Your Mid-Year Financial Review: 6 Key Steps for Long-Term Success

Mid-Year Financial Review

As we transition into the second half of the year, now is the perfect time to take a step back and assess your financial health. A mid-year financial review allows you to celebrate your progress, identify areas needing improvement, and adjust your financial plan accordingly. It also gives you a chance to consider external factors that might affect your finances, such as economic conditions, changes in tax laws, or shifts in interest rates.

Committing to a mid-year financial review helps you stay on track toward your financial goals, allowing you to adapt to any changes in your financial situation. By taking this proactive approach, you can ensure your financial plan remains flexible and resilient, paving the way for sustained success in the second half of the year and beyond.

#1: Assess Your Current Financial Situation

The first step in your mid-year financial review is to take a close look at where you currently stand financially. Start by reviewing your budget, comparing your actual spending to what you had planned. Are there any areas where you’re consistently over or under budget?

Next, analyze your income and expenses. Has your income changed since the start of the year? Perhaps you’ve received a raise, started a side business, or experienced a reduction in hours. On the expense side, look for any new recurring costs or significant one-time expenses that have impacted your financial picture.

Lastly, check the balances of your savings accounts, including emergency funds, retirement savings, and any other goal-specific savings. Are you on track with your savings targets? Similarly, review any debt balances and assess your progress toward paying them down.

This comprehensive review gives you a clear snapshot of your current financial health. It serves as the foundation for the rest of your mid-year review, allowing you to make informed decisions about your financial strategy for the remainder of the year.

#2: Revisit Your Goals During Your Mid-Year Financial Review

Once you’ve assessed your current financial situation, the next step in your mid-year financial review is to revisit the financial goals you set at the beginning of the year. What did you hope to achieve this year? Perhaps you aimed to boost your emergency fund, increase retirement contributions, or pay off a specific debt.

Then, evaluate your progress on these goals. If you’re on track or ahead of schedule, be sure to celebrate these wins—they’re a testament to your commitment and hard work.

If you’re falling behind on some goals, don’t let your lack of progress discourage you. The purpose of this mid-year check-in is to identify these areas and adapt your financial approach accordingly.

Lastly, take a moment to update your goals if necessary. Perhaps you’ve had a major life event like a new marriage or the birth of a child that requires reallocation of your resources. Or maybe you’ve made such great progress on one goal that you can now focus more of your efforts on another. Adjusting your goals as your life changes and priorities shift helps ensure your goals remain relevant and achievable.

#3: Focus on Key Areas of Your Financial Life

As you conduct your mid-year financial review, there are several key areas that deserve your attention:

  • Emergency Fund. An emergency fund is your financial safety net for unexpected expenses or setbacks. If your fund isn’t where you’d like it to be, consider strategies to build or replenish it. While most experts recommend saving enough to cover at least three to six months’ worth of living expenses, this amount can vary depending on your lifestyle and other factors. Consider using an online emergency fund calculator to determine how much you should save.
  • Retirement Savings. Be sure to review your retirement contribution levels and increase them, if possible, especially if you aren’t currently contributing enough to meet your employer’s match. If you’re 50 or older, consider making catch-up contributions to boost your retirement savings. Even small increases in your contribution rate can make a significant difference over time due to the power of compounding.
  • Debt Management. If you’re carrying debt, prioritize paying down high-interest balances first, as these cost you the most over time. Consider strategies for accelerated debt repayment, such as the debt avalanche method (focusing on highest interest debt first) or the debt snowball method (paying off smallest balances first for psychological wins).
  • Insurance Coverage. Don’t forget to review your current insurance policies and identify any gaps in coverage that could leave you financially vulnerable. For instance, if you’ve recently started a family, you might need to increase your life insurance coverage. Alternatively, if your net worth has grown substantially since the last time you reviewed your coverage, you might want to consider adding an umbrella policy to your insurance strategy.

Focusing on these key areas allows you to address the cornerstones of financial health: protection against emergencies, preparing for the future, managing liabilities, and safeguarding against risks.

#4: Identify Tax Planning Opportunities During Your Mid-Year Financial Review

Mid-year can be an ideal time to focus on tax planning, ensuring you’re on track for a smooth tax season next year. The following steps can help you better understand your current tax situation and prepare accordingly:

  1. Review your current tax withholdings. Are you having too much or too little withheld from your paycheck? If you received a large refund last year, you might be over-withholding. While a refund feels nice, it essentially means you’ve given the government an interest-free loan. On the other hand, if you owed a significant amount, you might need to increase your withholdings. Adjusting now can help avoid surprises come tax time.
  2. Familiarize yourself with the deductions and credits you may be eligible for this year. Are you keeping track of charitable donations? If you’re a parent, are you taking advantage of child-related tax credits? Understanding these can help you make informed decisions for the rest of the year, minimizing your potential tax liability.
  3. Plan for estimated tax payments. If you’re self-employed or have significant income outside of your regular job, you might need to make estimated tax payments. Mid-year is a great time to review your earnings and ensure you’re setting aside enough for these quarterly payments. This practice can help you avoid steep penalties for underpayment.

Remember, tax laws can change, so it’s wise to consult with an experienced financial advisor or tax professional. By addressing these tax considerations now, you can potentially reduce your tax burden and avoid unpleasant surprises when tax season arrives.

#5: Plan for the Rest of the Year

As you wrap up your mid-year financial review, don’t forget to plan for the rest of the year. This forward-thinking approach can help you finish the year financially strong.

Start by setting specific financial targets for the second half of the year. These should be concrete, measurable goals that align with your broader financial objectives. For example, you might aim to save an additional $10,000 for your emergency fund, increase your retirement contributions by 2%, or pay off your mortgage balance by year-end.

Once you’ve set these targets, create an action plan to achieve them by breaking down each goal into smaller, manageable steps. Be specific about how you’ll accomplish each step, perhaps by cutting certain expenses or redirecting unused funds.

Lastly, be sure to anticipate upcoming expenses. The second half of the year often brings significant costs like back-to-school shopping, holiday gifts, and year-end travel. Consider setting up separate savings accounts for these expenses and start contributing to them now to avoid financial stress later.

#6: Consider the Value of Professional Guidance

A mid-year financial review is more than just a routine check-up—it’s a powerful catalyst for financial growth and stability. By committing to this practice, you’re not just maintaining your financial health; you’re actively shaping your financial future.

Remember, you don’t have to navigate this journey alone. Professional guidance can be invaluable in managing the complexities of personal finance. Oak Capital Advisors can help you develop a comprehensive strategy to reach your financial goals and secure your future. Contact us today to book your complimentary Pre-Op Assessment and embark on your financial journey with confidence.

Did you find this information interesting? If so, please share it!

Free Guide!

A CRNA's Prescription to Comprehensive Financial Wellness

Download Your Free Copy!