As summer fades and the holiday season approaches, it's important to take a moment for a
strategic financial check-in. This period serves as a pivotal opportunity to reassess financial goals, make necessary adjustments, and ensure that your financial strategies align with your long-term objectives. For high-net-worth individuals, this check-in is not just a best practice—it’s a necessity.
The Importance of Revisiting and Reassessing Goals
Revisiting your financial goals is the cornerstone of any strategic check-in. These goals are the foundation of your financial plan, guiding your spending, saving, and investment strategies. Setting and regularly reviewing goals keeps you on track and motivated. After the summer, when discretionary spending often peaks, it’s crucial to re-evaluate your goals.
Have you overspent during the summer months?
How does this impact on your ability to achieve your financial objective by year-end?
Your goals should reflect your core motivations, whether that’s building a secure retirement, buying a new home, or investing in your children’s education. In a Harvard Business Review article, Ravishankar (2023) notes, aligning financial goals with personal purpose is essential for achieving them effectively. Write down your goals and keep them visible—place reminders where you’ll see them regularly. This visibility will help you stay focused and adjust your spending and saving habits as needed. According to CNBC, individuals who frequently revisit their financial goals are more likely to achieve them and avoid falling into debt (McNair, 2024).
Budget Review: A Key Component
With your goals in mind, reviewing and adjusting your budget is crucial. Budgeting should be a flexible and adaptive practice, continually shifting to align with your changing financial landscape. If your summer spending exceeded expectations, now is the time to revise your budget accordingly. This involves evaluating your income, expenses, and savings. If overspending occurred, consider reducing discretionary expenses or postponing non-essential purchases. Addressing overspending is vital. If you went through a period of overspending, now you’ve got to take time to refill your savings and pay off debt. Automating your savings can simplify this process, ensuring you consistently set aside money for future needs and reducing the temptation to spend funds earmarked for savings.
Evaluating Debt and Credit
Overseeing and managing debt is a critical aspect of sustaining strong financial health and achieving long-term stability. If summer expenses have led to higher credit card balances, it’s important to address this issue promptly. High-interest debt can erode your financial stability and obstruct your progress towards long-term goals. Begin by evaluating your current debt situation—review outstanding balances, interest rates, and minimum payments. Craft a strategic repayment plan that may involve reallocating funds from other areas of your budget or exploring options like debt consolidation to secure lower interest rates. Effective debt management not only alleviates financial stress but also improves your overall economic well-being, providing a clearer path to achieving your financial objectives. Prioritizing debt reduction enhances your financial flexibility and contributes to long-term peace of mind.
Retirement Contributions and Savings
Evaluating your retirement savings is another crucial component of your financial check-in. Evaluate if you are progressing toward your retirement objectives. If you haven’t maximized your retirement account contributions for the year, consider increasing them now. A modest boost in your contributions can yield substantial growth in your retirement savings over time, thanks to the power of compound interest. If you had to dip into your savings during the summer, it’s important to replenish those funds as soon as possible. Setting up automatic contributions to your retirement accounts and emergency savings can streamline your financial management and ensure steady growth over time. For individuals in sports and entertainment, managing irregular earnings requires a tailored approach to retirement savings. Forbes Advisor (2024) suggests specialized investment options for high-net-worth individuals, such as setting up automatic contributions during high-income periods to ensure consistent retirement savings.
Planning Ahead: The Before-Year-End Perspective
As you conduct your financial check-in, it's also a good time to plan for the final quarter of the year. This period often brings additional expenses and financial obligations, such as holiday spending, tax planning, and charitable donations. By planning ahead, you can mitigate the stress and financial strain associated with these end-of-year activities. Consider setting aside funds for holiday expenses, reviewing your tax situation, and making any necessary adjustments to your investment portfolio. Preparing in advance helps ensure a smooth transition into the new year.
Summary
A financial check-in is an essential practice for anyone serious about achieving their financial goals. By reassessing your goals, reviewing your budget, managing debt, and planning for the future, you can ensure that you’re on the right path to financial success.
"Keeping goals front and center is crucial,
as they’re the driving force that keeps us
focused and on track."
~ Katie MacDonald
Keeping this in mind is not just relevant for today but serves as a guiding principle for your long-term financial wellness.
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References:
Forbes Advisor. (2024, March 21). Best investments for high-net-worth individuals. Retrieved from https://www.forbes.com/advisor/investing/investment-options-for-hnwi/
McNair, K. (2024, April 9). Set yourself up to build wealth, save more and get out of debt in 3 simple steps: “Starting is critical.” CNBC. Retrieved from https://www.cnbc.com/2024/04/09/steps-to-take-to-build-wealth-save-more-get-out-of-debt.html
Ravishankar, R. A. (2023b, July 27). 5 ways to set more achievable goals. Harvard Business Review. https://hbr.org/2022/08/5-ways-to-set-more-achievable-goals
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