August 5, 2022 By Curtis Trimble

August Provides Prime Time for Financial Planning Review

The dog days of August offer prime time for financial planning and goal reviews. Sure, no one wants to consume vacation time with thoughts of budgets and investments and planning. The clearer heads that prevail when not consumed by work, however, provide optimal opportunities for focusing on such tasks. Maybe run through mental checklists while driving or sitting in the airport waiting for flight to board… work with me here: it will be to your benefit.

The review process need not be ridiculously time consuming and tedious. If it is, your process probably could use some help.  Please feel free to give us a call (713-444-3560), we are here to help. I recommend addressing three inter-related topics:

  1. Evaluate your budget
  2. Focus on your goals
  3. Consider you tax position

Just a guess here, but the unrelenting discussions of inflation omnipresent through the first half of 2022 likely impacted more than a few components of your budget. The costs of home ownership or rent, gasoline, and food almost certainly rose to levels significantly above expectations set earlier in the year. As a result of price escalations, savings and credit card balances may have suffered inordinately. Not to be a Negative Nelly and ruin your Bloody Mary buzz, but these could turn out to be big issues if the job market weakens later in late 2022 or in 2023 as the U.S. Federal Reserve continues to hike interest rates to curb that aforementioned inflation. Fail to plan, plan to fail – just sayin’.

My comments in the prior paragraph segue directly into this point: evaluate what changed from your last budgeting review to this assessment. Things likely changed for the good and the bad. If those two canceled each other out, “Hot dog!” order another Bloody Mary and quit reading. Higher probabilities exist that either “good” or “bad” outweighed the other through the first seven months of 2022. In this event what actions need to be undertaken before year-end 2022 to realign your means with your goals? Or, how do your goals need to be adjusted to improve your financial position and comfort level heading into 2023? Rarely do we suffer from poor planning when future events turn out to be better than our expectations. However, if 2023 underwhelms expectations how well positioned are you to attain peace of mind and endure until those rosier scenarios materialize?

Finally, it behooves one to complete at least one mid-year tax review to guard against surprises. A quick review of a paystub may confirm that deductions remain sufficient to avoid having to write Uncle Sam a check come April. Alternatively, a gap in tax withholding and a pay increase or mid-year retention bonus (good for you!) may present an opportunity to increase 401(k) contributions through the rest of the year or to open a Roth Individual Retirement Account (IRA). If you just go spend it, you keep driving more of that inflation that led this process in the first place, just kidding…not. Anyway, twenty minutes on tax planning could save you angst and a few thousand dollars down the road. I kid you not: a new client called April 10th last year to open an IRA after his accountant discovered insufficient tax withholding throughout the year. A quick review and the client could have leisurely pursued opening an IRA rather than hustling through the process and creating anxiety for himself and his wife. A little time here could go a long way later.  Happy August!