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Mid-Year Financial Checklist

Mid-Year Financial Checklist

June 29, 2022

Without regular maintenance, financial plans tend to fall apart.

Relief benefits are changing, market conditions are evolving, and plans made six months ago might not make much sense today if any major life events have since occurred. Enter the midyear financial checkup.

A midyear financial checkup is an opportunity to review the progress you've made toward goals set at the start of the year and make plans for the remaining months of the year. It's an organizational tool as well as a chance for individuals and families to reflect and adapt as needed. It is also a good practice for business owners, although some of your checklist items will be different.

Life events such as a death in the family, a marriage, the birth of a child or grandchild, or a job change can trigger tax and financial implications that need to be addressed before the year's up. As both world and life circumstances change, consider running through this checklist of items to review at the midyear mark.

  • Evaluate your budget.
    • Review which areas came in under budget and which exceeded planned expenditures, as well as how any income changes may affect their budget going forward.
  • Review bank statements for reoccurring charges and subscriptions.
  • Boost retirement contributions.
  • Review your FSA and HSA.
  • Take stock of your college savings and student loans.
  • Manage and prioritize debts.
  • Inspect your credit report.
  • Tidy up your taxes.
  • Update your estate plan.
  • No budget? Start your midyear financial checkup by creating one.

A strong budget includes a plan to create or maintain an emergency fund – particularly in the wake of a year that left many facing sudden job loss and financial uncertainties resulting from the coronavirus pandemic.

Life can be full of surprises, and a cash reserve provides a critical safety net for the unexpected. Use your mid-year financial check-up for a closer look at your emergency fund and determine whether you’re on the right track or need to adjust.

This fund should cover essential living expenses for three to six months, but the more you can save, the better.

Review Your Bank Statements

If during this budget review you uncover any unnecessary expenses, like excessive shopping, unnecessary subscriptions, or other recurring fees, now is the time to eliminate them.

Review your bank statements and budget to understand your essential living expenses, and look for opportunities to reduce your financial risk, such as paying off credit card debt or eliminating/reducing lifestyle expenses that may be hard to maintain in a cash crunch.

This might include canceling a streaming service that is rarely used or closing a bank account you're no longer using but for which you're still paying maintenance fees.


Boost Retirement Contributions

During a midyear checkup, savers can assess their progress toward retirement and ensure they remain on pace to retire at their target date and net worth.

Those who experienced a recent promotion or raise may want to increase their retirement contributions, if able. Those who had a birthday this year may be able to take advantage of catch-up contributions, which allow workers ages 50 and older to contribute $6,500 more to 401(k) plans than younger workers.


Review Your FSA and HSA

Individuals using a flexible spending account must consider their benefits and usage closely each year, as some employers do not allow plan participants to carry over any balance into a new plan year.

This checkup may also be an opportunity to increase your health savings account contribution to reach yearly maximums, if possible. The rules of HSAs allow these contributions to roll over and stay with you regardless of employment status, meaning there are no downsides to contributing beyond what one might use in a year.


Take Stock of Your College Savings and Student Loans

Most parents agree that time flies, and before you know it, you’re set to make that first tuition payment. Midyear parents should review their college savings rate, any new projections for college costs the year their child turns 18 years old and adjust accordingly. Those who have not yet begun saving for college can consider and research education savings options, such as tax-advantaged 529 plans.

Student loan borrowers received student loan relief and forbearance during the coronavirus pandemic, but these benefits are set to expire on Sept. 30, 2022. Borrowers should review their budgets carefully in preparation for the return of student loan payments.


Manage and Prioritize Debts

During your midyear checkup, review and create a plan for debt repayment.

If you don’t have a payment strategy in place, now is a great time to start. First, incorporate paying down debt into your monthly budget to ensure you’re allocating money each month to pay it off – how much you allocate is dependent on your approach to paying down debt.

Two common options for debt repayment are the snowball method, which involves paying off the smallest debts in their entirety first, and the avalanche method, in which individuals pay off accounts with the highest interest rate first.


Inspect Your Credit Report

To open a business, buy a home, or open a new credit card, oftentimes a good credit score will prove to be useful, especially in determining your interest rate.

One great financial habit to establish is a midyear credit report check. Look for signs of identity theft or anything that seems amiss using the free website.


Tidy Up Your Taxes

Planning can go a long way when it comes to taxes, particularly after a year of Internal Revenue Service delays.

This process includes keeping and maintaining records of any tax-deductible expenses, which could include out-of-pocket medical expenses, mortgage interest, and charitable contributions.

Get organized as best you can. Scrambling last minute to gather your tax documents often leads to missing things. Consult your tax advisor if you have questions, there are many ways they can help to reduce your potential tax bill come April.


Update Your Estate Plan

Estate planning attorneys typically suggest clients review and update their documents every five years or so, or if they have experienced certain life events, such as a death, birth, or marriage.

Documents to review include a will or trust, guardianship directives for those with minor children, an advanced health care directive, and powers of attorney.

Conducting a mid-year financial checkup can be time and effort well spent. If you need help in making adjustments or need some additional guidance we are happy to review your unique situation.