4 Quick Mid-Year Financial Checkups

Posted by Jill on July 6, 2010

I looked at the calendar the other day and couldn’t believe the year was already half over!

It seems like just yesterday we were ringing in 2010, and now 2011 is just 6 months away.

The summer is a time for vacations and cookouts, but don’t forget to pay attention to your finances too!

Follow these four quick steps to improve your financial situation before we ring in the next New Year.

Mid-Year Tips

  1. Review your retirement contributions: In 2010, you can contribute $16,500 to a 401(k) and similar workplace retirement plans and another $5,000 to an IRA or Roth IRA – not to mention additional catch up amounts if you are over 55. If you’re not on track to max out one or both, review your budget and see if you can find a few extra dollars to move you a little closer to doing so. If you had planned to max out both this year, make sure you’ve contributed roughly half of the limit by the end of the month, and set up a plan to dollar cost average the rest over the next 6 months.
  2. Rebalance your portfolio: If you haven’t done so in the last year, review your asset allocation and rebalance your portfolio – recent market volatility may have thrown it out of whack. And if your income previously excluded you from doing so, don’t forget to check into a Roth IRA conversion!
  3. Assess your insurance situation: Most households should maintain home, auto, health and disability insurance. Depending on your family and financial situation, you may also need life, long-term care and/or liability insurance. Take this opportunity to review your insurance situation – are your policies up to date? – Have you gotten a new quote lately to compare prices? If the value of your home has increased (or, more likely, decreased) in value, you should update the amount of your homeowner’s policy. You may be able to save money on home or auto insurance by increasing your deductibles, or lowering the insurance amount on an older, paid-off car. If you are in your mid-50s or older, you may consider long-term care insurance for the first time. If you recently added to your family, had one spouse leave the workforce, or took on an increased debt load, you may need a new or increased life insurance policy. Take this time to do some research and update your insurance policies as appropriate. When it comes to health insurance, get a jump on open enrollment – take the next few months to assess how you’ve used your current policy and how a different policy might benefit you. Don’t forget to take the new health care laws into consideration!
  4. Adjust your withholding: Did you owe the IRS lots of money at tax time, or receive a large refund? Your budget can be more effective if you smooth all income and expenses out over the course of the year. If you didn’t do so in January or after tax time, take this time to review your withholding with your human resources department and adjust it if needed. Assuming your income and credits/deductions stayed generally the same in 2010 as in 2009, you should withhold more if you owed money and less if you received a large refund. Even if you didn’t see a large tax bill or refund for 2009, you may still want to look at your withholding if your financial situation has drastically changed – for instance, if you or someone in your household went back to school, lost a job, bought a house, began collecting Social Security, etc.

More Mid Year Financial Check Up Tasks

What other mid-year financial check-ups would you suggest? Tell us in the comments!

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Comments to 4 Quick Mid-Year Financial Checkups

  1. I think that rebalancing my retirement portfolio is key. However, at what percentage should a rebalancing occur? If my directives are within 1% of my current portfolio is it worth rebalancing? Any ‘guidelines’ or rules of thumb? 😀

    Ian G

    • Hi Ian,
      Good question and perhaps something we will explore in a future post! Most guidance recommends rebalancing on a fixed schedule (e.g., every 12 or 18 months) rather than in response to your current holdings. Just make sure you are paying attention to tax consequences and give market abnormalities a chance to smooth themselves out!


  2. Good list, Jill!

    The only thing I would add is to review how you are doing regarding any goals you might have set at the beginning of the year – and re-plan your action strategy if necessary!


    Len Penzo dot Com

    Len Penzo

    • Excellent suggestion! I know I am a bit behind on some of my goals 🙂


  3. Re balancing is key but it does not have to be done every 6 months IMO.
    The difference between 60% stocks/ 40% bonds and 65/35 or 55/45 is negligible over a 6-12 month period


    • Thanks Evan. I think we’re advocating more of an annual thing – just suggesting that you could do it in the middle of each year.


  4. Catch-up contributions begin at age 50, not 55.


    • Thanks for catching that! I will try to get the post updated.


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