Mid-Year is a Good Time to Adjust Your Finances
The economy and many individuals’ financial situations have changed dramatically since January. Now more than ever, June is a fantastic time for a financial tune-up. You can take time to review your priorities, saving strategies, and tax withholdings before we head into fall. Doing so can help you prepare financially for the road ahead.
Reflect On Your Resolutions
Many people start off the New Year with specific financial goals. Perhaps you wanted to save more, reduce debt, or spend less; however, the COVID-19 crisis may have changed your financial situation along with your goals. Take some time this month to think about your main financial goals for the rest of 2020. Then review your financial statements and account balances to see if you’re on track to reach those goals. If not, how do you need to readjust your behavior in order to do so?
Check In On Your Retirement Savings
If you’re still saving for retirement, consider increasing your retirement plan contributions. You’ve just reviewed your bank statements: Where can you increase saving and decrease spending? Have you gotten a salary increase recently that would allow you to contribute a higher percentage of your paycheck towards your retirement accounts? For 2020, your contribution limit is $19,500, and if you’re over 50, you can make catch-up contributions up to $26,000. For those who’re already retired, review your investment and distribution strategy to ensure your income can support you in retirement.
Check Your Withholdings
If you have already filed last year’s tax return, take a moment to review your tax liability for 2019. Think about whether your income or deductions will change your liability for 2020, and after doing so, think through how much you need to be saving to prepare for tax filings next year.
It’s also important to take a moment to review your withholdings, especially if you received a large refund or bill after filing for 2019. You can use the IRS’s Tax Withholding Calculator to better estimate how much you should be withholding from each paycheck and make adjustments with your employer as necessary.
(Cautiously) Revisit Your Investments
Reviewing your portfolio can be stressful during today’s market volatility. Before engaging in this step, I encourage you to seek questions rather than answers. As you review your portfolio, think through how your investments are performing compared to major indexes. Consider the amount of risk you’ve assumed and how much risk you’re comfortable assuming. Think about your financial goals and how your portfolio’s performance is or isn’t helping you reach those goals. After doing so, ask yourself: How am I feeling? What questions do I have? Reflect on your questions before jumping into any decisions, especially knowing that the market is changing rapidly from day to day.
Other Questions to Consider
As you conduct your financial tune-up, consider checking your insurance policies to confirm your coverage will meet you and your family’s needs. You can also think through some of the questions below, and as always, you can reach out to ELM3 for assistance in improving your personal financial health.
