We all start the year off with good financial intentions.
However, like most New Years resolutions, life gets in the way.
Maybe your rent went up, or you faced unexpected medical issues.
Or, on the flipside, you gota raise at work(lucky you!)
The point is, everyones finances change during the course of a year.
Thats why a mid-year financial review can be the key to hitting your 2024 financial goals.
Before we jump in, lets cover the basics.
What does a mid-year financial review entail?
That way, you might make smart financial choices for the rest of the year.
How To Do A Mid-Year Financial Review
We know tackling this checkup might sound daunting.
It potentially is the make-it-or-break-it moment you gotta redirect your finances.
You also could use a budgeting app likeCleoorQuicken Simplifi.
From there, youll want to go through your expenses line by line.
Look for any trends that are telling or surprising.
Also, look at expenses that changed or are more than you thought.
For example, you might be paying more money than you thought in tolls each week.
Maybe your phone or cable bill recently increased by $15 a month.
Many of us are spending money on things we dont even think about.
Yes, some of the patterns might prompt you to cut back on frivolous spending.
However, the real goal is to make informed spending decisions as you plan the rest of your year.
Did you want to focus on retirement or build a more diverse investment portfolio?
How did you want your money to build for you?
Next, consider if any of these goals have changed.
Maybe youre now expecting your first child and college savings accounts have gotten more important.
If you recently switched jobs, your new company might offer a better 401(k) match.
While reviewing spending is important, tweaking your budgeting is your plan for the future.
If you already have a budget, use this checkup to adjust it to match reality.
Start by taking a look at your income and updating your budget for any changes.
Did your boss give you a raise, or did you start freelancing?
Increase your budget income to reflect that and consider putting some of that windfall into savings.
Or, have you recently experienced a layoff or a decrease in contract work?
Lower your budget income accordingly and start looking at your non-essential spending for some wiggle room.
Check each spending category and track which ones you regularly over or under spend in.
Can You Survive 10 Days of Budgeting?
If you oughta wrangle your budget, it may be time to consider a savings challenge.
Prioritize Managing Debt
Paying off debt is often a top financial goal for people.
Doing so as quickly as possible is a major investment in your future financial freedom.
There are two major methods when it comes to debt repayment: thedebt avalanche methodand thedebt snowball method.
Mid-year is a good time to examine which method youve been using and how its serving you.
The debt avalanche method is all about paying the least interest possible.
You start by listing your debts by interest rates and paying off the highest interest debt first.
The goal of this method is to save you money by saving you interest payments.
If tackling that high-interest debt sounds daunting, the debt snowball method might be more your style.
The debt snowball method is about chipping away at your debt to create momentum.
You start by organizing your debts by the size of the debt and paying off your smallest amount first.
There also is the debt lasso method.
This is more complicated and involves moving debt around to monopolize on certain credit card benefits.
It can be beneficial but also challenging to keep track of.
If this all feels overwhelming, you might try thedebt snowflake method.
This method is about throwing tiny payments at your debt and letting it pile up to a big dent.
Secure Your Emergency Fund
Unexpected expenses often are the biggest hits to personal finances.
You cant predict these unfortunate events, but you could financially prepare with anemergency fund.
Most finance experts recommend saving three to six months worth of expenses in an emergency fund.
Your budget can help make it easy to calculate how much you need.
Simply take your necessary monthly household expenses and multiply by three.
If your emergency fund is already secure, you could examine where youre actually keeping it.
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Plan for Retirement
Retirement savings can often feel like a scary subject.
ensure you understand how much they match and when that match will vest.
If you discovered some surplus when you reviewed your spending, consider upping your 401(k) contribution.
This will not only build your retirement account, but also lower your taxable income.
There are two types of IRAs that offer different types of benefits to your finances.
Instead, look at your investments over time and see if your portfolio is working for you.
You also might consider whether or not your risk level has changed during the first part of the year.
you could calculate your risk tolerance and use that information to rebalance your portfolio as needed.
Getting a handle on these changes now can save you a headache come tax season.
First, youll want to see to it all your tax documentation is in order.
You should also verify you have the right withholdings taken out of your income.
One easy way to check your withholding status accuracy is to look back at last years taxes.
Did you end up owing a lot in taxes?
Then consider upping your tax withholding status.
If you wound up with a large tax return, then consider lowering your withholding status.
If youre self-employed, you also want to check up on your self-submitted quarterly estimated taxes.
Do these taxes accurately reflect your income so far this year?
Should you adjust your planned tax payments for the future?
Now get out there and make it rain!
Contributor Whitney Hansen covers banking, credit cards and investing for The Penny Hoarder.
