Your fall plan to maximize cash flow by summer break
It might be early in the school year, but it’s never too soon to start thinking about summer break.
Especially where your finances are concerned.
After all, having more free time in July and August can potentially lead to spending a lot more money.
Then there’s the added possibility of a summer income gap for those of you that only get paid during the school year, such as Long-Term Occasional (LTO) and supply staff.
That’s where planning ahead now can provide the financial cushion you need come next June.
Step 1: Build a realistic 10-month financial roadmap
‘Realistic’ is the keyword here because we understand that life and the busy demands of being an education member can make it difficult to add yet another task to your plate.
However, your roadmap doesn’t have to be complicated.
In fact, it can be as simple as gauging how much money you’ll need during the summer months for regular and discretionary expenses, and then working backwards to determine how you’ll come up with that amount.
Basically, we’re talking about creating a summer-specific budget.
For example, let’s say you’ll require $3,500 a month for regular expenses (rent/mortgage, food, utilities, etc.) and $1,000 a month for discretionary purchases (tickets to events, gas/flights, hotel stays, etc.). If your salary gets paid across all 12 months of the calendar year, the only extra money you’ll have to budget for is the $2,000 in extra spending you plan on doing during next year’s summer break.
That works out to saving $200 a month over the 10 months of the school year.
If your plans for next summer involve spending more or less, then you’ll naturally need to adjust your savings plan accordingly.
Start building your summer budget right now
Step 2: Automate your summer savings goals
Let’s face it, even the most focused of plans can get sidetracked from time to time, especially where saving money is concerned. So, if you truly want to gain momentum with your summer break savings goals, ensure you’ll stick to the plan by automating contributions.
Because money that you don’t see is money that you won’t spend.
Enter pre-authorized contributions (PAC). With a PAC, you set the savings terms according to your budget (i.e. weekly, bi-weekly, monthly). In addition to removing the temptation to spend money you’re trying to save; those consistent contributions will benefit from compound interest—giving next year’s summer goals a further financial boost.
Step 3: Keep the use of credit under control
Relying on the use of credit cards to cover expenses can quickly drain your finances through high-interest charges if you’re not paying balances off in full every month.
To help keep credit use from getting out of hand, a good rule of thumb is to have no more than one major credit card.
The more cards you have, the greater the risk of creating a debt hole that’ll eventually become too big to dig yourself out of. Ultimately, the best way to prevent a credit crisis is to simply spend within your means by sticking with a preset budget.
Step 4: Trim unnecessary expenses
One of the biggest obstacles to realizing financial goals tends to be the perception of not having the money to save.
But, as the old saying goes, “where there’s a will (to save for summer break), there’s a way”.
In other words, when there’s no additional cash flow coming in, your next course of action is to look at the money that’s going out and then scale back where possible.
That’s where creating a list of monthly expenses will provide you with a more comprehensive financial picture. Once you’ve come up with a complete list, divide it into three categories: ‘necessities’ (i.e. food, gas, mortgage/rent, utilities, phone); ‘debt payments’ (loans, credit cards); and ‘nice-to-haves’ (coffee, eating out, online gaming/shopping, entertainment, etc.), then see which areas you can trim back on, or cut out altogether. You can then allocate the extra cash flow from any cuts you’ve made towards your summer savings goals.
Step 5: Book next year’s summer plans sooner rather than later
While being spontaneous can be fun, it can also be more expensive—particularly when it comes to flights and hotel stays. So, if you’ve got big travel plans next summer, booking those things well in advance can actually work out to greater cost savings.
Also be sure to leverage educator-specific savings resources, such as EdvantagePerks™.
Beyond the steps above, be sure to also get in touch with Educators Financial Group.
At the end of the day, your fall plan to maximize cash flow by next summer doesn’t require drastic changes—just steady, intentional steps.
That’s where we can help.
Whatever goals you have planned 10 months from now and beyond, we can help you navigate the financial challenges of today so that you’re in a better position to realize your ultimate dreams for tomorrow.
