Many people make New Year financial resolutions and even set specific goals for the year ahead. But by May or June, most of us can’t even remember what our resolutions were or we have simply veered off track. With the year approximately half gone, are you halfway to reaching your annual financial goals? Following are a few tips for running a simple mid-year financial check-up. The good news is, whether you made New Year financial resolutions or not, you still have half a year left to reach your financial goals.
Mid-Year Financial Check Up
This is a guest post created by Benedetti, Gucer & Associates. See below for further disclosures.
#1. Make specific goals – If you made New Year financial resolutions, how specific were they? Have a clear, concise financial goal, rather than a general intention. For example, don’t plan on simply increasing your college savings. Instead set an amount and a plan to achieve it such as starting a Section 529 College Savings Plan and have withdrawals made twice monthly from your checking account on the same day you receive your paycheck.
#2. Don’t be a budget-buster – Was 2019 the year you were going to finally stick to a budget? Now is a great time to see if you are on track. Start with the basics: Have you tracked your expenses for a few months? Do you know how much you spend? If not, maybe you should reconsider buying another set of designer cufflinks. By mid-year, your categories may need adjustment and numbers may need tweaking after living with your budget. Are you saving money from each paycheck?
#3. Withhold with care – Did you receive a sizable refund or did you owe a chunk of money in April? If either one happened, mid-year is a good time to correct that by changing how much you are withholding from your paycheck or paying in estimated taxes. In order to reduce the size of your refund, increase the number of allowances you claim on your W-4 form (or pay less in estimated taxes due in June, September, and January.) But don’t forget to save and invest the difference each month. Also, consider meeting with a tax advisor before you make any changes to your tax withholding.
#4. Itemize deductions – A government study found that up to 2.2 million taxpayers overpay their taxes simply because they claimed the standard deduction instead of itemizing, according to Money Magazine. Mid-year is a good time to meet with your tax professional to determine if you should itemize your deductions this year rather than claim the standard deductions. Find out what records and receipts you will need to support your itemization come year-end so you are not left scrambling for your back-up in December.
#5. Prepare for Open Enrollment – Many companies hold their open enrollment sessions for employees in the fall. Therefore, it is best to start researching and thinking about your choices in the summertime. Your employer may have changed health care plans, existing plans may have been updated or perhaps your family circumstances have changed, such as the addition of a child. Review your choices now and take time to research your options before your narrow window of opportunity for change during the open enrollment period quickly passes.
#6. Review your Portfolio – Just because your portfolio had the right mix of assets at the start of the year, doesn’t mean that it doesn’t need to be modified before next year. A portion of your portfolio may have done extremely well or poorly, meaning you may want to rebalance it to bring the proper mix back in line.
#7. Plan ahead – Review your other year-end financial deadlines, such as flexible spending accounts for healthcare where you forfeit a balance not spent by Dec. 31 or charitable giving that must take place before the year-end. Calculate how much you have spent by the middle of the year so you may strategically plan your spending or giving for the remainder of the year, rather than make rash decisions late in December when the clock is ticking.
#8. Seek professional help – There is not a better time than now to consult a qualified financial planner to get a professional mid-year financial check-up that would include creating or updating your financial plan. The Atlanta based Wealth Management Firm of Benedetti, Gucer & Associates can be a valuable asset in this regard. Their fee-based, fiduciary advisors have decades of experience preparing and implementing financial plans for their clients.
The views expressed represent the opinions of Benedetti, Gucer & Associates and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person.
Additional information, including management fees and expenses, is provided on Benedetti, Gucer & Associates’ Form ADV Part 2, which is available upon request.
The use of the term “RIA” does not imply a certain level of skill