So where to start ? Add these four items to your mid-year financial checklist.
1. CHECK YOUR INCOMEEXPENSES AND OBJECTIVES
You don’t have to account for every penny you’ve earned and spent over the past six months. But taking a few minutes to check out a bank or budget app can help you better understand your finances and course-correct if needed.
“Right now with inflation, even if you had a budget in January, it’s probably not the same as today. There are things that are going to have to change. So it’s about just resetting and figuring out where you are today versus where you thought you were going to be today,” says Kayla Welte, financial planner. Look for opportunities to cut spending if you’ve spent more than planned. For example, you can dine out less or cancel subscription services you rarely use.” Any overspending you have made, you may need to reduce to account for this higher cost of things you owe. definitely buy,” says Welte.
If you set any financial resolutions or other financial goals earlier this year, check those as well. Have you saved as much as you planned for retirement or an emergency fund? Are you on track to pay off your debts?
2. SETTLEMENT DEBT
Debt is becoming more and more expensive to bear due to rising interest rates. Pay off your debts earlier, especially those with variable interest rates, to save money. These debts can include credit cards, personal loans or adjustable rate mortgages.
Focus on reducing your debt to the highest rate first, then move on to the next one. Dall’Acqua also proposes to switch from variable rate options to fixed rate options by refinancing, if possible. “If you can lock in the fixed rate now, you’ll likely save a lot on interest charges over time,” he says.
Putting money aside now in a separate savings fund can help cushion the blow.
3. PLAN HOLIDAY SHOPPING
Inflation could make holiday gifts a bit more expensive this year. Create a shopping list and think about how much you can afford to spend. “Find out what it would take for you to start saving on a weekly or monthly basis and start putting that money aside now,” says Dall’Acqua.
Starting to shop early can also help you manage costs without going into debt. Many retailers hold major sales events.
4. REVIEW YOUR TAXES AND BENEFITS
Welte recommends using an online tax calculator to check if you are withholding too much or too little. This can help you avoid unexpectedly ending up with a big tax bill or missing out on the extra money you might need now.
“If you’re doing the math and you’re going to get a tax refund, now would be a great time to change your investment reporting form, have more money in your pocket now to pay those excess costs that come with the inflation,” says Welt.
If you need to make adjustments, fill out a new investment declaration form and give it to your employer.
While you’re at it, evaluate your benefits selections. These benefits can include health insurance, life insurance, health savings accounts, and flexible spending accounts, as well as perks like gym memberships.
Reviewing your choices in the summer can save you from being overwhelmed in October and November, when open registration begins for most businesses, says Joe Bautista, CFP at Lake Oswego, Oregon.
The goal is to ensure that you choose the most cost-effective options that meet your needs. For example, “a PPO has higher premiums but lower cost if you tend to use health care, lower deductibles, and copayments generally. But if someone doesn’t use that health care, then he can overspend,” says Bautista.
Don’t worry about everything being perfect right now. As Bautista says, “Financial planning is dynamic, not static.” Periodically check your financial plans and update them as needed.