There is something about the midpoint of the year. If you’re like me you’ve had a couple freak-out moments! “Where has the time gone?!” We think back on our intentions, and while we’ve probably made progress in some areas, there are always things we meant to do that we’ve pushed off because, well, life happens…
Why We Freak Out
It’s natural to take stock at the half-way mark, but we freak out because the calendar midpoint is really a horrible time for reassessment! July starts with fireworks: Independence Day. It’s warm, sunny, and we want to spend time outside with our friends and family. We plan barbecues. We attend festivals and events. The month of July is the busiest time for air travel as we visit family across the country and send our kids to camps. Plans are in motion, things are happening, and it’s fantastic!
So it’s not hard to see how frustration is born. We’re naturally inclined to take stock during one of the busiest months of the year! Thankfully August, September, and October follow, and our excuses begin to fall away. Children go back to school, and family vacations are complete. Summer may not be over, but we transition from the Season’s high point into something more steady. These few months are the perfect “lull” between the Summer season and the Holiday season to revisit our objectives, and to get things crossed off the list before Thanksgiving.
Seven Steps to a Stress-Free Mid-Year Financial Checkpoint
- Review Debts & Savings – We start the year with financial goals in mind, but our ideas often change and it’s easy to get off track. One easy step is to compare your total debt and total savings numbers from January 1 through today. Ideally the debt has gone down and the savings has gone up! Regardless, if you find yourself surprised and can’t explain why, it’s a sign you need to dig deeper to see what spending habits are keeping you from your goals.
- Rebalance Your 401k – Over time the values of each investment will drift up and down. Rebalancing means placing buys and sells to get back to the intended allocation. Midyear is a great time to complete a semi annual rebalancing of your retirement accounts. Rebalancing on a set schedule ensures that you “buy low and sell high” over time. Take note of any changes to the available funds, and talk to your financial planner if you feel your allocation is no longer appropriate.
- Credit Report – There are three main Credit bureaus that track our individual Credit usage, and you are allowed to request a free credit report from each bureau annually. If you haven’t reviewed your credit report in some time, go to www.annualcreditreport.com and request a free report from one of the bureaus. Look for lines of credit that you don’t recognize, and any overdue accounts or disputed charges you do not agree with.
- Prepare for Holiday Spending – While the holiday season approaches faster than we’d like, there is plenty of time to plan ahead to lessen the financial pinch it can create. Start contributing an extra amount to savings each paycheck to be sure your holidays are happy! Giving gifts should bring joy, not a financial burden. Challenge yourself to avoid using credit cards and debt to finance your gifting!
- Tax Projection – Ask your tax preparer to run a tax projection, or use an online tax calculator yourself. If your tax situation is complex, finding out now gives you enough time to correct course before the end of the year. If you were awarded an unplanned bonus or raise at work, received an inheritance, got married or had a new child, began taking care of an elderly family member, purchased or sold property, sold shares of stock, etc., adjustments may be needed ahead of tax time to prevent surprises.
- Flexible Spending – If you’ve contributed money to a flexible spending arrangement with your employer, make sure you’re on track to spend the full balance before the end of the year. Any unused amount may be forfeited. Employers are allowed but not obligated to give you a grace period through March 15, or to let you carry forward $500 to the next year. Find out the details of your employers policy and plan accordingly.
- Paid Time Off – I’ve saved the best for last, but it goes without saying that your vacation time should be used for your leisure! People have a habit of hoarding their PTO for fear of running out, and an unfortunate consequence is that many risk losing it without using it. Make sure to enjoy any days that you can’t roll forward to next year!