ONE HOUR, 5 TIPS. LET’S BEGIN YOUR MIDYEAR MONEY CHECKUP
We get it. Suggesting you do a midyear money checkup is like reminding you it’s time to visit the dentist.
But completing a midyear checkup is less about finding cracks in your financial plan and more about being in control of your money. It’s also the most effective way to ensure your budgeting and savings plans stay on track.
What if we told you that you could perform a midyear financial checkup in about an hour?
Let’s get started.
IN 30 MINUTES…
Review your monthly budgets for the past six months.
First, I want to reassure you, it’s never too late to start monthly budgeting if you haven’t been doing one. Try the 50/30/20 rule, or allocating 50% of your after-tax income to needs, 30% to wants and 20% to savings and debts.
TIP: Interested in learning about the 50/30/20 rule? Check out this helpful resource.
If you have been doing a monthly budget, keep up the great work! Review your last six months of spending to ensure you’re staying in line financially within each category of needs/wants/savings and debts.
At the same time, look for areas that are under budget or over budget. Consider reallocating under-budget monies to areas where you’re overspending. Smarter yet, put that excess money toward an emergency or retirement fund.
However you allocate the overage, make sure every single dollar is accounted for and put to good use. Remember, you control your money. It doesn’t control you.
IN 15 MINUTES…
Check your credit.
You’ve worked hard to build your credit. Keep it from falling by checking your credit score and credit report at least once a year.
Your credit score is the three-digit number that represents your overall credit risk. The lowest score you can receive is 300; the highest, 850. Anything under 580 is rated as poor, making it harder to qualify for credit cards and loans.
A credit report, on the other hand, lays out your credit history, including the credit accounts you’ve had and your payment history.
Checking your credit at least annually ensures you find and correct any issues that may lower your score, hopefully early on before they become a bigger problem.
TIP: Check your credit at least three to six months before applying for a “big-ticket item,” like a mortgage or car loan.
IN 5 MINUTES…
Check your emergency fund.
This is what our grandparents often referred to as a rainy-day fund. Whatever you call it, this savings tool catches you when life throws unexpected financial curveballs your way, like having to replace an old air-conditioner or covering expenses during an unplanned job loss.
The Consumer Financial Protection Bureau offers a helpful guide to build an emergency fund and answers questions like how much you should have in it and when you should use it.
A general guideline: Build three to six months of essential living expenses in your emergency fund. At the end of the day, however, the amount you need depends on your individual financial situation. Think about the unexpected expenses you’ve incurred throughout the past 12 months and use that total to determine how much you should set aside for future expenses.
IN 5 MINUTES …
Organize Your Tax Receipts and Documents.
Make sure any receipts for potential deductions are organized in a folder, either in physical or digital form.
Other quick tips:
· Designate one easy-to-access location for all your tax receipts and documents.
· Organize receipts into categories like “healthcare expenses” and “office expenses”; use color-coded folders to differentiate categories.
IN 5 MINUTES…
Determine if you need to start saving for the holidays.
Saving early for the holidays is the best way to prevent high-interest credit card debt or needing to pull funds from your emergency fund. This dedicated fund for holiday gifts, travel and other related expenses also allows you to shop and plan more intentionally and enjoy it without worrying about overspending.
TIP: Get a head start on holiday spending by opening a high-yield savings account and setting up a monthly automatic contribution from now through December.
Do you complete a midyear money checkup? If so, feel free to share any additional tips you have for doing one. If you’d like to begin putting together a monthly budget or performing a midyear money checkup but aren’t sure how to get started, we can help. Simply contact us today.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
