Now is a great time to start evaluating your finances for the year ahead. Don’t wait until January 1^st to wake up and say, “Where has all of the money gone?” Position yourself for more clarity and better decisions by looking now at your spending patterns and framework for decision making. A few simple changes (like setting up a Savings-to-Spend account) could make a huge difference the next time you have a major expense or have other financial issues.

You might wonder where you should start…so let’s start with the basics.

Here are some quick questions to get you started:

• Do you have ample cash reserves for your non-routine expense between now and the end of the year? This means property taxes, major home maintenance projects, holiday expenses, and vacation or holiday travel?
• Where do you maintain your savings? Is some in a checking account paying almost zero interest? Or do you have most of it in a FDIC insured savings or money market account earning at least 4%?
• Are you happy with your sense of control over your finances? Or do you feel like you constantly have financial emergencies that need to go on a credit card?
• Do you have all your investment savings in retirement accounts? Or is at least some of it in non-retirement (non-qualified) accounts? 
• Have you set up a system where you can clearly see your savings, income, and expenses? 
• Do you have a system set up where your spending is done more consciously, and your saving is done automatically?

Once you ponder the above, consider going a bit further.

Below are three easy steps to get your Fall Financial Clean-Up started:

1. Identify all debt and financial obligations (who you owe). 
   Are there any surprises? Consider closing unused lines of credit and credit cards. For further information, see last month’s blog Breaking Up with a Credit Card is Hard to Do here.) Also, evaluate if you can (or should) make extra payments on certain loans.
2. Identify the automatic recurring charges or withdrawals from your bank account or credit card. 
   Are there any surprises? While we love the idea of automating savings and payment systems, the danger zone is when you have automated certain purchases, such as subscriptions, software licenses, memberships, or other periodic purchases. Unfortunately, routine monthly payments are highly encouraged by vendors who want you to forget that you are paying them each month.
3. Review your banking relationships.
   Are there any frustrations? Examples may be fee increases, website issues, or access limitations (such as it is difficult to speak to a real person). Just because you have been with the same institution for a long time doesn’t mean you need to stay there. It could be time to move on since the reasons you established an account at that bank no longer make sense.

As always, our objective is to help you simplify your financial life and create systems where you don’t need to live on a budget, but you can easily manage your cash flow. The axiom “knowledge is power” certainly applies to your personal finances, and to the extent that you can anticipate expenses and prepare for them in advance, it will reduce stress and help you make better financial decisions. 

One of the added benefits of a fall financial clean-up is that it reinforces the need to monitor your accounts for fraudulent activity. 

You may wonder if I do the exercises I am describing above. The answer is YES. I use the PlanFirst! system that is available to all Arkansas Financial Group, Inc. clients. Because it is easy to download and sort transactions into Microsoft^® Excel, it took less than an hour this year to go through all my “automatics” and see what the surprises were. Luckily, nothing stood out that I didn’t already know, but I will be adjusting where certain charges are paid to make it even easier to track in the future. I had fraudulent activity earlier this year, which was quickly caught because of the systems I had in place. In addition to the tranquility that comes with being able to make financial decisions with ease, I value being able to swiftly monitor activity since credit card fraudsters are coming up with more inventive techniques to obtain credit card details. 

As for managing cash and Savings-to-Spend accounts, we now have a relationship with a company called Flourish (Flourish Financial LLC). This is a company that is only for Registered Investment Advisor clients, and they offer a competitive rate on FDIC insurance savings accounts. Additionally, they provide significantly larger FDIC limits than retail banks do. If you are interested in more information, let your advisor know. We will rollout more information on Flourish in the future.

In the meantime, plan a certain time for your fall financial clean-up. Like all meaningful projects, the hardest part is getting started. Once you dive in, you may even have a gratifying time doing it and be rewarded with peace of mind.

Kristina Bolhouse, CPA/PFS, CFP®

Vice President/Shareholder

© 2023 Kristina Bolhouse and The Arkansas Financial Group, Inc., All rights reserved.

The Arkansas Financial Group, Inc. is a Fee-Only Financial Planning Firm located in Little Rock, AR serving clients in Arkansas and throughout the country.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by The Arkansas Financial Group, Inc. [“AFG]), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from AFG. AFG is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of the AFG’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.arfinancial.com.

Please Remember: If you are a AFG client, please contact AFG, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.