June 2023

You might think that the title to this article indicates something ominous. Actually it is very happy and joyous, I just had not planned for it financially and that bothered me.

The Christmas of 2021, our whole family gathered together alongside the family of our son’s girlfriend. Our son and their daughter live and work in Washington DC and are both financially independent. He works for the Department of Commerce and is in the Army Reserve. She works for the Office of Management and Budget.

The day after Christmas, with each of their families gathered in our kitchen they announced their engagement. A very joyous occasion!

We have three daughters and one son. Since traditionally the groom’s parents only focus on the rehearsal dinner, supporting a son’s wedding is less of a stretch. After our son and future daughter-in-law announced their engagement I made a toast, “Here’s to one wedding we do not have to pay for,” thinking we would only pay for a dinner and hotel rooms for the children. The unexpected was when they informed us they were getting married in Germany. We had not planned for extra expenses for overseas airfare for the entire family, nor an extended stay from traveling several days in advance to avoid any travel issues. After I thought through it, we had indeed planned for his wedding, we just had to make some tweaks for a wedding in Germany.

Article after article submitted to the financial column of the newspaper by members and employees of our firms stress the importance of having a financial plan. Phyllis and I have a plan and it is reviewed on an annual basis. In the grand scheme of life, this was really just a happy blip on our financial planning screen.

Part of the planning process is thinking about the unexpected events of life that could challenge or wreck your plan. Having reserve liquid funds in place for things you are not expecting help to smooth over those events. No one can foresee the future or plan for everything, but having a plan, a budget, and knowing where your money is being spent goes a long way to realizing your life goals and protecting your family. Having eighteen months to plan for our son’s wedding gave us (in reality Phyllis) time to consider all the many things that have to come together and be paid for the special event.

Our oldest daughter has been married six years. She had a traditional pre-COVID wedding. Our oldest triplet daughter had the traditional wedding planned, but COVID hit and she eventually was married with just them, us, his parents and his grandparents. It was a fantastic and special wedding. After COVID ended, we offered to have a party for them, but being the practical engineer, she took the check instead. We have one single left and look forward to the day, whenever it may come, for her special event.

Let’s get back to how important financial planning is. Whether you are just entering the job market, raising and educating a family, thinking about retirement or in retirement; it is never too late to plan. Understanding where you are financially and where you need to be, at whatever stage of life you are in, is very important. Seriously consider contacting a CERTIFIED FINANCIAL PLANNER™ professional. Make sure you have a qualified CPA and attorney on your team that work well together and get going.

Published in the Victoria Advocate

Lane Keller CPA/CFP® is a managing member of Keller & Associates CPAs, PLLC and KMH Wealth Management, LLC.

Market volatility, debt ceiling default and impending financial doom continue to dominate the headlines of major news outlets as they have for the past year. Most so called “experts” predict at some point in 2023, the United States economy will dip in to a recession. The general definition of a recession is a fall in Gross Domestic Product (“GDP”) in two successive quarters, but there are also other factors that economists look to before officially declaring a recession.

The timing of a recession is difficult to predict so it is best to be prepared for one before it hits. Below are a handful of tips to help you prepare your finances for the next recession, whether that be in 2023 or in the future.

Inspect your budget. Personal financial planning does not have to be complex or complicated. One of the easiest methods to ensure long-term financial success is to craft your budget with cash inflows exceeding cash outflows. Realizing positive discretionary cash flow will allow you to increase your savings, pay off debt and invest for the future. If pen and paper or an Excel spreadsheet do not work for you, there are many smart phone apps or online budget tools such as Quicken or Mint that will help you prepare a budget. Analyze your spending for a few months to determine where your money is being spent and if any changes are necessary.
Beef up your emergency savings. Your budget is crafted, your spending has been adjusted and you are now cash flow positive. It is time to beef up your emergency savings. The general rule of thumb is to maintain 3 to 6 months’ worth of living expenses in savings. Like most rules of thumb, this really serves as a good starting point. The appropriate balance for your savings account will depend on factors that are unique to you such as your budget, other streams of income and number of dependents. Your budget and financial plan serve as two great resources that will help determine the right amount that you should keep in savings.
Pay off high interest debt. By paying off your debt, you will be increasing the amount of positive cash flow for your monthly budget. I am reminded of a young couple who became clients of our firm about 5 years ago. They were both young pharmacists who had just graduated from college and were looking to get rid of the large debt burden they had, mostly in the form of student loan debt. One of our advisors worked with them to prepare a budget and identified that they had strong, positive cash flow. She worked with them to increase their emergency fund and then to aggressively pay down their debt. The end result was a plan for the clients to pay off over $100,000 of student loan debt in just under two years. Talk about huge lifetime savings by not paying decades worth of interest!

This is just one of many stories I could share about the impacts of the three simple tips shared above. These are the same initial steps our firm takes with almost all new clients who hire us for financial planning services. While we do not know when the next recession or economic downturn will hit, it is never too late to work to prepare your finances to weather the next storm.

Published in the Victoria Advocate

Kyle W. Noack CPA/CFP® is Chief Executive Officer of Keller & Associates CPAs, PLLC and KMH Wealth Management, LLC.

The Unexpected

Preparing for Recession

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