Time for midyear money checkup

A lot can happen in six months. That’s why, as we close out the first half of the year, it makes sense to check in on your financial life.

“With inflation, I think people this year are more heavily impacted than they probably have been in many years leading up to this point,” said Jason Dall’Acqua, a certified financial planner and founder of Crest Wealth Advisors in Annapolis, Md. “So it’s a good time to see how things have been going … as well as plan for what lies ahead in the remainder of the year.”

So where should you start? Add these to your checklist.

1. Review expenses, goals

Take a few minutes to check a bank or budget app to help better understand your finances and course-correct if necessary.

“Right now with inflation, even if you had a budget back in January, it probably is not the same as it is today. So it’s just really resetting and figuring out where you stand today versus where you thought you were going to stand today,” said Kayla Welte, a CFP with District Capital Management in Denver.

Look for opportunities to scale back if you’ve spent more than anticipated. For example, you can dine out less or cancel subscription services you rarely use.

If you set money resolutions or other financial goals earlier this year, check on those, too.

2. Deal with debt

Debt is becoming more expensive to carry due to rising interest rates. Pay down debts sooner, particularly those with variable interest rates, to save money. These debts might include credit cards, personal loans or adjustable-rate mortgages.

Concentrate on reducing your highest-rate debt first, then move on to the next highest. Dall’Acqua also suggests switching from variable-rate to fixedrate options by refinancing, if possible. “If you can lock in the fixed rate now, you’re likely to be saving yourself significantly in interest costs over time,” he said.

Be aware of end dates for loans in forbearance. For instance, federal student loan payments will resume Sept. 1, barring another extension.

Setting aside money now in a separate savings fund can help soften the blow.

3. Plan holiday shopping

Inflation could make holiday gifts pricier this year. Create a shopping list and think about how much you can afford. “Figure out what that would require for you to start saving ... and start putting that money aside right now,” Dall’Acqua said.

Starting on shopping early can also help you manage the cost without accruing debt. Many retailers host major sale events in the summer, so you’ll find discounts well before Black Friday. Amazon’s Prime Day is coming in July.

4. Examine taxes, benefits

Welte recommended using an online tax calculator to check whether you’re withholding too much or too little. This can help you avoid getting hit with a big tax bill or missing out on extra cash you may need now.

“If you do the math and you’re going to get a $6,000 tax refund, it would be a great time to change your W-4s, get more money in your pocket now to pay for these excess costs that are coming up with inflation rather than waiting until next April to get that refund,” Welte said.

If you need to make adjustments, fill out a new Form W-4 (you can find this on the IRS website) and submit it to your employer.

While you’re at it, evaluate your employee benefit selections. These benefits can include health insurance, life insurance, health savings accounts and flexible spending accounts, plus perks like gym memberships.

Reviewing your choices in the summer can prevent you from becoming overwhelmed in October and November, when open enrollment begins for most companies, said Joe Bautista, a CFP in Lake Oswego, Ore.

The goal is to ensure you’re choosing the most cost-effective options that suit your needs. For example, “a PPO has higher premiums but a lower cost if you tend to use health care, lower deductibles and copays typically. But if someone doesn’t use that health care, then they can be overspending,” Bautista said.

Don’t worry about getting everything perfect right now. As Bautista said, “financial planning is dynamic, it’s not static.” Check in on your money plans periodically and update as needed.