Our Midyear Checkup Guide Can Help You Focus on Your Financial Goals

Tom Gilmour is a senior director of Behavioral Insights and Psychology of Planning for Northwestern Mutual.

You wouldn't skip a regular tune-up for your car, and your finances deserve that same level of care to keep everything running smoothly. A financial checkup is the perfect time to celebrate your wins and catch small issues before they turn into bigger problems. While routine upkeep—like tracking your budget and checking your credit report—is always important, some financial tasks really benefit from a deeper dive.

Creating your personal finance checklist

As we head into the second half of the year, your New Year’s intentions to keep up with your personal financial goals may have waned. Since tackling everything at once can feel overwhelming, try designating just one task a month for the rest of the year.

We’ve identified six to consider, one aligned to each remaining month to make it easier to achieve your financial goals (but choose the order that makes sense for you):

July: Check in on your retirement savings

Celebrating Independence Day is an ideal time to review your retirement accounts. After all, what’s better than having the financial independence to do what you want in retirement?

Start saving regularly or increase your contributions in a company 401(k)

Even if retirement seems like a distant dream, it’s important to start saving for retirement early—and regularly. You can start small by investing a set percentage of your salary in your retirement account each month. As your income grows, you can consider increasing the percentage or amount you save so your contributions keep pace.[GT1]

Consider making savings automatic by directing a portion of your paycheck right to a high-yield savings account or another savings vehicle. Automating savings can help you build the habit and you will reap benefits by taking advantage of compound interest.

Aim to max out your tax-advantaged accounts

If you’re looking to supercharge your savings, contributing the maximum you can to your 401(k) is often the best place to start. However, if that’s not realistic right now, try to save at least up to the amount of your company match.

If you’re age 50 or over, you’re eligible to contribute additional money to your employer sponsored retirement plan in what’s called a “catch-up” contribution.

Make use of multiple retirement accounts

If you’re contributing as much as possible to your company-sponsored plan, consider exploring other strategies to maximize your future retirement, such as contributing to a Roth IRA, if you’re eligible, which can eventually serve as another source of income that can help reduce your taxes in retirement. The more you set aside today, the more you’ll be able to take advantage of the magic of compounding interest tomorrow.

August: Make a plan to reduce your debt

Many of us are burdened by debt, and when you have several competing concerns, 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.

The first step is to create a list of all your debts: the name of the lender, interest rate, total amount due, and minimum monthly payment. Because we tend to look at things in silos, having a complete picture makes it easier to put together a holistic strategy. Then you’re ready to take the next steps.

Choose a debt management strategy

When deciding how to prioritize paying off your debts, you may want to start by paying off the smallest amounts—to get them off the books and enjoy the win—while still making the minimum payment on all your bills. Or you can tackle the ones with the highest interest rate, as this will save the most money over time. You’ll want to 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.

Build an emergency fund

While you’re addressing current debt, make sure it’s not still accumulating. By establishing an emergency fund, you can handle unexpected expenses as they arise rather than reaching for that credit card and running up the tab. Stash the funds in a high yield savings account that you can easily access, yet still allows the money to work for you by earning interest.

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.

Assess your life insurance needs

When deciding what type of life insurance to buy, the sheer variety of options can be confusing. Your financial planner can help you determine the right amount and type you need—for instance, deciding between term or permanent life insurance. They will take into account your individual situation and use an insurance needs calculator to determine the optimal level of protection for your family.

Consider disability insurance

Another type of insurance coverage that’s easy to overlook is disability insurance. In fact, many people assume they’re covered because most employers offer a short-term policy. However, these typically have limitations: Many of these plans are designed to cover a mere six weeks and likely only replace a portion of your salary. Short-term disability insurance can kick in to help ensure you’re adequately covered for a temporary illness, injury, pregnancy-related disability or recovery from childbirth.

A long-term disability policy is designed to provide income protection for an extended illness or injury. 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 an estate plan 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 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 may be costly for your heirs.

Keep these estate planning essentials in mind

Having an estate plan can help ensure your assets are passed on according to your wishes and in a tax-efficient manner. It includes documents such as your will or trust, beneficiary forms, advanced health care directive, and power of attorney. One crucial component that’s easy to overlook is the living will, which goes into effect if you’re incapacitated and can’t make your own decisions.

Review your estate plans

If you already have an estate plan, it’s wise to revisit it every two to three years—you want to make sure it still complies with your wishes and that all the account information is up to date. 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.

November: Prepare for open enrollment

Open enrollment season, when you select your healthcare plan and other benefits for the upcoming year, kicks off at most employers in November. It may be tempting to stay on autopilot, but a few tweaks can make a difference in your finances.

Evaluate your employer’s health plan options

If you have been happy with your plan, you might assume you can skip this step, but that could be a mistake as shifts happen constantly—from plans changing their list of preferred providers to employers altering how much of the premium they will pay. It’s a good idea to attend your company’s general information session to hear about updated options for the upcoming year, review any pricing changes, and verify your preferred providers are still covered.

Consider funding a health savings account

One substantial benefit to keep in mind is a health savings account (HSA) that typically accompanies a high-deductible health plan (HDHP). These health plans are characterized by a lower monthly premium and a higher deductible, which can be the right choice for some families.

An HSA offers a rare federal triple tax advantage. First: You can contribute pretax dollars, reducing your taxable income for the year. Second: The money then grows tax-free through investments. Third: Withdrawals are tax-free when used for qualified medical expenses, even years down the line.

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: Take a broad look at your overall portfolio

As the year winds down, assess your overall portfolio step back and take a comprehensive look at your overall financial picture to see if you can take additional actions to help preserve your wealth and peace of mind.

Rebalance your assets

The investment technique called portfolio rebalancing allows you to bring your mix of assets back to their target levels, typically by buying and selling holdings to get back on track. Over time, individual investments and assets classes, like stocks and bonds, may have gained or lost value. If your preferred allocation (such as a 70/30 split) has drifted, it can potentially expose you to more or less risk than you intended. Keep in mind that rebalancing can trigger fees or taxes especially in taxable accounts, so discuss the specifics with your financial planner to find a cadence that works for your situation.

Reassess your risk tolerance

Successful investing is largely about risk management and taking on the appropriate level for your own personal situation and goals. Diversifying across asset classes is one of the most effective ways to spread your risk exposure to help guard against a decline in one area derailing your entire portfolio. You may want to adjust your risk depending on your life stage by decreasing your exposure to short-term volatility as you get closer to retirement age.

Conduct tax-loss harvesting

Tax-loss harvesting involves selling an investment at a loss and reinvesting in a similar (but not substantially identical) investment so you can maintain market exposure while potentially using the realized loss for tax purposes. Be mindful of wash sale rules, which can disallow a loss if you buy substantially identical securities within 30 days before or after the sale.

Wrap up the year and create new financial resolutions

The end of the year offers the ideal opportunity to reflect on your wins and start laying the groundwork for your financial goals for the new year.

An easy place to start is with the bills you’re likely incurring this month. 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 or even creating a plan to cut back overall.

To help you stay on course in all areas throughout the coming year, make an appointment to consult with your financial advisor, or think about working with one if you aren’t already. They can look at your entire financial picture and assess where you are today and where you want to be for your golden years, helping create a personalized financial plan designed to address both short-term and long-term goals.

This information is for educational purposes only and does not constitute or contain specific legal, accounting, or tax advice. Northwestern Mutual, its agents and employees, do not and cannot give legal, accounting, or tax advice. Clients who need legal, accounting, or tax advice should seek advice regarding their particular circumstances from their independent legal, accounting, or tax advisor. All investments carry some level of risk including the potential of loss of principal invested. No investment strategy can guarantee a profit or protect against a loss.