Midyear Money Checkup: 9 Things To Do Now To Keep Your Finances On The Right Track

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While there are still several weeks of summer left, and you are probably thinking about your next rooftop happy hour or beach vacation, you may want to consider checking in on your money management. “Because we are so busy throughout the year, this a good time to catch your breath and commit to your finances, rather than wait until the end of the year when you are stressed with work and the holidays,” says Wendy Liebowitz, CFP, vice president and branch manager of Fidelity Investment Fort Lauderdale Investor Center. When you take the time to look over your income, your spending, your investments, and your credit, it forces you to think about your actions. Here, Liebowitz shares nine steps to take before the season is over to help keep your finances on the right track.

Review your spending

From wedding season to warm-weather weekend getaways, the first half of the year can wring out your wallet, so start by taking a closer look at your spending. “Whether that means taking out a notepad and writing down expenses or looking at your statements to see where your money is going, try accounting for every dollar spent in a month,” suggests Liebowitz, noting that the more data you can collect, the better. This will help you identify patterns and/or problems and better plan for the rest of the year.

Get serious about your financial goals

Whether you are saving for a vacation, paying off student loans, buying your first home, or planning for a family, define your goals and develop a plan to reach them, Liebowitz advises. This provides accountability and encourages you to modify your behavior or make any necessary adjustments to stay on track. “When I was in my 20s, I took out a sticky note and drew a little grid of the calendar year with my goal and the age at which I wanted to reach it. I stayed on track and amazed myself by reaching this goal sooner than planned,” she shares. If you have a significant other, make sure your goals are aligned, she adds. If they aren’t, have a conversation on how to get on the same page, stat.

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Revisit your budget

Sticking to a budget is critical to financial success. Now that you have studied your spending habits and set a financial goal, take a closer look at how you are allocating your “take home pay” and make any adjustments, says Liebowitz. Fidelity recommends the following guidelines to budget: Assign 50 percent to essential expenses, including housing, transportation, utilities, and food; 15 percent of your pretax income to retirement savings; and 5 percent to an emergency fund. The remaining 30 percent, she says, can go toward discretionary spending — things like vacations, going out to eat, and shopping. Just keep in mind that this category also includes any debt you are working to pay off.

Keep in mind that these percentages can be modified to better fit your situation. “We call them guidelines, not rules, because these percentages may vary based on income, cost of living, and other factors of life,” Liebowitz notes.

Recognize money mistakes

Whether it’s an impulse buy, an online shopping spree, or the result of peer pressure (“one more round!”), making purchases without considering their consequences can sabotage your goals. Go ahead and unsubscribe to those newsletters from your favorite retailers and try to avoid tempting situations. If you are consistently overspending, Liebowitz suggests trying the envelope strategy: “At the beginning of every month take out cash and place a certain amount in each envelope, one for entertainment, one for clothing, etc. When you run out of cash, that’s it.”

Reconsider reoccurring costs

Look through your statements for reoccurring costs, some of which you might not even remember you have. Gym membership you haven’t used in months? Greeting card subscription service you only needed for a short period of time? Cancel them. These things can really add up.

money management

Prioritize savings

No, not next month. Now. “A common mistake I see is people not having an emergency fund saved up for rainy days,” Liebowitz tells us. “You want it to be able to cover one to two months of expenses should your income go away.” In addition to this safety net, now is also a good time to start contributing more to your retirement fund (aka your future). Make sure you are taking advantage of your employer’s 401(k) match, if they offer one, and increase your contribution by 1 percent. “You won’t feel it right then and there, but it will add up over time with compounding growth,” she says.

Check in on your investments

According to Fidelity, this is also a good time to ensure your investment mix continues to meet your needs and to make any changes that might be necessary. Look through your assets — stocks, bonds, and cash — and make sure they still match your time frame, risk tolerance, and financial situation. “Your investments should be lower risk, the sooner you plan to use the dollar, and growth-oriented when you have more time,” explains Liebowitz. When reviewing your portfolio, also keep any eye out any changes to each fund’s investment approach.

Protect your credit

Calculate how much debt you have and from where, then learn the interest rate of each source. Make a plan to pay off the high-interest-bearing debt first, says Liebowitz. Also, take this time to review your credit report and make sure the information is accurate. There are three credit reporting providers who offer free annual reports, so set a calendar alert every four months to check in. You can learn more about that here.

Get professional help

We get it: All this talk about finance can be overwhelming, but so can thought of paying for professional help. “You don’t necessarily have to pay for good financial advice,” Liebowitz reassures us. “Take advantage of the different mediums like online assistance, phone consultations, robo advisors, seminars and workshops — there is great info available if you know where to look.” Fidelity has a helpful app and an online check-in tool that serves as a good start. It will ask you a few different questions about your savings, spending, and goals, and then tell you where you’re doing well and suggest things you might want to focus on next.

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