For many people, the start of a new year brings new goals, and financial goals are typically at the top of the list.As the year progresses and life happens, it’s common to ease up on even our best intentions.
With almost half the year behind us and the summer ahead, it’s the perfect time for a mid-year check. If you set financial goals in January, use this time to honestly assess your progress and adjust for the back half of the year. If you didn’t set financial goals, it’s never too late. Use these seven areas to guide your efforts for the rest of the year and beyond.
1. Cash Flow: Cash flow helps define your investment plan, including how much you have available to invest and save.
It’s not just income minus bills, but what you need to live on each month, including lifestyle expenses. If you set a budget, how is it holding up? If it’s too tight, look for soft expenses to cut. If your budget is already lean, adjust how much you're committing to your plan. If you have a large surplus at month’s end, consider contributing more to savings or retirement. The goal isn't to squeeze every dollar, but to build a plan you can stick to without dipping into savings.
2. Savings: When evaluating your savings, try to think of it in buckets rather than as a single number. Two such buckets would include:
Emergency fund: You should have three to six months of living expenses set aside to manage unexpected expenses. If your car diedtomorrow, you lost your job next week, or you received an emergency medical bill, this helps cover it without unraveling your financial plan. If you had to dip into it earlier in the year, now is the time to build back up.
Above-and-beyond savings: This is the money you tap into for things like vacations, big purchases, or planned expenses,above and beyond the three to six months set aside for emergencies. Are you making consistent progress, even if it’s modest?
3. Debt: Most people have debt, but not all debt is created equal. Think about your approach to and progress of paying off debt in two tiers.
High-interest debt: Think credit cards and high-interest personal loans. This is debt that's actively working against you – every month it compounds. Are you actively and aggressively paying it down with a focused plan that has a dedicated place in your monthly budget?
Low-interest debt: This can include mortgages, car loans, or a home equity line. Do you have a timeline attached to them so you’re as debt-free as possible entering retirement, whenyou want to maximize your income?
4. Retirement:Making small adjustments now can have a significant payoff down the road.
It’s not just a question of whether you’re contributing to a retirement plan, but whether you’re taking advantage of your options.
Have you revisited your contribution rate since your income grew?
If you’re over 50, are you making use of catch-up contributions?
Are you maximizing your 401(k) contribution?
Are there additional tools, such as an IRA or Roth IRA, you're not yet taking advantage of?
5. Investment Alignment: Many factors can change your timeline and risk tolerance – from global events and market trends to personal events.
If you haven’t done so recently, ensure your portfolio still makes sense for where you are and rebalance it if necessary.
6. Insurance: Life changes can shift insurance needs.
Income grows, assets accumulate, properties are added, and families change, but policies don't update themselves. Have you reviewed your coverage to ensure it aligns with your current life?
7. Upcoming Life Events: From pleasant surprises and new opportunities to major updates, life can alter even the best-laid plans.
Career changes, pay raises, a new home, marriage, divorce, a child starting college, grandchildren – whatever is on the horizon, be sure to revisit your financial plan and adjust accordingly.
Financial Goals Should Be a Work in Progress
Financial goals are by nature a work in progress. The expectation isn’t that you’veaccomplishedall these items, but that you have a plan, have put it into action, and can honestly evaluate your progress.
Some areas benefit from specialized expertise and guidance. If you’re struggling to stick to a plan or create one that fits, or simply want to ensure the plan you’ve created aligns with your future goals, let’s talk.