July is often thought of as a time for home improvement projects, well-deserved vacations and leisurely day trips. In addition to these activities, financial pros say that the mid-year month of July is an ideal opportunity to assess your financial situation so you’re better prepared for the rest of the year.
FOX Business asked money experts about why it’s important to take the time to check in on your money matters and how to implement a plan to achieve your short-term goals and long-term aspirations. Here’s how to get started.
Why is now an ideal time for a mid-year money check-in?
While you should always have a handle on your spending, savings, budgeting, investing and your overall financial plan regularly, it’s important to take a closer look at the big picture.
“With spring over and tax season complete, it’s a time to reflect on the past six months and make any changes to your plan to meet your year-end goals,” said Nicole Cope, senior director at Ally Invest. “Taking the time to evaluate your finances now allows ample time at the backend of the year should you need to readjust any debt pay-down or savings strategies.”
What are some expenses that should be reviewed mid-year?
Review bank fees
As you’re checking in on your finances, take a closer look at bank fees, which add up over time. Here are some fees that could cost you.
Monthly service fees: Cope said account holders can typically avoid monthly fees by opening both a checking and savings account at the same bank or by setting up a monthly direct deposit.
Overdraft/insufficient funds fees: To prevent this fee, Cope suggests signing up for overdraft protection or low balance alerts, so you can replenish your account before it dips too low.
“Some accounts may even waive overdraft fees in certain situations – be sure to ask your bank,” she said.
ATM fees: To avoid these fees, use your bank’s website to find an in-network ATM.
So, when evaluating whether a bank is right for you, take a moment to reflect on how you spend and save.
TOO MUCH INFO? PARENTS WORRY ABOUT SHARING THEIR MONEY WOES WITH THEIR KIDS
“Compare minimum opening deposits and balance requirements, monthly fees, interest rates and customer service reviews and determine if they’re in line with your spending habits so that you can keep your banking fees low,” said Cope. “Your banking partner should be helping you meet your financial goals and helping along the way.” If after some research, you realize your current institution isn’t meeting you needs, it might be time to make the move to somewhere else.
Look over insurance coverage: Mid-year may be a time to take a closer look at your insurance needs, what your premiums are and whether you can snag some bundling discounts.
“You can’t always negotiate insurance rates, but you’re also not contractually bound to stay with your current provider,” Cope said. “Just as you would when opening a new bank account, shop around and compare rates against your current statements, including bundling options, premiums, benefits and more.”
Assess your savings strategy: Halfway through the year can also be an opportunity to set goals for saving, and having a plan can make this goal more attainable, experts say. Even small amounts of money earmarked for savings is important.
“There’s no one-size-fits-all strategy when it comes to saving and your savings strategy can look different than someone else’s, but any amount you can put away consistently will add up,” Cope said.
Keep in mind that when it comes to saving, time is on your side. So, whether you’re conducting a mid-year review of your current approach or starting fresh, consider the following:
WHY JANUARY IS AN IDEAL TIME TO REVIEW YOUR INSURANCE POLICIES
Set a monthly savings goal: Get in the habit of saving regularly and often.
Start small: Cope said micro-saving with spare change or saving a small amount automatically can help more than you might think.
“Many people find success in using a ‘pay yourself first’ strategy, where they put away small amounts from each paycheck to build up savings,” she said. “And if you can slowly increase how much you’re saving – even better.”
Boost your emergency savings: No matter how well you plan, emergency expenses like unexpected bills, hospital visits, and unforeseen home and car repairs can set you back.
“When building an emergency fund, a general rule of thumb is to have three to six months of typical expenses set aside,” Cope said. If you have earnings from a side gig, a work bonus or any unused cash, you can use it to pad your emergency fund for those unexpected bills, she said.
Review credit card debt: The second half of the year can bring more credit card use, so a July review can be a way to plan accordingly.
“For many consumers, year-end brings higher spending due to holidays and once-a-year sales,” said Emily Irwin, head of Wells Fargo’s advice center.
She suggested using a spreadsheet or other organizational method to understand your spending and set a plan to pay off any debt that you already have accumulated on your balance sheet.
“Remember, not all debt is bad (e.g., mortgage, student loans, auto loans), and it can serve the purpose of building credit; but credit card debt that is accumulated at high interest rates can drag down your finances,” Irwin said.
To that point, there are two ways of attacking debt. First, the “avalanche” payoff strategy is best from a pure financial standpoint. With this strategy, described by Irwin, you pay the highest interest rate loan first and continue to make payments against that loan (minimum payment + extra) until it is paid off.
A second method is the “snowball” payoff strategy, which is best for people who need quick wins.
“With this strategy, you pay the lowest balance loan first and continue to make payments against that loan (minimum payment + extra) until it is paid off,” said Irwin. She said a key benefit is that you’ll likely feel a sense of satisfaction once the debt is paid off, and it’ll motivate you to continue to tackle other debts.
Why you shouldn’t wait until the end of the year
Putting your financial check-in on the back burner could have consequences.
“If you wait until the end of the year to look back on your finances, you’re likely to get overwhelmed and give up,” said Cope. “A financial mid-year check-in is a more digestible opportunity to not only evaluate your current financial situation but look at your future goals as well.”
Read the full article here
The post Why July is an ideal time for a mid-year money check-in appeared first on Budget Busters Hub.