51: Fall Financial Tune-Up: Managing Seasonal Spending and Overcoming Money Pitfalls
Sep 14, 2023
Carolyn
One of the rules that my Mom had growing up was not to turn the heat on until November 1st - a unique practice I've carried over into my home every fall. (One that my family doesn't quite appreciate 🥶). This episode unravels a few more realistic tricks, tips, and strategies using a fall financial tune-up. From back-to-school expenses to holiday shopping, this season can be a spending trap. But don't worry, together we'll sail through the sea of seasonal spending, armed with savvy financial strategies.
I'm sure you've found yourself lured by shiny new toys or swiping your card for those irresistible Black Friday deals? You're not alone. We all have our financial pitfalls. This episode is your opportunity to identify and overcome them. Whether you're struggling with procrastination, forgetting to save for emergencies, or considering investing – we discuss it all. Let's get ready for fall and kickstart the season with our to-do list from thefinancialmoment.com/falltuneup. Let's face the season of spending with financial wisdom and preparedness!
One of the rules that my Mom had growing up was not to turn the heat on until November 1st - a unique practice I've carried over into my home every fall. (One that my family doesn't quite appreciate 🥶). This episode unravels a few more realistic tricks, tips, and strategies using a fall financial tune-up. From back-to-school expenses to holiday shopping, this season can be a spending trap. But don't worry, together we'll sail through the sea of seasonal spending, armed with savvy financial strategies.
I'm sure you've found yourself lured by shiny new toys or swiping your card for those irresistible Black Friday deals? You're not alone. We all have our financial pitfalls. This episode is your opportunity to identify and overcome them. Whether you're struggling with procrastination, forgetting to save for emergencies, or considering investing – we discuss it all. Let's get ready for fall and kickstart the season with our to-do list from thefinancialmoment.com/falltuneup. Let's face the season of spending with financial wisdom and preparedness!
My name is Carolyn. Welcome to the Saving for your First Home podcast. I am the CEO of the Financial Moment. We offer money coaching for those who are ready and willing to make financial changes in their lives. For the most of us, there comes a point in time where we think to ourselves it would be really nice to own property, but it sometimes can feel like a pipe dream and not very easily obtainable. So I created this podcast to give you all the information and tools you need to take the steps forward toward home ownership. Take it from me my husband and I started our lives together, working part-time jobs with a young child. Fast forward, through many hiccups and failures, we stepped our feet into our very first home. For us it was a pile of dirt, but eventually our family home was built on that dirt. Now we are in the midst of growing our investment property portfolio. I created the savings for your first home podcast to give you easy, actionable tools for you to do the same. If you have that same gut feeling that I did and want to create a life for yourself and your growing family, but don't know where to start, you are in the right place. Let's do this. Hello everyone, welcome back to the Saving for your First Home podcast.
Speaker 1:
I'm Carolyn, your Money Coach, so by now I think you guys are settling into a new routine. We're slowly coming out of the casualness of summer and back into more structured days. So last week I touched on doing a fall tune-up. So if you haven't downloaded my to-do list, make sure you head to thefinancialmomentcom backslash fall tune-up. This to-do list is a comprehensive list of what you need to do just to fine tune for the fall season. So today I'd like to take that one step further and talk about how we can prepare for a season of spending. Now, if you think that you spent a lot in the summertime, just wait for the fall season. I'm going to go through a few different areas where our spending can spike. So it's essential to really do a reset After the summer period. It's important to do a reset and take an analysis of what your finances are like before we head into this new season. So that fall tune-up is really key just to give you an idea of where you're at.
Speaker 1:
Okay, so here are some of the things that I think are going to catch us off-guard or creep up on us and cause us to increase our spending, all right. So the first thing that came across my mind was obviously back-to-school expenses. If you have children that are heading off to school or now in school, I would think that you have spent money on school supplies and backpacks and clothing. But that was just one part of the back-to-school expenses. The other part is coming, which is all those extracurricular activity fees. So if your kids are in additional sports outside of school, all of those fees will be coming due very shortly.
Speaker 1:
Another thing that kind of creeps in is our extra spending on new clothing. So as the season changes, you know you're going to pull out your last year's fall clothing, but you're going to want to probably add a few more items to your closet. Now one of the tips I always say is go through your closet, get rid of the stuff that you don't need. If you can sell it even better before you add anything new to your closet. And I fall right into that trap every time. I know the rules, but this weekend I was in the stores and I'm looking at the boots and I'm like, oh, these are nice. I don't know if I need new pair of boots. I haven't even pulled up my old ones, but you know, I tried them on, I had them in the cart, and then my husband comes around. He's like, why do you have a pair of boots in your cart? I'm like, oh, they're really nice. And he's like, do you really need that? So you see how you need someone to kind of check yourself before you make a purchase. So anyway, I put them back.
Speaker 1:
And the next thing that can kind of cut us off guard is our home heating costs. So if you own a home or if you're in a unit where your rental doesn't include utilities, we're switching over from air conditioning to heat very soon. At least in Canada we are, and the arrival of colder weather tends to increase our electricity bills as soon as we start turning on the heating system. Now, I hope you guys know that I'm not cheap, so but I'm gonna tell you this story. Anyways. My mom, when we were younger, she would always wait till after October 31st to turn on the heat, and I guess it was just her way of saving money and trying to extend it as long as possible. But towards the end of October it's getting cold, so I don't know what it is, but I kind of just adopted that practice, so I push it as far as I can go without turning on that heat and everybody's like bundled up in blankets watching TV or whatever, and I'm like, no, it's just a couple more days, it'll be good. So, anyway, I think it's just the challenge of it all. I don't even know how much you're saving within a week or two.
Speaker 1:
And then there's the holidays, so there's Halloween, thanksgiving, christmas, hanukkah. There's so many different holidays that fall into the next couple months that our spending is just bound to increase. And then, if you've been listening to this podcast for a while, I've told the story before, but I'm a very avid Black Friday shopper and have done some crazy things to get those deals. No, I'm not trampling over anyone in Walmart, just so you know, but I do have my share of stories and I just love a good deal. So you gotta think about Black Friday and Cyber Monday as well, because there it goes again, that spike in the spending. And then a lot of people also travel during this time of year. Obviously, there's holidays and the Air Force can tend to be a little bit more expensive depending on where you're going, and so that's something to consider as well the time of year of when you're traveling, because things like accommodation, transportation, food, all those things can be a little bit more expensive during certain times of the year.
Speaker 1:
Okay, does any of these things kind of hit home for you? If so, now the question is do you have money allocated for them? Because all of those things are going to happen within the next few months. So are you ready? Are you prepared? If the answer is no, then stick with me. I'm going to take you on a journey that's going to get you ready.
Speaker 1:
Remember, the first thing you need to do is download that to-do list. That part is going to take care of taking the inventory of your finances, seeing how much income you're making based on the expenses that you have, and determining how much available funds you have for this type of spending. So now we need to take some action. Just focus in on a couple points within that tune up and see if you can make some small lifestyle changes, whether that be cutting back or eliminating some expenses. Maybe it can just be for a temporary period of time to let you can boost your savings. Like, for example, if you don't think you're going to use your gym membership in the next four weeks, maybe put it on hold right, save yourself a payment. I'm not saying you shouldn't exercise, but you know we all have to be realistic. Another area to look at is your takeout consumption. Perhaps you give yourself a restricted amount of days for takeout and then cook the rest of the time. This may have an impact on your budget as well. What we really want to do is free up some of your funds to put away and save.
Speaker 1:
Now, part of your actions is also taking a look at what your savings currently look like. So you may already have savings funds. Now be sure that you have an emergency fund. Now, this is not a spending fund, right? So some people think, oh well, I do have an emergency set aside over here. Well, that is not to be used for any of those items that I talked about. An emergency fund is for the purposes of an emergency, something that is unexpected, that's coming. All of those things I mentioned are expected expenses. So if you do have some savings set aside that is not part of your emergency savings fund, then what you need to do is calculate is that enough? Is it enough that it's going to carry you from now until December? So here's a little exercise for you Take out your calendar and schedule in all the things that you think are going to happen between now and December.
Speaker 1:
Now I know you're not going to be able to allocate for the entertaining that happens closer to Christmas, because some of those things are unexpected and perhaps they're more casual. But I'd like you to do the best that you can and just kind of pencil in the calendar all the events that you think you're going to spend additional money for and then, once you have that done, in another column put dollar amounts beside each event. And once you have that done, then add it all up and see if your current savings is enough to cover everything you think you're going to do over the next few weeks. And if it isn't, then this is where you need to go back and do some adjusting with your current situation. Now I've seen people do something a little bit more radical, and that is going on a spending cleanse. So what that is really is just for a week or two or three, you really narrow down exactly what you need to spend on your essentials only, so you eliminate anything that is non-essential for that time period and see how much money you can save just by focusing on your essentials. Right, it's only for a short period of time, and you're building your bank so that you can do some of the things that you enjoy.
Speaker 1:
We don't realize how much money we spend on unnecessary purchases, and the only way to really know that is if you go in and take a look at your bank account, see what the transactions are on a weekly basis. Where is your money going? You won't know that unless you take a look. So now you kind of know what your shortfall is, right. So you have your existing spending, if you even have some, you have the total amount of expenses that you think you're going to spend, and you have this shortfall.
Speaker 1:
What I'd like you to do is put that shortfall into your original budget. So If your budget has already been mapped out, you're going to add this as an expense line. What that means is you need to put aside a certain amount of money every pay towards these additional expenses. So it's much easier if you have more time right. So we're in September now, and so that only leaves us October, november and December, and we can't really save too much in December. So you really have a short period of time to get to the amount that you need to save. What I'm trying to avoid is you putting all that money on a credit card, because that's exactly what will happen If you don't have the money saved. You're going to do those events regardless, and so where that money is going to come from is from debt. And remember summertime? Do you remember how much you spent in summertime? If you haven't cleared that debt, we are just going to compound it with all the activities that come with the fall.
Speaker 1:
Okay, now that we've talked about what to watch out for and how to kind of prepare for the season of spending, I wanted to talk also about where most people fall down, because if you know that the road bump is coming, then perhaps you can swerve and avoid it. So one of the most common things I've seen is that people spend more than they earn, and I can't stress this enough that you really need to know what your cash flow number is. If you don't know what that is, in episode 10 of this podcast I talk about breaking that paycheck to paycheck cycle. So head back and listen to that one if you don't know what the cash flow number is. But spending more than what you earn is the cycle that leads us, spirals us down into a ward's debt, and so we really need to break that. We need to create budgets that work for us, that are not just restrictive and not allowing us to do the things that we want to do. We need to have something that has a good balance of what our wants are and what our needs are.
Speaker 1:
Another pitfall that a lot of people fall into is procrastination, putting off financial planning. People think, oh, you know what, I can just do that later. It's too much headache, right now I don't want to have to deal with it, and unfortunately, that can lead to, you know, mis-optitunities. Perhaps you are looking to buy a home right now in the market, prices are having a downward trend, and this is because there is more inventory out there, more housing available, and so the prices are going down. It's now becoming a buyer's market as opposed to a seller's market Now, even though, as a buyer, you're going to be paying much higher interest, but it is still better for you because the prices are coming down Now.
Speaker 1:
If you were prepared and you didn't procrastinate during the last few years, you could have been saving, investing and actually making a significant return on your money, so that, in this time of financial difficulty for some who have to sell. You are ready to invest to scoop up those properties at a much lower price. So where does procrastination get you if you're not prepared for this type of turn in the market? So, even if you break up your financial tasks into small, manageable pieces, then you can set some time aside and do a little financial check-ins Check on your savings, check on your debt, check on your income all at different times and doesn't feel so overwhelming.
Speaker 1:
Now, another roadblock that people fall into is failing to save for emergencies. I know, I know I preach on this a lot, but it's so important because it's probably the number one reason why people go into debt. It's not being prepared for the unexpected right. So the idea is you wanna save at least I don't know 10% of your income. But you can start even with 5% and then just slowly increase it. The rule of thumb is that your emergency fund is supposed to cover three to six months of expenses, but don't let that overwhelm you, because it's such a high number. Just start. You know, if you just start, then eventually you're going to be in a position where you have enough in your emergency savings fund to cover you for various types of expenses.
Speaker 1:
Now this is another one that a lot of young people tend to avoid thinking about, and that is retirement. And it's because you know it's so far away, and why do I need to think about that now? But if you do, you are gonna make yourself such a better position and you can save that money away without even thinking about it. So my daughter is 18 and I'm trying to really get her on the right track. Now is the beginning of the young adulthood, and so I'm trying to encourage her to save, put money away and put it into an investment and let it grow significantly over time. So if she starts saving at that age, at the age of 18, it's gonna be so much easier for her than for someone like me who, if I just started now, would have to put away a significant amount of money to in order to reach my retirement goal in a shorter period of time.
Speaker 1:
Now, another pitfall that people fall into is always buying the new shiny toy. Now, that new shiny toy can be many, many, many things. It can be a brand new car, it can be the newest cell phone, it can be. Whatever it is that you're into, something new is going to come out and you're gonna be like man, I wish I could have that. And you know, you're maybe gonna spend a little bit more than you should because you really just want that new, latest thing. So this is where you really have to show a little bit of constraint and resist buying it new just because you want the latest and greatest. Marketing is an amazing thing. They will show you all the bells and whistles that are in this new item and they're going to suck you right in. So be aware of that and kind of show yourself that you know what. If it's not broke, don't fix it or don't replace it, for that matter.
Speaker 1:
Now, finally, I just wanted to touch on this slightly, and that is to have an investment strategy. A lot of people nowadays use Wealth, simple and all these other tools to invest, and that is a fantastic thing. That has made it more accessible to a lot of people. But having an investment strategy is major when it comes to making your money work for you. So this is where my plug is for the financial advisors of the world, because they will actually ensure that your money is being diversified over various different products.
Speaker 1:
If it was just us trying to invest, perhaps we heard a tip from a friend and then we go and we put money into it and it's not really a strategy. It's just kind of hoping that the market's going to turn in your favor. So you really want an investment strategy, and having a financial advisor does have its pros and its cons. If you were to get a financial advisor from a banking institution or an investment firm, they're going to be slightly biased. So you want someone that is completely unbiased and is going to give you their true recommendations based on your personal interest. So that's a little bit more advanced, but I do see that happening a lot, that people just go off and make their own little investment choices based on information that it may not be sound or have a purpose, because the idea is that you want to reach a specific goal.
Speaker 1:
Okay, does any of those things kind of resonate with you? I really want you guys to be fully informed and have all your options on the table and know what to look out for. So remember to make your first step and download that to-do list. It is going to be essential going into this new fall season and you can find it at thefinancialmomentcom backslashfalltuneup and I'll also put it in the show notes for convenience as well. So I hope you guys have a great week and be sure to follow me on Instagram or Facebook, because you know I'm always putting fresh ideas or tips out there that's going to help you reach your financial goals. Alright, take care, guys. Thank you for listening. We are committed to helping you place your very first steps into your new home. See you next time.