Your Midyear Financial Checkup

Just like getting a regular exam with your health care provider, conducting a financial checkup is a great way to take stock of your fiscal health. It's a chance to celebrate your wins and catch potential red flags before any major damage is done. While you should make it a regular part of your routine to get a pulse on maintenance habits, such as tracking your budget and checking your credit report, there are other activities that only need to be done periodically.

As we head into the second half of the year, here are six manageable tasks you can tackle—one per month for the rest of 2023—to help you keep your goals on track.

Your Midyear Financial Checkup

July: Check in on your retirement savings

As we celebrate Independence Day, why not check in on your retirement accounts—after all, what’s better than having the financial independence to do what you want in retirement?

Retirement might seem like a distant dream, but that doesn’t mean you shouldn’t be actively addressing your savings needs now, says Rafaela Gittens, financial planning consultant at Northwestern Mutual. “Saving regularly is a good habit to start early,” she says. “Start small by investing a set percentage of your salary in your retirement account each month. As your income grows, over time, you can consider increasing your savings a commensurate amount, and it will grow into a sizable nest egg.”

To help you stay on course, schedule a consultation with a financial planner who can look at your entire financial picture and take inventory of where you are currently and where you want to be. “They can help you take stock of your progress to date and create a plan for strategies to implement now to get you to your eventual goal, such as retiring at a certain age,” Gittens says.

August: Make a plan for your debt

Many of us are bedeviled by debt, and when you have several competing priorities, it can be hard to know which one to tackle first. But formulating an approach to address the situation will help you feel more in control, Gittens says.

The first step is to create a list of all your debt in one place: the name of the lender, the interest rate, total amount and minimum monthly payment. “It’s important to get a complete picture because we tend to look at things in silos. Looking at it holistically makes it easier to put together a strategy for paying it off,” Gittens says.

When deciding how to address your debts, it can be tempting to start with the smallest ones—to get them off the books and enjoy the win. However, Gittens says a better strategy can be to erase the ones with the highest interest rate, as this will save the most money over time. “Continue to pay the minimum on all your debts, and then make additional, larger payments—as much as your budget allows—on the highest interest rate one, until it’s gone, then move on to the second highest one, and so forth.”

Wondering how to avoid accumulating additional debt? “Creating an emergency fund—and stashing it in a high yield savings account—can help prevent you from reaching for that credit card and running up the tab when an unexpected expense arises, as they always seem to,” she says.

September: Confirm you have adequate insurance

September is Life Insurance Awareness Month, which is a timely reminder to verify your family is protected should something happen to you. When deciding what type of life insurance to buy, the sheer variety of options can be confusing. Gittens recommends talking to a financial planner to determine the right amount and type, such as term or permanent. “They use an insurance needs calculator, to determine the optimal level of protection needed for your family, based on your individual situation.”

Another type of insurance coverage that’s easy to overlook is disability insurance, says Gittens. In fact, many people assume they’re covered because most employers offer a short-term policy—but Gittens cautions that these typically have limitations. “Most are only designed to cover six weeks and just part of your salary,” she says. “So if you are injured or want to take an extended maternity leave, you wouldn’t be adequately covered.”

Gittens recommends looking into long-term disability policies that will cover a longer period of time and often replace a higher percentage of income. As you compare policies, look at nuances such as coverage amounts and the length of the “elimination period,” which is the time between when you experience the event and when insurance kicks in.

October: Assess your estate plan or will

Making a will or estate planning is easy to put off—you might not think you have sufficient resources to need one or you might be uncomfortable confronting your own mortality. But it’s vital to make sure assets are passed on according to your wishes and in a tax-efficient manner. “If you don’t have a will in place, your estate will go through probate, and the state courts will decide how to distribute your belongings, which is also typically costly for your heirs,” Gittens says.

Your estate plan will include documents such as your will or trust, beneficiary forms, advanced health care directive and power of attorney. One component that’s easy to overlook but might be the most crucial document is the living will, says Gittens. “This goes into effect if you’re incapacitated and can’t make your own decisions,” she explains.

If you have already created an estate plan, it’s wise to revisit it every two to three years—you want to ensure it still complies with your wishes and that all the account information is up to date. However, it’s especially important to verify the particulars whenever your family situation changes, such as with a birth, marriage, death or divorce, all of which can affect your designated beneficiaries, Gittens says.

November: Prepare for open enrollment

Open enrollment season, when you select your health care plan and other benefits for the upcoming year, kicks off at most employers in November. If you have been happy with your plan, you might be tempted to skip the research, but that could be a mistake, Gittens says.

“Shifts happen constantly—from plans changing their list of preferred providers to employers altering how much of the premium they will pay.” She recommends attending your company’s general information session to hear about updated options for the upcoming year, review price changes in cost and verify your preferred providers are still covered.

One substantial benefit to watch for is a health savings account (HSA), which is often paired with a high-deductible health plan (HDHP). These plans typically have a lower monthly cost, yet a higher deductible. The HSA allows you to contribute pretax dollars to help prepay health care costs for that year as well as for future years. Because these plans are portable, you retain ownership even if you change employers. Some employers even make contributions on your behalf, similar to a 401(k) match.

December: Wrap up the year and create financial resolutions for 2024

The end of the year offers the ideal opportunity to reflect and then look ahead. “Review and celebrate your accomplishments, then create goals and start laying the groundwork,” Gittens says. For example, check to see if you maximized your retirement contribution, at least up to your company match, if offered. If not, make adjustments to get there, perhaps increasing it by a percentage or two.

“Since you’re funding it with pretax dollars, your paycheck won’t feel like it’s that much less, but you will reap significant benefits as these small amounts accumulate and grow over time,” Gittens says. And to keep your resolve up, make savings automatic by directing a portion of your paycheck right to a high-yield savings account or another savings vehicle.

This is also a good time to visit a financial planner to talk about ongoing strategies to maximize your future retirement, such as contributing to a 401(k) and a Roth IRA, which is funded with post-tax dollars. “Down the road, that can be another source of income that can help reduce your taxes in retirement,” Gittens says.

If you’re feeling overwhelmed with holiday expenses, vow to avoid that situation next year by establishing a gift fund you can contribute to all year. “Taking the time to figure out a savings plan for the upcoming year means you’ll be in a much better position when next December rolls around,” Gittens says.