By: Ashley Ann Reich
It is hard to believe that we are in July with half the year behind us, and you are probably wondering where the time has gone. One of my favorite traditions each year is to focus on the halfway point for a budget review. This long-standing habit has allowed me to conduct an introspective look at the first half of the year to strategically plan out the last six months. For those of you that have never done this practice before, now is the perfect time to get started, but let’s discuss some tips for success.
Review Your Budget
In order to plan for the future, you have to take a moment to review the past. If you have never created a budget, starting mid-year is not too late. It is recommended that you start by creating a realistic budget for the last six months of expected income and expenses. If you have been consistently making a budget each month, way to go! Pull out all budget worksheets or budget app information to have ready to review. Starting with a review of income and expenses is important to review if your monthly expenses have either increased or decreased in relation to your income. If your income has increased, you will want to check your tax liability to ensure you have enough withdrawn to avoid owing taxes at the end of the year.
Consider Financial Goals
If you created financial goals for this year, it is time to do a check-up to determine how you are progressing toward those goals. This could include goals for emergency savings, debt reduction, or saving for retirement. Suppose one of your goals was to increase retirement contributions. In that case, you should take a look at your retirement portfolio to determine how the market has affected this amount (up or down) and if you have been consistent in your contributions based on the desired percentage. If you are uncertain about how to review your portfolio or have additional investment questions, it is always best to seek out the advice of a professional financial advisor. For each goal, it might help to create a visual of progress to completion to keep you motivated.
Check on Your Debt Levels
Debt can often creep into our lives when we least expect it. When we are out of a routine, especially in the summertime, we can tend to make decisions that are not as calculated. If you have taken a vacation lately, you likely paid for a lot of the vacation on a credit card – I am certain with good intentions of paying it off immediately; however, it can be tempting to pay it off little by little. If this resonates with you, take a moment to list out your debts from smallest to largest and make a plan to quickly attack this debt in the latter part of the year.
Conclusion
Once you have considered your budget, it is time to set realistic goals for the last six months of the year. Here are some questions to consider as you finalize your goals:
- Do I need to decrease some expenses due to increased debt?
- Have I noticed lifestyle creep due to an increase in income (recent promotion, bonus, overtime pay) where I need to adjust back to a manageable level?
- Have I accounted for expenses that will be different in the last part of the year (i.e., holidays, birthdays, etc.)?
- Have I met my emergency savings goals? If not, what do I need to do to get there by December?
- Have I been consistently budgeting and accurately reflecting costs? If not, where does this need to change?
- Do I need to enlist accountability to stay on track? If so, who is that accountability partner?
These questions will help you move forward with the end in mind and are ones I have asked myself consistently in the middle of the year. This practice has been useful to keep my financial goals in check and determine where I might need to relinquish some control over my finances. Use the next week to incorporate these budgeting habits that you can regularly review at strategic checkpoints in the year to ensure that your financial goals are met.
