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It may seem like it was just a few short weeks ago that you sat down and organized your finances by making goals and creating a workable budget to help you reach them. The reality is that it was probably a half year ago. You know what that means; it’s time for a mid-year financial review!
Your mid-year review doesn’t have to be as involved and extensive as the overhaul you did back when you made that New Year’s resolution six months ago. However, it should help you take a good look at how you’re progressing so you can make any necessary changes to stay headed in the right direction.
Review Your Goals
Consider whether your goals are still accurate. It’s okay to change your goals to new ones before meeting the old. Times change, and people change. The things that were important to you six months ago might not be as important today. Alternatively, other goals may pop up out of necessity and take precedence over your existing goals. Perhaps you’ve been having more car troubles lately, and you think it may be time to start saving for a new car, so one of your current goals needs to be put on the back burner for a while.
Check Your Progress
If you’ve met any of your goals, then it’s time to add a new one. If not, calculate exactly how close you are to achieving them. If you’re on track, that’s great! If not, or you feel like you could do better, look for areas where you could save more by making changes in your budget or adjusting other goals.
If you don’t have room to make these adjustments, it may be time to consider other ways to increase your income, such as getting a side job or selling some of the things you don’t use anymore. Summer is prime yard sale season, so it’s an opportune time to de-clutter and sell things. The extra cash may help you get back on track.
Analyze Your Budget
Evaluate the progress you’ve made toward sticking to a budget. The goal of a budget is to keep your spending in check; it shouldn’t be designed to pinch every penny. Your budget needs to contain some wiggle room for entertainment and other things that bring you joy. All work and no play doesn’t make Jack a dull boy; it makes him an extremely stressed out boy! Fun is important, and if you don’t allow yourself a little fun and relaxation, you’ll never stick to your budget.
In the last six months, perhaps unexpected expenses threw you off track, and you used your emergency fund to cover them. Consider adjusting how much you’re putting aside for emergencies to ensure it’s enough. The ideal emergency fund is six months’ worth of salary, but having enough to cover things such as unexpected car repairs or a few days of unpaid sick time is a good start.
Celebrate any Goals Achieved
You should reward yourself for your accomplishments, even small ones! Of course, keep your rewards within reason, as you wouldn’t want to take a step back.
If you haven’t met any goals and gone off the track, don’t be discouraged. It takes a lot of determination and self-discipline to stick to a budget and meet your financial goals. Instead, think of ways to encourage yourself. Put up visual reminders of your goals, such as sticking photos of those goals to your fridge. Put a reminder app on your phone to remember why you’re saving.
Short-term goals are another way to stay on track. If you have a high balance on a credit card that you’re trying to pay off, figure out how much you could realistically pay off by the end of the year and focus on that.
Look at how things have changed for you over the last six months. Changes in your home situation such as having a baby or moving to a more expensive apartment can add to your debt, whereas getting a raise or a higher-paying job or moving into a cheaper apartment will bring in more money. Use these changes to adjust your budget to keep moving forward.
Tweak Your Finances
Six months in, you shouldn’t have to make drastic changes to your finances. A little tweaking of your goals and/or budget will usually do the trick.
Performing a mid-year financial review serves two purposes. First, it shows you where you may be going off the track so you can be where you want to be by the end of the year. You can make changes to get back on the rails.
Secondly, a mid-year financial review shows you that you can meet your goals and keep moving in the right direction, closer to being financially secure.
You’ve got this!