We all have annual rituals – from New Year’s resolutions to spring cleaning. This year, add one more: a midyear financial checkup. And what better time to do it than summer, when other obligations often ease?
We recommend evaluating the following areas to determine whether your financial health needs improvement:
Budget. How much are you spending? Can you trim costs by eliminating unnecessary expenditures?
Emergency fund. You should have liquid and accessible reserves that will cover three to six months of living expenses.
Retirement savings. Look at what you’re contributing to retirement plans – such as 401(k)s and IRAs – and consider how your funds are invested. Are changes needed?
Benefits. If you’re employed, determine when your company offers its annual open enrollment window, then review coverage in advance to decide whether you want to make changes.
Taxes. Did you owe money this year or get a refund? Adjust your W-4 accordingly. Remember, while a refund is nice, it really means you’re loaning money to Uncle Sam interest-free.
Insurance. Review your home, auto, and umbrella insurance coverage and determine whether changes are required. Do you need more coverage? Can you afford the deductibles?
Beneficiaries. Ensure the beneficiaries are correctly named on your bank accounts, retirement plans, and life insurance so that your assets transfer to the correct person in the event of your death.
Probate. If you haven’t already, consider setting up your bank accounts as transfer on death (TOD) to avoid probate.
Credit. Review your credit reports from TransUnion, Equifax, and Experian annually. All offer one free report each year; however, you may want to arrange for one every four months throughout the year to ensure you have regularly updated information.
Financial advisor. Be sure you have one.