Gear Up for the Last Quarter: 7 Financial Planning Strategies to Use

Young African woman seated by the window making notes in her diary- financial planning strategies

Gear Up for the Last Quarter: 7 Financial Planning Strategies to Use

It’s the last day of September, the clock is about to hit midnight and what am I doing? I am in haste, albeit sleepily, trying to catch up on some long-forgotten budgeting with a pile of receipts gracing my desk. I feel like I have been in limbo for the better part of the year and I am just coming up for air when it’s winding down.

Fortunately, the year is not over yet. We still have three months to go. And this presents a unique opportunity to review your progress, address any shortcomings, and set yourself up for a prosperous new year. So, let’s gear up for the last quarter of the year!

Reflect On The Year So Far

This reflection is not just about tallying successes or pondering missteps, but about understanding your financial trajectory and preparing to end the year with a strong, strategic approach.

Evaluate Your Goals

Begin by revisiting the financial goals you’ve set, whether at the beginning of the year or the last time you revised these goals during the year. These might have included saving a certain amount, reducing debt, or investing in new ventures. Approach this evaluation with a straightforward assessment:

List each goal – write them down clearly and mark those you have achieved.
Measure your progress – for goals that are partially met or ongoing, quantify your progress. For instance, if your goal was to save a specific amount, calculate the percentage of that goal you have achieved to date.
Identify the goals that were not met – consider the factors that contributed to these outcomes. Was it a change in your financial situation, unexpected expenses, or a shift in priorities?

This process will provide a clear picture of where you stand relative to your initial expectations and help you identify the areas that need more attention as you plan for the closing months of the year.

Consider Major Financial Challenges

No financial journey is without its hurdles. So, what challenges have you faced throughout the year? Reflecting on the challenges will help you understand your financial resilience and prepare for future fluctuations.

Unexpected expenses – identify any unplanned expenditures that arose this year. This might include emergency medical expenses, urgent home repairs, or unforeseen educational costs. Understanding these can help you better plan for similar incidents in the future.
Economic fluctuations – consider how any shifts in the economic environment have impacted your finances. This might include changes in inflation rates, interest rates, new tax rates, or employment status that affected your income or spending patterns. A good example is the current change; NHIF replacement with SHIF. With higher SHIF rates, your disposable income will reduce, leaving you with fewer shillings to spend.
Adjustments in financial strategy – reflect on any strategic adjustments you had to make. Perhaps you redirected funds from one investment to another, or maybe you had to tighten your budget more than expected. Analyzing these adjustments can provide valuable insights into your financial decision-making process and adaptability.

How to Plan for the Last Quarter

Now that you know where you stand, it’s time to plan for the last quarter of the year. Unlike other quarters, this last quarter presents an opportunity to make strategic decisions to ensure you end the year on a strong note.

Here are some key areas to focus on:

1. Savings

How is your savings journey? This is the time to evaluate your progress and define your savings targets for the remainder of the year. Whether it’s continuing to fund your emergency fund, saving for the upcoming holiday, or setting aside funds for significant purchases, having distinct objectives helps you stay focused and motivated.

Additionally, evaluate your current savings accounts. Are the details up to date, including the posting of interest earned? Is the interest competitive or is it time to shop for accounts with higher interest returns?

2. Debt Management

Do you have debt? In that case, it’s time to evaluate or devise a debt management plan. If you already have a debt management plan, your goal is to check your progress. Are you up to date with your repayments or are you lagging?

If it’s the latter, assess your situation to confirm the cause. Is it that your disposable income has reduced or you have more expenses? Whatever the cause, it’s time to make changes to ensure you don’t start accumulating penalties for late or missed. Payments.

Don’t have a debt management plan yet? Start by creating one. List your debt, noting the principal amounts and interest rates. Next, organize your debts either by interest rate or lowest balance. If you want to save money in the long run, organize your debt for repayment starting with high interest. This is referred to as the debt avalanche method. However, if you feel strapped, you can use the snowball repayment strategy. With this, you organize your debts for repayment starting with loans with the lowest balance.

3. Investments

Next, review your investment portfolio. Evaluate the performance of your investments and ensure they align with your financial goals and risk tolerance. This will help you make informed decisions about where to allocate your resources for the next three months.

As you evaluate your portfolio, consider rebalancing your portfolio. This is important if your preferred asset mix has changed. For instance, you might have an asset mix of 20% cash and equivalents, 60% equity, and 40% bonds but it has since changed. Rebalancing your portfolio will ensure it continues to meet your risk tolerance and investment objectives.

Finally, look for ways to minimize your tax liability through strategic investment choices, such as tax-loss harvesting or investing in tax-advantaged accounts.

4. Tax Planning

Nobody wants to pay taxes, but tax evasion is not the way to go about it. That’s where tax planning strategies come in handy.

When it comes to your investments, there are some strategies to help you reduce your tax liability legally. A good example is through your retirement contributions. Remember that your retirement contributions to a registered fund, whether pension or provident, are allowable up to Ksh. 20,000 per month. If your current contributions are less than Ksh. 20,000, you can increase these contributions to help lower your tax liability. For instance, if you were to contribute Ksh. 20,000 for the next three months, you’d enjoy a tax deduction of Ksh. 60,000.

To help you maximize your tax planning, I recommend consulting a tax accountant or your financial advisor. Their expertise can provide critical insights and help you navigate complex tax scenarios.

5. Risk Management

What is your current risk exposure? The best way to ascertain this is to analyze your current risk exposure related to investments, personal liabilities, or business activities. This will help you manage your risk exposure effectively.

Here’s what to focus on when it comes to risk management:

Update your insurance policies – ensure your insurance coverage—whether for health, life, property, or liability—is sufficient to cover potential risks. Adjust your policies as necessary to reflect any changes in your circumstances or to provide additional security.
Revisit your estate plan – check and update your estate planning documents, including wills and trusts, to ensure they accurately reflect your current wishes and family dynamics. Proper estate planning is crucial for the orderly transfer of assets and can provide peace of mind.

Don’t Forget to Plan for the Holiday Season

Guess what’s around the corner? The holiday season! As festive as the season can get, it is, unfortunately, the time most people rake up debt. From traveling upcountry to buying gifts or taking a vacation. Holiday expenses can quickly add up, leaving you with unplanned debt. Planning for these expenses in advance can prevent financial strain.

Here’s what you can do to ensure you are prepared when the holiday rolls up:

Set a dedicated holiday budget – establish a specific budget for holiday-related expenses, such as gifts, travel, and festivities. This proactive approach helps you enjoy the season without compromising your financial health.
Start saving for the holidays early – consider setting aside money for the holidays well before they begin. Early preparation can ease the financial impact of holiday spending and ensure a more enjoyable season.

Ready to create your holiday budget? Use my EPC Budget Planner to plan and track holiday expenses.

Final Word

The last quarter of 2024 offers a prime opportunity to review your financial journey, make strategic decisions, and position yourself for a prosperous new year. Implementing the above financial planning strategies, including fine-tuning your savings, updating your debt management and investment plans, and planning for the holiday season will ensure optimization of your financial health.