The Importance of Midyear Financial Reviews

With summer here, taxes are probably the last thing on your mind. They shouldn’t be. Summer means we’re halfway through the year, so now is the time to do a midyear review of your financial situation.

A midyear review gives you the opportunity to see how your finances compare with the goals you set at the beginning of the year –whether you are on track to save as much as you were hoping to, or whether changes are needed to meet your financial goals. A midyear review is also a good time to make changes if you have experienced any major life events in the first half of the year (i.e. marriage, divorce, family births or deaths) that at minimum may require changes to your beneficiaries.

Following are some of the big picture things to consider when doing a midyear review, as well as some of the potential benefits:

  • If the money you have saved so far this year isn’t on track to meet your goals, now is the time to increase what you put away each month. If your savings are made through recurring contributions, increase the amount you are contributing.
  • If your company has a 401k plan that includes matching contributions, make sure that you are maxing out those contributions. Not only will this ensure that you’re not leaving any money on the table, but doing so will reduce your overall income which can lower your taxes.
  • If you are 50 or older, take advantage of the catch-up contributions the IRS allows you to make into your 401k or IRA.
  • Between market volatility and the increase in interest rates, make sure your investment portfolio doesn’t need to be rebalanced. Failing to monitor your portfolio could potentially result in a portfolio that is riskier or less aggressive than you want.
  • If you have a health savings account (HSA), particularly if your company will match contributions, make sure that you are on track to contribute the maximum amount allowed this year. If you have already maxed out your HSA contribution, shift those funds toward your retirement savings.
  • Check in with your accountant. If you have experienced any major life events in the first half of the year, your accountant can tell you if there are any adjustments you should be making to your withholding to leave you best positioned for tax season. In light of the changes to the tax laws at the end of 2017, there may be other changes that you should make to ensure that you don’t miss any new tax breaks. You should also be aware of tax breaks which may have benefitted you in the past, but will no longer do so.
  • Take time to go through your credit card and banking statements to see if there are any places that fees can be lowered and to make sure that you aren’t being hit with recurring fees for any services you are unaware of.
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