Q: I felt like I had a good plan for getting my finances in order in 2022, but I’m not sure how the last six-months went by so fast! Can you please recommend some focus areas for a mid-year financial check-up?
A: A mid-year check-up is an excellent idea! While doing a thorough analysis of your wealth may sound intimidating, especially during the Summer, we’ve broken it down into eight simple steps to keep you focused and on track.
It seems like when summertime hits, time slows down. The hustle and bustle of the holiday season is over, the taxes are complete, and the vacation days are scheduled. If you find yourself with a bit of extra time on your hands in the upcoming months, you may want to use this opportunity to check in on your personal and family’s finances. Here are your steps:
Step 1: Analyze Your Budget
In early 2022, the Bureau of Economic Analysis reported that the personal savings rate is at only 6 percent.1 An effective way to avoid spending more than you’re earning is to step back and take stock of your monthly and annual budget. And if you don’t have a budget at all, use this time to make one.
Many credit cards or banks will offer categorical breakdowns of your spending, which can be a great way to find out what you’re spending the most money on and if there’s room to cut back. To get the best look at your spending habits, you may want to evaluate your savings and spending record over the past six to 12 months.
Step 2: Seek Out Tax Savings
Do you scramble to pull your paperwork together every March and April? This year, try taking a different approach to tax season by evaluating your tax-saving strategies early. You may want to work with your financial planner or tax professional to create a mock tax return, as this can help you understand your withholding options and tax-saving opportunities such as 401(k) or 403(b) options, IRAs, and HSA contributions.
Focus on filing any time-sensitive deductions and brush up on changes in tax laws. Reaching out to your tax professional now could mean you have more time to prepare and strategize together for next year’s returns.
Step 3: Tackle Your Debt
An alarming 38 percent of adults carry credit card debt from month to month.2 If you’re guilty of putting off managing your mounting expenses, now’s the time to start planning to pay them off. While most consumers have some amount of good debt on their plate (mortgages, car payments, etc.), it’s the bad debt (credit card debt, student loans, etc.) that you’ll likely want to focus on managing and eliminating.
While you could be tempted to simply pay off what shows up on the bills each month, you may want to create a debt summary to get a better idea of your total debt’s big picture. By creating an annual debt summary, you and your financial advisor can better understand whether you’re gradually working down the amount or falling farther into the hole.
Step 4: Revisit Short and Long-Term Goals
A lot can change in a year – marriage, death, divorce, growing your family and experiencing a major career change. Even seemingly small adjustments, like a job promotion or sending a kid off to college, can have a significant impact on your financial status. That’s why it’s important to regularly review your long-term goals and progress towards them while revisiting and evaluating your shorter-term goals as well.
Step 5: Evaluate Coverage and Providers
As you’re reviewing your budget and expenses, take the extra time to thoroughly evaluate your current providers and coverage options. This includes your internet, cable and wireless service providers in addition to your insurance coverage options. If you tend to set up auto payments and forget about your monthly bills, this could be an opportune time to revisit what it is you’re actually paying for.
Step 6: Reassess and Rebalance Your Portfolio
It’s important to visit your portfolio and risk regularly to help keep it in line with your tolerance, goals, and market conditions. While most managed portfolios will be rebalanced automatically, it’s important to take stock of your investments’ big picture. Doing so can help you determine if you need to diversify differently or reassess your risk tolerance.
Step 7: Review Your Retirement Savings
Whether retirement is decades down the line or within the upcoming year, reviewing your retirement savings on an annual basis is a great habit to start. Take the time to assess whether or not you’re maxing out your retirement contribution options and how the savings you’re making today will translate into retirement income later down the line.
Step 8: Assess Your Estate Plan
As reviewed in our last monthly column, it’s not fun to plan for the worst-case scenario, but leaving your family with an outdated will, trust or estate plan can lead to some major issues down the line. As you assess your legacy plan annually, make sure you’re accounting for any newly acquired assets (houses, cars, pets, etc.) while checking that your designated beneficiaries are still willing and able to assist in the event of your passing.
While you’re likely daydreaming of book reading, beach-going and backyard barbecuing this summer, don’t forget to do yourself a favor and squeeze in some financial assessment as well.
Sources:
1https://www.bea.gov/data/income-saving/personal-saving-rate
Jeremy R. Gussick is a Certified Financial Planner™ professional affiliated with LPL Financial, the nation’s largest independent broker-dealer.* Jeremy specializes in the financial planning and retirement income needs of the LGBTQ+ community and was recently named a 2021 FIVE STAR Wealth Manager as mentioned in Philadelphia Magazine.** He is active with several LGBTQ+ organizations in the Philadelphia region, including DVLF (Delaware Valley Legacy Fund) and the Independence Business Alliance (IBA), the Philadelphia Region’s LGBT Chamber of Commerce. OutMoney appears monthly. If you have a question for Jeremy, you can contact him via email at [email protected].
This content is developed from sources believed to be providing accurate information and provided with the assistance of Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
Jeremy R. Gussick is a Registered Representative with, and securities and advisory services are offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.
*As reported by Financial Planning magazine, June 1996-2021, based on total revenues.
**Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2021 Five Star Wealth Managers.