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8 Step Summer Financial Checkup  Thumbnail

8 Step Summer Financial Checkup

When summertime hits, it feels like time slows down. The busyness of the holiday season is done, the stress of tax season is over with and the time for vacation is finally here. If you find yourself with free time in the upcoming months, you may want to use this opportunity to check your family’s finances. While doing a thorough analysis of your wealth may sound overwhelming, we’ve broken it down into eight simple steps to keep you in the right frame of mind to be able to tackle it quickly.

Step 1: Analyze Your Budget

In early 2022, the Bureau of Economic Analysis reported that the personal savings rate is at only 6.4%.1 An effective way to avoid spending more than you’re earning is to back up and take a hard look at your monthly and annual budgets. If you don’t have a budget at all, use this time to make one. You’ll be surprised at how freeing it can be.

Many credit cards or banks will offer a categorical breakdown of your spending, which is a great way to find out what you’re spending the most money on. It might even help you identify areas where you can spend less. To get the best overall look at your spending habits, you may want to evaluate your savings and spending record over the past 6-12 months.

Step 2: Seek Out Tax Savings

Do you struggle to pull your paperwork together every March and April? This year, try taking a different approach to tax season by taking a step back and looking at your tax-saving strategies early. You may want to work with your financial advisor or tax professional to create a practice tax return, as this can help you understand your withholding options and tax-saving opportunities such as 401(k) or 403(b) options, IRAs, and HSA contributions.

Try to focus on any time-sensitive deductions and brush up on changes in tax laws. Reaching out to your tax professional now could mean you have more time to strategize together for next year’s returns.

Step 3: Tackle Your Debt

An alarming 62% of adults have carried over credit card debt in the last 12 months.2 If you find that you’re guilty of procrastinating on managing your expenses, now’s the time to start planning to pay it off. While most consumers have some amount of good debt on their plate (mortgages, car payments, etc.), it’s the bad debt (credit card debt, student loans, etc.) that you’ll likely want to spend more time on managing and eliminating.

While you could be tempted to simply pay off what shows up on the bills each month, you may want to create a debt summary to get a big picture view of your total debt. By creating an annual debt summary, you and your financial advisor can better understand whether you’re gradually working down the amount or getting further away from your debt-free goal.

Step 4: Revisit Short and Long-Term Goals

A lot can change in a year - marriage, divorce, birth, death, and experiencing a major career change. Even seemingly small changes, like a promotion or sending a child off to college, can have a major impact on your financial status. That is why it’s important to regularly check in on your long-term goals and your progress toward them while revisiting and evaluating your shorter-term goals as well. 

Step 5: Evaluate Coverage and Providers

As you’re evaluating your budget and expenses, take the extra step to thoroughly review your current providers and coverage options. Some of these are internet, cable, and wireless service providers in addition to your insurance coverage options. If you tend to set up auto payments and forget about your monthly bills, this could be an opportune time to revisit what it is you’re truly paying for.  

Step 6: Reassess and Rebalance Your Portfolio

It is important to check your portfolio and risk tolerance regularly to help keep it in line with your goals and current market conditions. While most managed portfolios will be rebalanced automatically, it’s important to take stock of your investments’ overview. Doing so can help you determine if you need to diversify differently or reassess your risk tolerance.

Step 7: Review Your Retirement Savings

Whether retirement is decades down the line or within the upcoming year, reviewing your retirement savings annually is a great habit to start. Take the time to evaluate whether or not you’re maxing out your retirement contribution options and consider how the savings you’re making today will translate into retirement income later in life.

Step 8: Assess Your Estate Plan

It’s not enjoyable to plan for the worst-case scenario, but leaving your family with an outdated will, trust or estate plan can lead to some major issues post-mortem. As you assess your legacy plan, make sure you’re accounting for any newly acquired assets (houses, cars, pets, etc.) while checking that your designated beneficiaries are still willing and able to assist in the event of your death.

While you’re likely daydreaming of book reading, family vacations, going to the beach, and barbecuing this summer, don’t forget to do yourself a favor and squeeze in some financial assessment as well. Performing your own annual financial check-in gives you time to prepare for tax season, budget for the upcoming holiday season, and acquire peace of mind knowing you have a good handle on your family’s future goals and current needs.

  1. https://www.bea.gov/data/income-saving/personal-saving-rate
  2. https://www.nfcc.org/resources/client-impact-and-research/2020-consumer-financial-literacy-survey/