The Jewish calendar in all its wisdom offers many varied opportunities throughout the year. If, for example, Pesach focuses our thoughts on freedom, and Chanukah offers an enlightening experience in the depths of winter, the month of Elul followed by Rosh HaShana and Yom Kippur is our chance for a spiritual awakening. There are many prompts and pointers available to facilitate that awakening, but if we don’t take advantage of those opportunities we will never maximize our potential for the coming year.
The spiritual refocus should also help us to re-assess our material lives and financial well-being. The New Year can serve as a tool to revitalize our financial energy into new opportunities, with brand new prospects and new focused drive towards achieving our goals.
It never ceases to amaze me how people can plan every aspect of their lives, their daily routines, their vacations, and their professional development, but nevertheless skip over all semblance of planning when it comes to their finances. How many of us proactively take the time to educate ourselves financially in order to ensure that we are maximizing our resources. Why is it that we don’t even know how to read our pay slip, never mind understand what it means and where our money is going?
If you already have a solid financial plan, use this time to evaluate if it’s working effectively. Your financial situation is not static, and the financial markets are ever-changing. When you first set up your plan, constructed your budget, and prioritized your financial needs, you were reacting to your financial circumstances and outlook at that particular time. However, as your personal situation changes, your financial requirements must accommodate your new reality – whether it’s small changes in your children’s extra-curricular activities or tuition fees, large positive life-changing events such as Aliyah, or negative events such as divorce or bereavement. Start evaluating your current state of finances by asking the following key questions:
- Are your assets growing and your liabilities shrinking as you pay off debt, or are you heading in the reverse direction?
- Are your retirement savings reaching the levels you’ve identified that you’ll need?
- If you are currently suffering from financial difficulties, are they systemic, due to some extreme one-time event, or due to large ongoing expenditures?
- Are you over/under-insured? In what areas?
- What is your current monthly expenditure? How does it compare to your revenue?
This time of year is also perfect for financial reassessment because the chances are, if you have children in some kind of educational establishment, there will probably be financial adjustments to be made due to different school fees, extra-curricular activities etc.
Your finances, just like life, are always changing, but some of the bigger changes occur as your kids progress to new schools, new challenges and new opportunities in life. Here’s a list of some things to ask as we start the New Year.
- Will any recent life changes affect your revenue generating ability or your expenses?
- Is tuition higher or lower this year?
- Are there extracurricular activities that need to be added to your budget, or do you need to cut back?
- Are any of your children leaving home and freeing up resources that should then be targeted to other areas like long-term savings?
We tend to live our financial lives on auto pilot, as the path of least resistance is the easiest option, but that can lead to making too many mistakes. Instead of waking up after the chagim with a large overdraft and the realization that your budget has expanded well beyond what you can afford, why not be proactive and start putting that new school year financial plan together right from the beginning of term. Ketiva ve’chatima tova!