6 Benefits Of A Mid-Year Money Check-In

Between inflation, interest rates, and the threat of another recession, for many, the last year has felt like a financial rollercoaster. In fact, the number of U.S. consumers who reported feeling anxious about their job situation increased to 25% in May (via Deloitte Insights). Couple that with rising food costs and the housing market's increasing unaffordability, and it makes sense why people are struggling to keep up with their finances.

Many people know how important it is to track their spending and budget on a regular basis, but setting aside time for a mid-year financial check-in to assess how things are going overall is crucial for your financial wellness. Think of this as going a bit deeper than just looking at your bank account balance. This can not only serve as the perfect opportunity to reassess any savings goals you might have made at the beginning of the year, but can also motivate you to set new ones. It can also be a great time to discuss finances with your partner, especially if you haven't broached the topic recently. 

Looking at your finances may not be the most exciting way to spend a warm summer night, but you'll thank yourself later in the year when you hit your savings goal or make that big purchase you've been planning for. There are so many reasons why taking this time to look into your financials is a great idea so let's dive into some of the benefits. 

Life happens and things can change. Maybe at the beginning of the year you set a goal to save $20,000, but were laid off and unexpectedly had to move, resulting in sudden expenses that made it impossible to stash your savings as quickly as you hoped. Or maybe you were banking on student loan forgiveness to pan out, only to be met with a new payment that's slowing down the repayment of other debt. It's not an inherently bad thing to reassess and change those goals in light of new information. For the rest of the year, you can either rev up your savings to make up for those changes or reduce the goal to make it more attainable. 

Taking a look at where your goals stand now compared to where you started allows you to get a full picture of whether they're still attainable or need to be changed. Remember, it's fine to adjust your goals for positive changes, too. Maybe you received a promotion and now have a higher net income each month that allows you to set aside more savings each month. Or maybe you're looking to start a savings for the very first time. In any case, a mid-year check-in can be the perfect time to dip a toe into long-term savings goals by planning for the rest of the year. Keeping your financial goals clear, and resisting the urge to splurge (we see those European trips on IG too) can make sure you end 2023 in a financially stable place

With how much we automate everything, including savings transfers or payments, it's easy to think that our goals will just happen. But when it comes to money, even in the best circumstances, we are all capable of going off-track. Beyond assessing your overall progress with saving, a mid-year money check-in is a great opportunity to examine your own habits and how they may be contributing to or hindering your financial goals. For instance, if you didn't quite meet your July or August goal to pay your credit card debt, but can't think of any special circumstances why this would have occurred, you might want to look closer at your spending. You can go the route of looking at your bank statements or even use convenient apps that categorize the spending for you. By looking closely at your daily transactions, you'll be able to see what areas you're going over budget in, or where your budget may need readjusting. You might find from looking at your spending that you've become a bit too comfortable swiping your credit card at restaurants after work. Developing an awareness of this habit — and taking steps to prevent it, like planning your meals — will help you better curb your spending so you can stay on track. 

As you might expect, consumer spending peaks in November and December as shoppers prepare for the holidays. This can make it a financially strenuous season for many. However, having a game plan months in advance can be beneficial to ensuring your budget is prepared to handle the extra spending the way you want. 

Whether it's family gifts or a planned holiday vacation, budgeting what your winter month expenses might look like now can ensure you're prepared long before the holidays arrive. For instance, if you know you'll need some specific, pricy winter gear for a trip or planned holiday in December, you can try cutting your retail spending now to ensure you have the budget to make it happen. As far as gifts go, if you already have higher price tag items in mind, consider setting up alerts for these items to see if they go on sale between now and the holidays. In the latter half of the year, both Labor Day and Black Friday are two of the best days for finding deals on items you might have planned for gifts. You can also set up sinking funds dedicated specifically to gifts or holiday travel. These are like special savings accounts dedicated to a specific goal that are separate from your regular savings. Start putting a bit of cash in it each week and by the time December rolls around, you'll have a large sum saved and good-to-go. 

Your eyes might have glazed over when you read the word 'tax' but trust us, this one is important. If you typically owe money when you file, or if your income has moved up a tax bracket this year, checking your financial status in August is critical before entering the second half of the year. Increasing your withholding could help you avoid a large IRS bill next spring. On the flip side, reducing your withheld money could give you some extra cash to put towards something else (Be careful with this as it could lead to a higher tax bill). Making adjustments to your withholding can be especially beneficial if your household changed this year either by getting married or having a child as both things can impact your tax liability.

Budgeting for your taxes during the summer can be particularly useful for freelancers and independent contractors who might not have taxes withheld on their biweekly or monthly earnings. If you are one of the 60 million people in the U.S. who does freelance work, your taxes can be fairly complicated. Between self-employment tax, 1099-MISC forms, and deciding on a business structure it can be extremely helpful to get a head start on your taxes and keep track of quarterly payments. Taking the time to organize your expenses, catalogue your receipts, and research possible deductions can ensure you have a less stressful tax season come spring. Future you will be grateful, trust us. 

It's important to remember that rising interest rates could be affecting your current lines of credit. So, making sure to look at your current rates can be key in determining what your debts and assets might look like by the end of the year. This can be especially beneficial for any investments or home equity credit you might have. Searching for a lower annual percentage rate (APR) on current debt, whenever possible, can also be important if you're facing higher debt this year. Keeping an eye on interest rates can also allow you to pinpoint ideal timing if you're looking to purchase or refinance a home or car this year. These rising interest rates and inflation-related expenses might have changed your spending budget for the year, so taking the time to reassess how realistic your initial goals were in today's money can ultimately help you stay on track.

Ultimately, a mid-year financial check-in is a great way for you to lay out your different wants, needs, and hopeful expenses in order to help you best prioritize what's most important to you. If a friend's wedding in three months is the absolute top priority for you, then knowing that ahead of time can help you make smarter financial decisions in the present. Perhaps the fancier gym membership or new purse can wait, but having those priorities in your mind now will ensure you don't get too financially strapped for the really important things later. Keeping your planned expenses budgeted and planned for ahead of time can ensure you stay within your financial means. Best of all, making your priorities (and financial capabilities) clear to both yourself and others can better help you navigate friendships, work, and life. Not only can this help your mental health, but it can keep you financially healthy too.