Have You Done Your Mid-Year Financial Health Check? 5 Steps to Ensure You're on Track

Did you know that July 2nd was the midpoint of the year? This means it’s time to do a mid-year financial health check. This includes reviewing your budget, evaluating your savings goals, and even considering whether or not your debt management strategy is working—and if you don’t have a debt management/payoff plan, now’s the time to create one.

Before you get started with your mid-year financial health check, consider going through Banzai’s Financial Wellness Assessment to get a good look at your overall financial health. 

Step 1. Review Your Budget

Evaluate your income and expenses. Has your income increased since you created your yearly financial plan? If so, do you need to adjust anything in your budget to accommodate the change? Using a trusted Budget Calculator or spreadsheet to do this could help the review process go quicker. While you’re looking at the numbers, note areas where spending exceeded or fell short of the allotted expectations. 

Adjust your budget categories by modifying areas where the first half of the year’s spending and income patterns didn’t quite hit their predetermined marks. If you haven’t built a budget yet, use Banzai’s online Coach, Create a Budget, to do so.

Step 2. Evaluate Savings Goals

How close are you to meeting your savings targets for the year (e.g., emergency fund, vacation fund, retirement)? It’s not uncommon for people to make big savings goals and then get three months out and realize the goal they set is just not sustainable—and that’s okay. But that’s why this mid-year progress check is so important. 

Before lowering your monthly savings goals or changing them because you feel they’re unreachable, consider how much money you’ve overspent in other areas of your budget. Ask yourself: “Is it possible to cut back on other spending expenses to meet my savings goals?” If so, perhaps that’s where you need to start. If not, though, that’s fine too. Consider what you can afford to save each month and alter your savings goals accordingly. Here are a few Banzai resources that help you find ways to cut back on expenses: 8 Tips to Reduce Your Food Bill, 7 Tips to Lower Your Utility Bill.

Once you fully recognize your savings capabilities, it could help to set up automatic transfers into your savings or retirement accounts to ensure consistent contributions. Treat savings like a monthly bill, meaning saving isn’t a choice, it’s a requirement.

Step 3. Assess Debt Management Progress

As far as debt management goes, there are a couple of things to consider:

• Debt Paydown Progress: How is your debt paydown progress going? How much debt have you paid off since the beginning of the year? Does it match your debt paydown goals?
• Debt Spending Habits: Are you using your credit card more than you expected, and is this standing in the way of paying down debt faster? Have you taken out more loans, whether it be for a new car or home?
• Refinancing and Consolidation Options: Discuss the potential benefits of refinancing or consolidating debt to lower interest rates or monthly payments.

Step 4. Review Your Investment Portfolio

Take time to evaluate the performance of your investment portfolio and consider rebalancing it if necessary. Are you contributing enough to your retirement to get a full employer match? If not, can you make room in your budget to do so? Make sure that your investment strategy aligns with your long-term financial goals and risk tolerance.

Step 5. Plan and Evaluate Taxes

Just as you do a mid-year review of your finances, it’s always a good idea to do a mid-year tax checkup. This includes reviewing your tax withholdings and estimating potential tax payments, particularly if you’re a freelancer who doesn’t have an employer pulling tax contributions from each paycheck, to avoid surprises come next tax season.

This is also a great time to look into ways you can maximize contributions to your retirement accounts and explore other tax breaks or advantages on either the state or federal level. Check this tax planning resource if you’re looking for a more general breakdown of how you can plan ahead for taxes.

Taking the time for a mid-year financial health check is an essential step to ensure you're on track to meet your financial goals for the year. By reviewing your budget, evaluating your savings goals, managing your debt, assessing your investment portfolio, and planning for taxes, you can make necessary adjustments and improvements. 

This proactive approach not only helps you stay organized, but also empowers you to make informed financial decisions. Remember, financial health is a continuous journey, and these mid-year checks are vital milestones along the way. So, dive into these steps and leverage the resources available so you can remain in control of your financial future.