The past couple of years have been financially turbulent for many people as a result of the COVID-19 pandemic. But for some, things are finally looking up. The unemployment rate has decreased, many businesses are operating again, and life may be feeling more normal. All of this means it’s a great time for you to give yourself a mid-year financial checkup.
A mid-year financial checkup is exactly what it sounds like -- now that 2021 is half over, it’s time to take a closer look at your financial situation. Pay attention to your goals that you’re working on and see how far you’ve come. Figure out what needs to change, heading into the second half of the year. And start thinking about your plans for 2022, and what actions you can start taking now to help you get there.
Here are four suggestions for your mid-year financial checkup.
If you’re like many Americans, you likely have a budget -- a Debt.com annual survey stated that more people are budgeting than ever before. You may have made your budget at the beginning of the year as one of your 2021 financial resolutions. But six months later, there’s a good chance your budgetary needs may have changed.
Life here in the U.S. looks a lot different than it did back in January, at the peak of the pandemic. Maybe you were unemployed then, or faced other employment changes. But now you may be working again. Or, maybe you remained employed. But you were working from home full time. Now, you may be back in the office on a daily basis.
Your work situation isn’t likely to be the only thing that may have changed from a financial standpoint. The ways you’re spending -- or plan to spend -- your money are probably different than they were six months ago. For example, if you were working from home for the past year, you may not have needed to pay for childcare. If you’re back in the office, this could be an additional expense you’ll want to add to the budget.
When you’re in a financial pinch -- as many people have been as a result of the pandemic -- it can be hard to think about saving for the future. For so many, the most pressing goal is getting by in day-to-day life, which is understandable. If you’re feeling more financially secure than you were at the beginning of the year, be sure you check in on your contributions to any retirement accounts you have.
Remember: the more you save for retirement, and the earlier you save it, the more your money is able to grow. That means it can help you down the line in retirement when you really need it. So, if possible, try to maximize your yearly contributions in order to maximize your potential savings.
Different types of retirement accounts have different contribution limits. You can contribute a total of $6,000 per year to any IRA accounts you hold, or $7,000 per year if you’re age 50 or older. 401(k)s, on the other hand, have an annual contribution limit of $19,500. Plus, many employer-sponsored retirement programs have a contribution-matching aspect, so try to take advantage of that, if you can.
Learn more about retirement account contribution limits from the IRS.
The middle of the year is a great time to review your insurance coverage. Health insurance, for example, is normally purchased at the end of the calendar year in preparation for the year ahead. Which means that it’s almost time to start thinking about whether you want to renew your current policy or look for something else.
This is even more true if you had an employment change or other life change in the past year that impacted your health insurance options. As 2022 approaches, be thinking about what you liked and disliked about your current plan.
The same applies to any other types of insurance policies you hold, though the policy periods may not line up as neatly with the beginning of the year. While car insurance policies are usually for six months at a time, you can always reshop your rates at any time throughout the year in the hopes of finding the best policy for a better price.
Just like with your retirement account, sometimes setting aside money in savings isn’t easy to do. But the unpredictable nature of the past couple of years has only proven the importance of having a financial safety net in the form of an emergency fund. Or, a “peace of mind” account, as we like to call it.
If you haven’t started an emergency fund, or you haven’t been contributing to it regularly, that’s okay. No contribution is too small, and it’s never too late to start.
But the best time to start is today. That’s the great thing about looking at your emergency fund now, during your mid-year financial checkup instead of waiting until the beginning of 2022 -- anything you start contributing today can only help you get ahead in the future.
Though 2020 and 2021 haven’t been easy, Academy Bank wants you to know that we’re by your side through it all. We’re committed to helping our clients on their journey to financial health.