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Mid-year Check Up: Is Your Money in Order?

Life as a responsible adult means juggling and properly handling finances. The overwhelming majority of all adults throughout the nation have debt, with roughly a third of Americans falling into delinquency, according to a 2014 report from USA Today. The average person also has a minimum of two credit cards, a mortgage or similar loan, and other finances to juggle. Checking your personal finances is a necessity to keep in good standing with creditors and to keep your credit score, investments, interest rates, and other fiscal aspects healthy.
While most people get in the habit of checking their finances at the beginning of the year, there are actually quite a few reasons why a midyear finance check is in your best interest. 
Those who have dealt with dwindling savings, crashing stocks and mounting credit understand that things can go from bad to buried-under-debt worse very quickly. Midyear financial checks help you stay ahead, particularly if you have experienced any life changes, have taken on new debt, or have invested in new ventures. 

6 Reasons to Run a Midyear Finance Check


Reason #1: Reviewing Your Savings

A midyear savings check isn’t so much about reviewing how much you have left in the tank. This is information you most likely already know like the back of your hand. It’s more about reevaluating your savings structure to see if you can possibly start saving more. The unfortunate fact is that prices are steadily increasing on fuel, food, insurance, and local rates and taxes. Perhaps a midyear savings rundown will enable you to free up 15% for savings instead of 10%; or, if you’re in a heavier situation, perhaps a review will help you save 10% rather than 15%, allowing you to pay down existing debt without falling behind. 
You may also find that savings do not necessarily have to be cash assets in the bank. In other words, reviewing your savings might prompt you to start investing more for the long-term over the proverbial rainy day funds. 

Reason #2: Tidying Up Your Budget

Creating and sticking to a budget is a very wise measure for fiscally responsible individuals. However, budgets are never etched in stone; they need to be liquid because your life is liquid. For instance, you may have received that big promotion at work, in which case you can decide midyear whether to increase the budget or to increase your savings. Contrarily, you may have received a demotion or have even lost your job outright. Revising your budget to slim it down will help you stretch those dollars. 
For individuals earning the median salary, roughly half of their earnings are allocated to COL (Cost of Living) expenses. Dividing the remaining half isn’t something to do on a whim. A midyear review allows you to reallocate money where you need it the most. 

Reason #3: Keeping an Eye on Your Credit Rating

Once a year, you can receive a free credit report, and most credit card companies and other lenders will give you a rough annual report so that you can review your status. Though there is a lot that can happen in 12 months; even one or two months putting a payment off or switching things around can have a very negative effect on your overall credit score. And this may result in being denied for loans and cards in the future. 
By checking your credit report in the middle of the year, you will understand more about your credit and can work to pay down anything outstanding and to stay current with all your payments. A midyear review may also alert you to a situation that’s about to spiral out of control. Consolidation, for instance, is a move that’s easier and cheaper to make before you’re completely buried. You’ll be able to spot looming disaster in time to fix it by performing a midyear check. 

Reason #4: Reviewing Your Portfolio

The average person’s portfolio is typically tied in with their employer in some fashion, via a 401K, so they don’t necessary check it. Then some people invest only a fraction of their yearly income in the stock market, so they tend to rely on brokers and services and annual reports to tell them how things are going. This shouldn’t be the way a fiscally responsible individual handles their investments. A midyear check of all investments allows you to assess risk and to make better choices going forward. 
While there have been too many instances of outright crashes and collapses, most downturn has ample warning signs before the bottom falls completely out. Though if you’re not abreast of your own financial situation, you will never be able to avoid risk in time. 

Reason #5: Considering Long-Term Savings

Back to that 401K, the average person’s retirement is tied up with their employer, or they’re relying on Social Security to pay back what they put in via Medicare and monetary payments. However, relying on the government is always risky business. If it pleases the politicians, they may not add any COL increases, and they may gut SS medical care and payments completely by the time you retire. Investing in something else for your retirement is a wiser play, and checking your finances midyear allows you to focus efforts on these types of savings.
For example, when checking your savings, budget and credit history, you might be in a fortunate position to put excess capital into your retirement fund by taking 5% away from your budget. There is a difference in savings and in retirement measures. You have to take into account long-term care and the quality of your life. Performing a midyear check in this area is the least you can do. 

Reason #6: Staying In Front of the Tax Man 

The IRS is a scary entity; and if you’re not worried about the tax man, perhaps you should be. That’s not to say one should be paranoid about taxes; plenty of leeway is offered to responsible individuals. Though tax codes consistently change, and audits and liens and penalties can seriously affect anyone. With a midyear tax check, you can start lining your ducks up in a row a lot earlier, reviewing new regulations, looking into different write-offs and deductions, and easing yourself gently into the filing process rather than rushing into it at the last minute.
Focusing more on this area might just allow you to find more deductions and loopholes that equate to more of your money kept in your pocket. A midyear tax check gives you more room and more time. 
Finances can be depressing and nerve-racking for many, so they don’t attempt to deal with the situation until they must. Though in order to make your fiscal life easier, a midyear finance checkup is definitely in your best interest. 
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Alice Bryant's picture

Alice Bryant is the Editor of Creditnet and a personal finance expert with over a decade of experience writing about credit cards, credit scores, debt repair, and more.

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