It’s Time for a Mid-Year Financial Check-In

Most people remember to check their investments, retirement accounts, and financial goals at the end of the year, but you should also check-in with your finances in the middle of the year to make sure you’re on track. This weekend, take a few minutes to check the following areas.

Retirement Accounts and Savings
If you’ve invested your retirement in index funds, you probably won’t need to do any mid-year rebalancing. You should avoid tinkering with those accounts more than once a year unless one of your investments has collapsed or changed hands. However, this is a great time to increase your retirement savings if you received a raise since the beginning of the year or make a deposit in your IRA if you’ve fallen behind.

Non-Retirement Investments
You should monitor your non-retirement investments more often. If any investments have exceeded your goals or your portfolio is out of balance, now is the time to rebalance. The market is jittery at the moment, so avoid making fear-driven changes, but you may want to remove funds or investments that have changed managers or focuses. If you started with a value fund, and now it’s a growth fund, it’s probably not doing what you want it to do. Replace it with another value fund you’ve carefully researched.

Health Savings Accounts and Flexible Spending Accounts
Some employers enroll employees in HSAs and FSAs in the fall while others do it at the beginning of the year. Regardless of when yours opens to new funds or permits changes in the plan, review your remaining balance now. If you have an FSA that loses the remaining balance at the end of the year, make plans to spend the balance down by the end of the year. Schedule a physical, make an eye appointment, schedule that procedure you’ve been putting off.

If you have an HSA, you don’t have to worry about spending down the funds, but you may want to reconsider your annual contribution if you have a large amount leftover or don’t have enough to get you through the year.

Financial Goals
I check-in with my financial resolutions every month. At the minimum, see how you’re doing with yours at the middle of the year. Are you falling behind on your savings or debt repayment goal? See where you can cut back spending. Have you received a raise? Direct the additional funds toward your goals with automatic deposits and payments. If you’ve already met your goals, set new ones.

Has your tax situation changed? You might be subject to a different tax treatment if the following apply:

  • You or your spouse returned to the workfore
  • You or your spouse left the workforce
  • You had a child
  • Your child graduated from college or turned 24 before January 1 of this year
  • Your child started college
  • You or your spouse received a raise
  • You bought or sold a house
  • You started or closed a business
  • You received a bonus or taxable windfall.

If any of the above apply, use the withholding calculator to make sure you’re withholding enough from your paychecks to cover the taxes. If you’re withholding too much, file a new W-4. If you’re not withholding enough, file a new W-4 or start setting money aside in a savings account. Visit the IRS website to determine whether you need to make quarterly payments.

If you take just a few minutes to check in with your finances now, you’ll have fewer surprises at the end of the year. That financial peace of mind will make your summer much happier.

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