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Money Goals

A New Summer Tradition:
The Mid-Year Financial Checkup

It’s not what most people would consider summer fun, but a mid-year review of your tax situation, retirement planning, savings and spending issues can be far more valuable than the rushed attempt most people make at the end of the year. Here are the big issues to tackle:

Taxes: If you received a sizable refund in April or found it necessary to turn over the seat cushions to pay Uncle Sam, it’s definitely time to reassess what you’ll owe at tax time next year.  Part of that might include harvesting losses in your investment portfolio and using them to shelter gains that may result from necessary rebalancing.

Retirement savings: If you are maxed out on your company retirement plan, that’s great, but experts stress you may need other resources to retire comfortably. Check your existing IRAs and other accounts to see if you can deposit the maximum by the end of the year.  Also see if a Roth IRA or Roth 401 (k) option might be right for you. Open enrollment is usually in the fall, so now might be a good time to give these issues some thought before you have to pick.

Check your spending: For people who use financial tracking software, budgeting is generally pretty easy to figure out. And it shouldn’t matter whether you’re tracking your spending with a keystroke or shoebox full of receipts – take the time to figure out where you’re money’s going.  A look at the last six months of spending may reveal opportunities to reduce spending and redirect money toward more necessary goals. Also, take a look at such things as gym memberships, magazines that are piled up and coffee expenses. If you’re paying without really thinking about these things, you can probably live without them.

Reserve fund: Most financial experts encourage you to have between three to six months of living expenses in an emergency fund.  If you don’t have that minimum, go back to your spending review and see where you can start building.

College savings: If you are saving for your child’s education or your own, check to see if you’re on track with the savings goals you made for the year, and better yet, take some time to read the latest news on financial aid. Schools change their financial aid policies in subtle ways each year, and it’s best to study the concept of college saving and financial aid early in the process rather than try to make up for lost knowledge late in the game.

Reset special goals: If you are going to need to replace your car, see if you can direct more money into your down payment fund so you don’t have to take out a huge loan at purchase. If there’s a vacation you want to take by the end of the year or a special household purchase you want to make, focus on the cash you’ll set aside to make that happen. Also, do yourself a favor and make sure you have small, more affordable goals on the list – you need goals you can reach quickly, too.

This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Innovative Financial, a local member of the FPA.

Life goals. Money goals. In that order.

Call Innovative Financial today at (303) 275-7170
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