It is crucial to reassess your financial goals during the summer to ensure you are on the right track. Here’re 9 essential financial steps for a mid-year financial checkup.
1. Track your net worth
- Tracking your net worth annually offers valuable insights into your wealth-building progress over time.
- Creating a simple net worth statement involves listing your assets and liabilities on one page.
Financial planner tip
Reviewing net worth trends can help identify necessary adjustments and broader patterns.
2. Increase your retirement savings
- Saving for retirement through employer plans is vital due to the decline of pension plans.
- Aim to maximize your 401(k) contributions, taking advantage of the maximum limits based on age.
Financial planner tip
Incrementally increasing your savings by one percent each year can have a significant impact.
3. Pay off high-interest debt
- Credit card balances can quickly accumulate, particularly with everyday purchases for rewards points.
- Prioritize paying off high-interest debt, such as credit card balances, to avoid interest costs.
Financial planner tip
Consider using the Snowball Method, focusing on paying off the highest interest-rate debts first.
4. Rebalance your portfolio
- As retirement approaches, ensure your asset allocation aligns with your risk tolerance.
- Regularly review your investment portfolio and make necessary adjustments to maintain the desired allocation.
Financial planner tip
Utilize automated rebalancing services offered by your 401(k) provider for convenience and consistency.
5. Start a gift/holiday savings account
- Avoid overspending during the holidays by establishing a separate savings account for gift-giving and celebrations.
- Determine your usual holiday expenses, divide the total by the number of months until November, and save monthly.
Financial planner tip
Opening additional bank accounts can help you stay organized and avoid financial stress during the holiday season.
6. Determine future expected but irregular expenses
- Avoid budgeting mistakes by accounting for irregular expenses that don’t occur monthly.
- Create a list of expected irregular expenses like vehicle service, home repairs, vacations, etc., and estimate their annual cost.
Financial planner tip
Consider setting up a separate savings account or padding your checking account to prepare for these expenses.
7. Set up annual health checkups
- Prioritize your health as it directly affects your financial well-being.
- Schedule regular health checkups, including annual physicals and relevant tests.
Financial planner tip
Investing in your physical well-being now can contribute to a more enjoyable retirement.
8. Map out your charitable giving plan
- Establish a tax-efficient strategy for charitable giving if you are inclined to contribute.
- Consider utilizing Qualified Charitable Distributions (QCDs) from your IRA for direct donations.
Financial planner tip
Explore gifting highly appreciated stock as part of your charitable giving strategy.
9. Update your financial plan
- Regularly review your financial plan with a professional advisor to stay on track.
- Assess your net worth statement, savings percentage, and goals for any necessary adjustments.
Financial planner tip
Consistent check-ins and updates help ensure your financial plan remains aligned with your objectives.
Conducting a mid-year financial checkup is important for maintaining your financial health. Take action and secure your financial future by implementing the suggested steps.