As summer comes to a close and before the frenzy of the holidays begins, it is a perfect time to take a look at your financial progress this year. Are you on track to meet your goals? Have you taken care of the details regarding investments, savings and insurance you set at the beginning of the year?
Here are five tips to check your finances:
1. Investments and Savings – Where do you stand in meeting your savings and investment goals? Do you have the cash reserves you need to cover an emergency (a common goal is 6 months of expenses)? Having cash reserves may save you from having to take an unnecessary loss if forced to sell investments. Are your investments performing the way you expected? If you are working, are you maximizing your 401(k) contributions?
2. Spending on track– Summer vacation, eating out more, weekend excursions and friends visiting can all make a dent in your budget. A mid-year review gives you a chance to get your spending back in line – or make some cuts if necessary and set realistic expectations for holiday spending. Make sure to watch those credit card balances. Borrowing to spend can add up quickly in fees and interest.
3. Insurance coverage – Have there been changes in your life that require an adjustment in your life insurance – a new baby, a new home, a pay increase? Make sure the coverage you have is reflective of your current lifestyle. Check your life insurance, home and car coverage. If you buy your own health insurance through the health care exchanges, remember that you will have a limited period of time in the fall to review and change your coverage for the following year. (Medicare – Oct. 15-Dec. 8; and health care exchanges Nov. 1-Dec. 15.)
4. Charitable contributions – Too often we wait until the rush of the end of the year to make a donation. Charitable organizations need money year round and many make it easy to contribute monthly. Or make your contribution mid-year rather than end -of –the-year to make sure your favorite charity benefits and you get the tax benefit.
5. Financial plan – If you have a financial advisor this is a great time to schedule a check-in to see how you are doing and update your advisor on any changes or upcoming changes in your life. It is important for your advisor to know about changes that could impact your short or long term plan – such as your employment, your health, and family financial obligations.
A mid-year financial checkup is a great way to see whether you are on track to reach your yearly goals. And if not, you still have time to make adjustments to reach your yearly goals.