time last year to get a handle on not only what your expenses were then — but how much you spent.
For example, you might discover that putting snow tires on your car cost $300 last year, and having your gutters professionally cleaned and all of the leaves raked, bagged, and hauled away cost $200. If that $500 price tag shocks you, now is the time to start strategizing how you can help reduce those expenses this season.
You may be able to do that by choosing a different mechanic or hiring a cheaper lawn-care service. Or you might have even more luck pursuing more creative alternatives — like offering to help your mechanic with some social media marketing or business consulting in exchange for a lower price on installing those snow tires.
So instead of making unhappy sacrifices that affect your flexible spending — like forgoing dinners out for a couple months or canceling that annual fall camping trip — make a specific plan to get what you want for less by tapping opportunities like these.
Of course, you probably won't be able to barter for everything. So for the fall expenses that you'll be paying full-price for, make sure to create a budget before you step into a single retail store. Whether you're shopping for yourself or your kids, it's all too easy to walk into a shop and suddenly 'need' stuff that's not on your list.
Shop smart for the season — and reap tax benefits
Avani Ramnani, CFP® at Francis Financial Inc., New York City:
I've got young kids, so I know back-to-school time can get very expensive between shopping for clothes, signing up for extracurricular activities and paying your regular child care costs.
Even though we, as planners, often encourage clients to plan ahead, when it comes to shopping for kids' clothes and shoes, you actually don't want to do it too far in advance. Small children grow so quickly, so buying something now could very well mean it doesn't fit come October.
Plus, if you wait until the back-to-school rush is over, you can snag midseason sales. To hold you over until then, I recommend just buying one or two new items your kids need in their current size, then do the rest of your shopping after school starts.
Fall is also a big shopping time for the grown-up set. I like to refresh my own wardrobe at the start of a new season, but since I live in New York City, where closet space is at a premium, I clear out my closets before buying new clothes.
But instead of tossing these items or giving them to friends, I donate all of my gently used clothes, shoes and bags to various charities — and keep a good record so that I can itemize these donations when I do my taxes. One quick tip: To help you remember exactly what you donated to a charity, snap a picture of your loot before you bag it, so you can go back later and tally up how much it's all worth.
And while we're on the topic of taxes, fall is a great time to consider checking in with a CFP® or accountant about your investments to take stock of any gains or losses you've seen so far this year. If you've sold stock, it's easy to forget that — and then you may be surprised when the tax consequences hit you early next year. Instead, be sure to start setting aside any money you might owe now to help lessen your burden in 2015.
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