It feels like you just packed away the holiday decorations yesterday, but believe it or not, 2023 is already half over. As we near the end of the barbecue-and-beach season, take a few minutes to give yourself a mid-year financial checkup. A small investment of time can spur important changes that can affect your financial wellness for the rest of 2023 or even for years to come.
Use the six steps detailed below to guide you through your checkup.
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Step 1: Revisit Your Budget
Remember sitting down in December and crunching all those numbers? There's no need for such a detailed job again, but take some time to review your monthly budget. Are you sticking to the planned budget for every category? Are you overspending in some areas or under-spending in others? Do you need to adjust your allotted budget in some areas or trim your discretionary spending across the board?
Review your spending over the last few months and make any necessary changes so your budget can continue working for you. Be sure to account for any significant life changes that may alter your financial needs, such as a marriage, childbirth, divorce, or job change.
By reviewing and adjusting your budget, you will avoid falling into the mindless spending trap and take proactive steps toward staying on top of your finances for the rest of 2023.
Step 2: Anticipate Large Expenses
Now that you've updated your monthly budget, take a moment to list any significant expenses you anticipate having in the next six months. This can include household appliances needing replacing, expensive car repairs that will likely become necessary, or an anticipated medical expense not fully covered by insurance.
Once you have this information, determine which spending category you will take the money from to cover these expenses. Do you have a rainy-day fund that can pay for one or several of these costs? Can you use the money in your emergency fund? Make the decision about sourcing this money now so you can make the right choices when you're stressed and pressed for time in the future.
If you do not have enough money for these expenses, build a savings plan into your monthly budget to have the funds available when needed.
Step 3: Check Your Credit Score
Your credit score is like your money grade, indicating the degree of your financial wellness and responsibility. Visit AnnualCreditReport.com for your free credit report from any of the three major credit bureaus: Experian, TransUnion, and Equifax.
If your score has increased in the last six months, you're doing great! Keep up the excellent work.
On the flip side, if your score has dropped, review your report in detail. Are there any errors you'll need to contest with the Federal Trade Commission? Is there a credit card bill or another line of credit you've been neglecting that is dragging your score down? Do you need help remembering to pay your monthly bills on time? Take the necessary steps to fix your score today, whether contesting a charge, setting up an automatic payment on some of your bills, or lowering your credit utilization rate by paying with plastic less often.
Step 4: Review Your Investments
Now is the time to review and adjust all of your investments. This includes your contributions to your retirement funds, any stock investments, bonds, trust funds, or certificates at Azura Credit Union. Make sure you maximize your contributions when possible and that your other investments perform according to plan, making adjustments as necessary.
Step 5: Tackle Your Debt
List every outstanding debt you carry, including credit card debt and loans. Designate one obligation to tackle first, choosing the one with the highest interest rate or the one with the lowest balance. Next, work on a plan to get rid of your selected debt, being careful not to neglect the others. See if you can trim your budget or boost your income to increase your payments on this debt. Once you've paid it off, move to the next one on your list so you're on your way to a debt-free life.
Read More: Snowball Method vs. Avalanche Method: What's the Best Way to Tackle Debt?
Step 6: Review Your Financial Resolutions and Long-term Goals
Which financial resolutions did you jot down at the end of last year? What are your dreams for the future? Did you want to start socking away another $200 a month? Is your goal to retire comfortably at 55?
Take some time to review these goals and determine whether you are taking the steps necessary to make them happen. If you've been neglecting them for the first half of 2019, create a plan for working toward them for the rest of the year.
Remember: With determination and proper planning, nearly any financial goal is possible!
Now that you've given yourself a thorough financial checkup, you can kick back and enjoy the sweetness and the sunshine of the season guilt-free.
Happy end of summer!
