A Key to Staying on Track
As we pass the halfway point of the year, it’s an ideal time to perform a mid-year financial checkup. This practice allows you to review your financial health, adjust your budget, and set the stage for meeting your end-of-year goals. A mid-year financial checkup may be the difference between staying on track and veering off course. Here are key areas to focus on during your review.
Assess Your Financial Goals
Start by revisiting the financial goals you set at the beginning of the year. Are you on track to meet them? Whether you’re saving for retirement, planning a vacation, or aiming to pay off debt, check your progress and make adjustments if necessary. If you’ve fallen behind, don’t be discouraged; instead, adjust your plan or set new, more attainable goals.
Review Your Budget
Your budget is the backbone of your financial plan. A mid-year checkup is an excellent time to review your spending and saving habits. Compare your actual expenses to your budgeted amounts and identify any variances. Are there categories where you’ve consistently overspent or underspent? Consider adjusting your budget to reflect your current situation, accounting for any changes in income or expenses.
Evaluate Your Savings and Investments
Check your savings accounts and investment portfolios. Are you saving enough for your short-term and long-term goals? This is also an excellent time to review your emergency fund. Financial experts recommend having three to six months’ worth of living expenses saved in case of emergencies. Additionally, assess your investment performance and ensure your portfolio is diversified and aligned with your risk tolerance and financial objectives.
Examine Debt and Credit
Review your outstanding debts, including credit cards, mortgages, and loans. Are you managing your debt effectively? Consider strategies to pay down high-interest debt faster, such as increasing your payments or refinancing. Also, check your credit report for any inaccuracies and your credit score to ensure it reflects your financial behavior accurately. Maintaining a good credit score is essential for favorable loan terms and interest rates.
Update Insurance Policies
Insurance is a crucial part of financial planning. Review your insurance policies, including health, life, auto, and home insurance. Ensure you have adequate coverage and that your policies reflect any recent life changes, such as marriage, the birth of a child, or purchasing a new home. Consider whether additional coverage, like disability or long-term care insurance, is needed to protect your financial well-being.
Plan for the Future
Think ahead to any significant expenses or financial changes expected in the second half of the year. This might include vacations, back-to-school costs, or holiday spending. Planning for these expenses now may help you avoid debt and stay on budget. Additionally, consider any tax implications and plan accordingly to maximize deductions and credits.
Consult a Financial Advisor
If your financial situation has changed significantly or you’re unsure about your financial plan, consider consulting a financial advisor. An advisor may provide personalized guidance and help you navigate complex financial decisions like investing, estate planning, and retirement savings.
Conclusion
A mid-year financial checkup is a proactive way to ensure you’re on the right path to achieving your financial goals. By reviewing and adjusting your budget, savings, investments, and other financial areas, you may make informed decisions that align with your objectives. Whether aiming for financial stability or working towards a specific goal, regular checkups may provide clarity and confidence in your financial journey.
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