Financial experts are suggesting that now is the ideal time to put a temporary halt on your spending and reassess your fiscal plans for the year. Not just to cool down your financial habits during the warm summer months but also as a proactive strategy for your annual monetary goals.
They propose that it’s like celebrating a “second New Year” in the middle of the year, allowing you to get back on track with your initial savings and spending objectives for 2023.
Summer is the perfect time to reflect on your New Year’s resolutions, particularly those related to finances. If you feel you’re behind on your financial targets, this mid-year pause provides ample time to adjust your strategies and align with your goals, whether it’s growing an emergency fund, curbing credit card debt, or resuming student loan repayments.
Why is this the optimal time for a fiscal health check-up? It’s primarily because we’re about to enter a period full of spending opportunities. Expenses related to back-to-school supplies, Halloween goodies, Thanksgiving feasts, and winter holiday gifts are looming. So, pausing to assess and plan now can prepare you for these upcoming expenditures.
Financial experts like Nate Hoskin, a certified financial planner who works with young adults, suggest conducting a personal financial “audit”. This review should be a thorough assessment of your financial performance since the start of the year. If you’ve fallen short of your savings targets, for instance, figure out why.
Did you overspend on dining out? Or did a side gig earn less than expected? Uncover the reasons behind your financial shortfalls and strategize how to address them.
One recommendation to get back on track involves a gradual build-up towards your saving goal. Suppose you had planned to save $500 per month but managed only $200; try saving $250 the next month, then $300, aiming to reach the $500 goal by the end of the year.
If the end of each month finds you with no extra money to save, consider adopting a “save first” strategy. Deduct a fixed percentage of your income, say 15%, and channel it into a savings account before planning your expenses. Numerous apps and banking services can automate this process, helping you make saving a priority.
Paying off credit card debt is another area to focus on, especially with the current high balances and interest rates. Online tools can guide you on how much extra you can afford to pay off and the timeline to clear the balance.
When it comes to choosing between the “avalanche” method (focusing on high-interest rate debt) and the “snowball” method (concentrating on smaller debts first), a hybrid approach may work best for most. Start by clearing a small debt for a quick win, then shift focus to high-interest debts.
Remember to set a specific date for your mid-year financial review, putting it on your calendar will ensure it gets done. It’s an effective way to keep your financial health on track, aiding in successful monetary management throughout the year.
A quick glance at your paycheck withholdings or your credit report can also be beneficial during this review. Particularly if there has been a significant change in your life, like a new job, a raise, getting married, or having a baby, as these events can influence your tax liabilities and credit score.
In essence, financial experts advocate for a mid-year pause in spending to reassess, re-strategize, and re-align with your annual financial goals. This can help you make informed decisions that lead to a more financially stable and prosperous year.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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