Professors, I know you are busy! You are pulled in many directions. That isn’t lost on me. For many, summer is a great time to unwind a bit and start crossing items off those to-do items that you’ve been putting off. Here are 7 strong summer financial moves for professors…
Get Your Cash Flow in Order
Summer can be a great time to get yourself set up on a good budget. A few startling statistics:
- Only one-third of Americans have a detailed household budget.
- 50% of Americans are woefully unprepared for a financial emergency.
- 31% of Americans don’t have at least $500 set aside for an unforeseen emergency expense.
Now is as good a time as any to start tracking your spending. I would suggest trying out Mint or YNAB as great tools to get started. If you already have a budget, but have been derailed a bit, set a goal to get back on track.
Reevaluate Your Student Loans
Older Americans are really struggling with student loans. It’s important to do your best to get them paid off completely or at least have a plan of attack early on in your career. One great benefit to working in higher ed is that you may qualify for public service loan forgiveness.
If you aren’t taking advantage of PSLF, do not settle for paying the minimums each month. Do everything in your power to pay down your student loan debt.
Check Your Progress Towards Retirement
Summer is a great time to check out your progress towards retirement. Is your current wealth accumulation sufficient to cover your lifestyle when you decide to retire? Do you know?
The summer months are often a great time to evaluate your 403(b) contribution percentage. One thing to consider is upping your contributions if you get a raise. You’ve already been living on the cash flow from before your raise, so give your retirement savings a boost. Let’s say you receive a 4% raise. Keep 2% for yourself to use toward your lifestyle and up your 403(b) deferral by 2% as well. You’ll be glad you did.
Give Your Portfolio a Risk Audit
What is the first thing you do when you enter your vehicle? I bet you buckle up. Why? You do it to reduce the risk of injury if you are involved in a crash…
How about your portfolio? Do you know how much risk you are taking? Do you know how your portfolio would behave if there is a market crash? It’s time to assess the risk in your investment accounts to see if any adjustments need to be made.
Analyze Your Benefits
When is the last time you took a hard look at your benefit elections? Do they still make sense or are you just sticking with what you’ve always done? The benefits that are offered can periodically change so it’s important to stay on top of things.
A few things to look into:
- Did you know that supplemental life insurance through your employer gets more expensive as you get older? How much are you paying? Can you get it cheaper elsewhere?
- Are you getting the full match that is offered in your retirement plan? Don’t leave money on the table.
- Some universities offer legal services as a benefit. Do you have estate planning done? If not, you should get this done asap. (even if the school won’t pay for it, get it done anyway)
- Does the health insurance plan you’ve chosen still make sense? Is there a better option?
Update Your Beneficiaries
I cannot tell you how many times I have met with folks that haven’t updated the beneficiaries on their accounts since they opened them. It’s easy to let that slip through the cracks because it’s never top-of-mind. Take a look at them and make sure they still reflect your wishes.
Did you know that beneficiary designations trump a will? Did you know that minors cannot directly inherit assets? Don’t let your hard earned wealth be decided on by someone you’ve never met (a judge) because you haven’t updated beneficiaries.
Replenish Cash Reserves
We already saw some statistics on the lack of savings by Americans. Look, I know how things can happen. You went overboard on Christmas and Valentine’s Day gifts and then planned a family vacation. The next thing you know, you’re pinching pennies to make ends meet.
Use the summer months to replenish cash reserves. Set a goal of one month’s worth of expenses and then build from there. Don’t allow a short-term emergency to sabotage your long-term plans.
Again, I know you’re busy. Don’t let that be an excuse to let your finances get out of control. Use the summer months to commit to organization and making smart money moves.
Need some pointers? Let’s chat!