How to Complete a Mid-Year Financial Checkup

It’s understandable that you might not want to check in on your finances. Daily news reports featuring a tumbling stock market and growing inflation are enough to make you want to lather on another layer of sunscreen, hang out by the pool, and delay reviewing your financial accounts until the fall. But these very circumstances make it even more critical that you review your financial progress today, with a mid-year financial checkup.

Review Your Expenses

Unnecessary expenses have a way of outstaying their welcome. While you might invite steaming services, app subscriptions, and gym memberships into your financial home for a season, they tend to linger long after you’ve stopped using them. List your recurring expenses and consider eliminating the ones you no longer need, use, or enjoy.

Necessary expenses such as home and auto insurance can also be reduced. Compare policies and carriers to find similar coverage options with lower annual premiums. Ask service providers, like internet and mobile companies, to review your usage to determine if you could save money by switching to a different plan. Redirect all the savings you uncover toward debt reduction or an emergency savings fund.

Look at Your Emergency Savings Fund

Summer is here — and if you haven’t made progress on building your emergency savings this year, now is the time to prioritize it. Your fund should equal three to six months’ worth of living expenses, which should be enough to cover bills if you lose your job and need to search for a new one. This money could also help cover unexpected but necessary expenses like a new transmission for your car. Without a fully-funded emergency savings account, it’s easy to turn to credit cards or retirement savings to cover large, unforeseen expenses.

Consider a Debt Reduction Plan

Credit cards, personal loans, and other forms of debt can stand in the way of living your best life. When you’re debt-free, you’ll have more cash to save for the future. Assess where you are on your path to paying off your debt. As interest rates rise, you might need to re-prioritize the order of debt payoff by putting higher-interest rate credit cards at the top of the list.

Report Household Changes

Did you get married, divorced, or increase the size of your family during the first half of the year? If so, review the following documents to ensure they reflect your new household status:

• Estate plans
• Financial accounts
• W-9 Tax withholdings
• Life insurance beneficiary designations
• Workplace healthcare coverage

Calculate Your FSA and HSA Balances

Some Flexible Spending Accounts (FSAs) do not allow you to carry over balances from one year to the next. Now is an excellent time to figure out whether you need to adjust your contribution to ensure you don’t leave money in the account at year-end.

Since Health Spending Account (HSA) balances roll over each year, you want to check this account for a different reason. Confirm how close you are to reaching your annual maximum contribution. Even if you don’t plan on using your HSA balance this year, contributing the maximum amount is a good idea since you can use the balance next year or during retirement.

Check Your Credit

An annual review of your credit history reports can help you avoid surprises when applying for a mortgage, credit card, or loan. Employers, utility companies, and even landlords may refer to certain aspects of your credit history before entering into a business relationship with you. Regularly reviewing your credit could also help stop identity theft in its tracks.

Visit AnnualCreditReport.com to request copies of your reports from each credit reporting bureau. Review them for errors, and then follow each agency’s dispute policies to remove inaccurate information from your credit file.

While you can’t control the economy, you do have control over how you manage your finances. Checking in mid-year helps you stay focused on your goals regardless of what’s happening in the financial markets. And it’s one of the best ways to ensure you stay on track toward achieving your goals.