How To Perform A Mid-Year Financial Wellness Check-In

“You may find yourself living in a shotgun shack.

And you may find yourself in another part of the world And you may find yourself behind the wheel of a large automobile And you may find yourself in a beautiful house, with a beautiful wife

And you may ask yourself, "Well... how did I get here?" – Talking Heads

Moving the financial knowledge needle in a positive direction can be a difference maker as you work to build your financial wellness foundation, but real change requires more than just knowing what to do with your money. You have to be ready to take action to improve your overall financial well-being and have the confidence and ability to follow through on that action plan. You also need to have a simple set of important life goals and regular check-ins to track your progress.

How I’m performing our family’s mid-year financial checkup

I will admit that this summer has already been a crazy journey with multiple work trips, baseball tournaments, summer camps and a family vacation. However, there is one thing on our annual calendar that I do have a firm grasp of and that’s our mid-year financial checkup. Yeah, I know it’s not the most glamorous and exciting event to put on the calendar, but it’s essential to make sure our financial plan is on track to meet our life goals! So in the middle of your busy summer schedule, it’s important that you take the time to review your financial plan and assess your progress. Here are some fairly simple things that you can include on your checklist to enhance your own financial health:

If you’ve had any changes in your income or expenses so far this year, you may need to adjust your income tax withholding. The same is true if you found that tax time was surprising, either with a bigger than normal refund or worse, if you ended up owing for the first time. You can adjust for that so next April, you won’t be scrambling. For a calculator you can use to figure out your recommended tax withholding, visit IRS.gov.

I’ve worked with many people recently who’ve confirmed Murphy’s Law with some major life changes and challenges that have required some type of emergency savings in their lives. For many people, 3-6 months of basic living expenses is sufficient for an emergency fund. For others (especially those in an uncertain job situation or with concerns about the economy), an emergency fund of 6-12 months of living expenses may be more prudent. If paying off debt is a current priority, you should at least maintain a starter emergency fund of around $1-2k.

While it may be too late to save for that summer vacation, it’s not too late to start planning for the holidays. In fact, one effective money management technique is to create a separate account for those expenses that don’t occur on a regular basis but still deserve a place in your personal spending plan. For more information on setting up a planned spending account system, check out our Money Management Tips That Work.

Little changes can make a big difference over time. Try putting every expense that falls into the “wants or lifestyle choice” category to the test as you update your personal spending plan. (This at least needs a semi-annual review as well.)

My family has recently started taking a regular inventory of the different account subscriptions and memberships that we maintain. Each account faces the same question at least once every six months: are you worth keeping? If the answer is no, we either cancel our subscription or find a more useful and cost-effective alternative. This summer, it looks like we’ll renew memberships at a local children’s museum and aquarium. We will also keep our Netflix and Spotify accounts because we enjoy streaming movies and music at home, but gym memberships, magazine subscriptions, college hoops season tickets, satellite tv and radio are long gone because they simply weren’t being used.

I’ve conducted numerous webcasts during the first half of the year, and debt is still one of the top obstacles holding people back from reaching their important goals like retirement or sending their kids to college. If you are working through debt issues, check out the Debt Blaster Calculator to see if you are on track to get those credit card balances and other creditors out of your life. If you don’t have a plan, your mid-year checkup provides you with a good starting point. If you have student loans, make sure that you’re taking the necessary steps to fit them into your financial life plans. (See 7 Steps to Deal with Student Loans.)

Most financial professionals recommend re-balancing your portfolio on at least an annual basis. If you haven’t reset your target asset allocation for current and future investments, the middle of the year is a convenient time to do so. Your retirement account at work may even have an automatic re-balancing feature to make this process easier in the future, although if you’re using an asset allocation or target retirement date fund, that’s already being done for you.

Has anything significant changed in your life that has an impact on your financial plan? Changes could include moving, the birth of a child, marriage, divorce, unexpected expenses, or increases/decreases to your income. It’s important to keep your financial plan up to date. Remember, financial planning is an ongoing process so whether you need to update your estate plan, change beneficiaries on retirement accounts, increase your life insurance coverage, or establish a plan to get out of debt, it’s always smart to adapt your plan to life’s changes.

As summertime kicks into full gear, be sure to fire up those barbecue grills, load up those cars and trucks with suitcases, and enjoy the mountains, lakes, beaches and other beautiful spots in our country and beyond. Just be sure to do a little mid-year financial check-up at some point this summer. It will definitely add some peace of mind both now and in future years to simply know that you’re doing everything possible to try and stay in solid shape financially. If you don’t, you may find yourself years from now recalling the classic lyrics to the Talking Heads song and asking yourself, “well, how did I get here?”.

Source: Forbes.com

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