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Summer House Cleaning: 9 Financial Items to Address
The days are long, the weather is perfect, and the year is already half over. In short, summer is truly my favorite time of the year. I love the picturesque sunsets, the summer breeze, and everything about my happy place, the Jersey Shore. That said, summer to me is also a great time to do a summer check-in with your finances. To me, there is something calming about doing so in the summer, plus with half the year in the rearview, and the other half ahead of us what better time to take stock of your finances?
Here is my handy dandy summer checklist.
- Check your 401(k) savings rate– Are you saving enough in your 401(k) to max out? Or have you left it from the previous year, and you are going to fall short of hitting the max due to laziness? Additionally, if not maxing out are you at the very least contributing the amount your employer will match on? These are all great things to adjust with half the year to go.
- Cash cash cash– Are your extra emergency funds sitting in your bank savings account earning .1%? There are so many great online options today paying 4% or more on your cash. If you aren’t taking advantage of this “free money” then time to clean it up, folks.
- Increase in savings– At this juncture in the year, most of us have received our annual raises. The question inevitably is what are you doing with it? Don’t let lifestyle creep get the better of you, and instead, make sure when you get that raise you’ve increased some savings for your financial health. Remember a little bit can go a long way.
- Debt assessment– Have you let your finances slip a little and perhaps are accumulating some of that nasty credit card debt? If so, let this halfway juncture serve as a wake-up call. No time like the present to right that ship and start crafting a plan to be credit card debt free by year-end.
- Time to tax plan– With CPAs finally, and slowly, climbing out of the tax crunch now is a great time to do some tax planning. Are you withholding too much or too little? Missing key tax strategies? Are there certain things you should be doing to optimize your tax situation for this and next year? All good questions to raise with your CPA (or ours if you use Diversified Tax).
- Health Savings Accounts– Please make sure you are maximizing them if you can. Triple tax savings is all I have to say, perhaps nothing better out there.
- Investment check-in– Now is a good time to check to make sure you are investing appropriately with your risk tolerance. Are your dollars doing what you would expect given risk tolerance and current equity/fixed-income markets?
- Insurance review– We often neglect to review our insurance coverages on a regular basis. What better time than summer to meet with your insurance professionals? Review those homeowners and car insurances. Are you paying too much? Are you properly covered if tragedy strikes? Have an umbrella policy? All things are to be reviewed during your insurance audit. I’d also give a look at your life insurance and disability, simply to make sure you aren’t exposed in a way you don’t want.
- Budgeting– Most people consider budgeting a 4-letter word. That said, with life slowing down a little in summer what a great time to print out those statements and spreadsheets. Sit by the pool with a nice Arnold Palmer, or hard seltzer, and take stock of where your money is going. Do you have the appropriate amount going to the appropriate categories for your financial goals? This can be a fun and therapeutic exercise that will go a long way to assuring your financial success.
Now, of course, this stuff doesn’t need to be done in the summer. However, a regular check-in on these categories (and many more like financial modeling) is always a healthy exercise. No different than not letting your health get out of control, with a little effort you can do some self-assessing on your finances and make sure you stop a bad trend before it turns ugly.
Don’t forget we are always here to help and live to do so.
Stay wealthy, healthy, and happy.