Mid-Year Financial Check-In: Staying on Track
As we have officially entered the second half of the year, it’s an excellent time for a mid-year financial check-in. Why is the helpful, you may ask? It helps you assess your financial health, track your progress towards your goals, and shows you where you may need to make any adjustments to stay on course to your financial goals.
Here are 6 tips to help guide you through an effective mid-year financial check-in.
1. Review the financial goals you set at the beginning of the year. Maybe your goal was to save for a big purchase, to pay off debt, or to increase your retirement investments. Now is the time to evaluate where you are on those goals.
Consider if you are on target, ahead or have fallen behind. Or perhaps you’ve either reached your goals or they have just changed due to something in your life changing requiring a shift. No matter your situation, update your goals to reflect your new priorities and circumstances. This will help you remain focused, or perhaps refocused for the rest of the year.
2. Examine your budget. Compare your actual spending versus your planned budget and make note of areas where you overspent or underspent. Understanding any patterns you find can help you make any adjustments you may need to make. Don’t forget there are many budgeting tools or apps available that you can use to help simplify this process and provide real-time insights into your spending habits.
3. Evaluate your savings accounts. Take a look at your emergency fund, your retirement accounts and any other savings accounts and goals that you have.
Note if you have been contributing as planned and consistently. Include your investment accounts as well. The key is to review how they’re performing and consider if it’s time to make any adjustments. If you have saved as much as you planned, this is great news! If not, make note of the reasons and explore ways to increase your savings or ways to cut some expenses. Even consider ways to increase your income to help you get back on track.
4. Assess Your Outstanding Debt. Take a look at all your outstanding debt including credit cards, any loans, and even your mortgage. Note the interest rates, minimum payments, and outstanding balances. Determine if it’s time to create a repayment plan or adjust your current. Remember, as we have discussed before, pay down high-interest debt first then move onto to the next ones. You can also consider exploring refinancing options. If the terms are better, it could help you reach that goal easier or maybe even save money, so it may be worth considering.
5. Review Your Retirement Contributions and other investments. Are your investments aligned with your current risk tolerance? What about your long-term goals? Look at their performance and determine if you need to make any adjustments or moves in your portfolio. You may need adjust allocations to make sure your risk level is where it needs to be or to optimize your returns. For your retirement accounts, especially a 401k, make sure you're taking advantage of employer matches and consider increasing your contribution rate if possible.
6. Update Your Insurance Coverage. This is one people often don’t think about, at least until they need it, then they realize there were things that needed to be updated. So this is the time to make sure your policies are up to date. This includes health, auto, home, and life insurance. Is your coverage adequate? Remember, life changes, like getting married, or having children, or buying a home, often will require adjustments to your coverage.
Bonus Tip!
Automate Your Savings and Investments. Consistency is a key point in reaching your financial goals. How often do you just forget to do something? Or something else comes up? This is true for finances as well. You mean to get to it, but it just never happens and before you know you are months down the road and have missed opportunities.
A great way to help that is to consider automating your savings and investment contributions. This minimizes the temptation to spend the money instead and it ensures that your financial priorities are handled regularly without it requiring your constant attention. You set it and you don’t have to think about or miss that money it just goes to the chosen accounts and it's done!
Automating your finances actually can lead to more disciplined saving and investing, and that helps you achieve your long-term financial objectives more efficiently.
When you set it and forget it though, don’t completely forget it! Just like we are doing now, revisit your finances on occasion and make sure your plans are still in line with your goals.
We hope this has been helpful and that you can take this information and adjust your financial plan. Regularly assessing your financial situation is key to staying on track and ensuring your secure financial future.
Also, as you make these adjustments make sure your goals for the remainder of the year are realistic and that you have a solid plan to reach them. Whether that’s increasing savings, reducing expenses, or investing in new opportunities.