Mid-Year Financial Check-Up: 7 Things You Can Do Today!
It is hard be to believe that we’re half way through 2021, but judging by the crowds at Newport Beach and Huntington Beach this week, summer has arrived. After the crazy isolation that was last year, it is so nice to be able to spend quality time with family and friends and to enjoy all of the outdoor activities that Orange County has to offer.
July, the midway point of the year, is also a great time to review the financial goals that you may have set at the beginning of the year to see how you are progressing. Here are 7 things you can do right now to make sure you are meeting your goals and positioning your finances so they are in great shape heading into the second half of the year.
Revise Your Budget
Your spending this year may be completely different from what it was a year ago. When you were drawing up your 2021 budget, you may not have considered we would have the ability to travel, go on vacations, go out to eat, see our favorite bands and just live our lives. Now may be a great time to make sure you are doing so within your financial capacity.
Check Your Credit Score
Checking your credit score is a great way to review your financial well-being. It is also important if you plan on doing anything major in the second half of 2021. Buying a car, purchasing a home, moving into an apartment, getting a new credit card or taking out a personal loan will require a credit check. Reviewing your credit score now can give you the opportunity to identify any potential errors or problems and work to get them resolved before you need to fill out any related credit applications.
Adjust Your Retirement Contributions
If you participate in your employer’s 401(k) or 403(b) retirement plan, take some time to review your account. For 2021, the 401(k) contribution limit is $19,500 for those under 50, and $26,000 for those 50 and better. (1) If you’re approaching retirement, take advantage of this opportunity to get the most out of your retirement plan. Checking in on your yearly contributions now gives you plenty of time to catch up or contribute more before the end of the year.
Consider Your Income Tax Liability
Review your tax withholdings to make sure you are withholding the proper amount. If you have recently got married or divorced, recently purchased a home, or had some over major life event, adjustments may be necessary in order to ensure you are covered. Making sure your tax withholdings are reflective of your current situation can help you avoid a nasty surprise at tax time next year.
Review Your Investments
Review your investments in both your retirement and brokerage accounts. The stock market has done very well during the first half of 2021. Make sure your asset allocation remains in line with your personal financial plan and you aren’t exposing yourself to any unnecessary risk.
Increase Your Emergency Savings
If last year taught us anything, it is to expect the unexpected. Have sufficient emergency savings will help protect you when life takes an unexpected turn. The conventional wisdom used to say 3 to 6 months of living expenses should be saved. In a post-Covid world, maybe the amount for you should be more.
Re-Evaluate Your Goals
You are sure to have gone through some unexpected changes in your life after living through a global pandemic. And there still may be more changes to come. Take some time to revisit the goals you made at the beginning of 2021, and make sure you are still aligned. If you are, congratulations! If not, take some time to reflect upon your current financial situation and future needs, and create new goals that make sense for you.
Summary
The midway point of a year is a great time to take stock of your financial life and reposition yourself for the second half. As life returns to normal, make sure you are prepared. Evaluate whether you’re on track to meet your goals, or if you may need the assistance of a trusted financial planner.
About the author:
JP Geisbauer is a Certified Public Accountant and a Certified Financial Planner ®. He is the founder of Centerpoint Financial Management, LLC, a retirement planning, investment management, and tax planning firm located in Irvine, CA. If you have specific questions regarding your situation, please schedule a complimentary 30-minute call here.
Disclaimer:
This article is for general information and educational purposes only. Nothing contained in this article constitutes financial, investment, tax, or legal advice. Before taking any action on any topic discussed in this article, please consult with your financial planner, investment advisor, tax professional, and/or attorney for advice on your specific situation.