Sunny, warm, welcoming – this is the time of year when many of us take the opportunity to relax and reenergize. Being midyear, it's also the perfect opportunity to reflect on the previous six months and look forward to the six still to come. That includes a midyear financial check-in.
Whether or not you kicked off the year by setting financial goals, it's wise to evaluate where you stand financially at the midway point, yet many people avoid this incredibly important and beneficial activity because they're fearful of what they'll see, they hope to steer clear of an undesirable truth, or they feel shame or guilt about a perceived failure.
It's not that different than when we set health or fitness goals, then avoid the gym or the scale because we know we've strayed from the plan. When it comes to finances, avoidance can be especially appealing in the summer months, when it's common to overspend. But short-term slips don't preclude long-term progress, and a midyear financial check-in isn't a verdict on success or failure.
Instead, it should be viewed as an opportunity to evaluate and adjust while there's still plenty of time to get back on track.
Why Summertime Is the Right Time
People often look at the end and beginning of the year as the obvious times to assess how they did with their financial goals, then set new ones for the next twelve months. However, evaluating your progress midyear offers a meaningful advantage in that it's neither the beginning nor the end. It has the benefit of providing six full months of numbers, habits, and trends to review, while also giving you another six full months to make impactful adjustments.
There's just enough roadway behind you to offer a true picture of where you've been and what you've been doing, and more than enough runway ahead to take action and change course as needed.
Evaluate Life Changes, Not Just Financial Success
Life changes quickly. It's a simple fact, but one that often gets lost in any discussion about a midyear check-in. While it's true that you want to evaluate how you're progressing in key financial areas, it's not the only reason to review your financial situation. Over the course of the first six months, your life may have changed considerably, including:
- A job change for you or a spouse
- Your relationship status – maybe you got engaged or divorced
- A family member developing a health condition
- A child deciding to go to college
The way your life looked in January helped shape any annual goals you set and likely aligned with your current financial plan. Summer is a good time to account for any changes within your plan and recalibrate it for the last half of the year. Remember: Having to adjust isn't failure. It's how good plans stay good.
Five Areas to Review
Ultimately, a midyear review doesn't have to be a deep dive into the nuances of your financials to be worthwhile. It can simply be a review of key areas to assess where you stand, gauge progress against your goals, and identify changes, gaps, or weaknesses that need to be addressed.
In addition to evaluating any life changes, here are five areas to review during a midyear financial check:
- Cash Flow: Lifestyle creep is real and not always obvious. Often it compounds over time, with small, innocent splurges turning into regular spending habits. The question isn't whether you're overspending, but whether your cash flow picture still matches the assumptions your plan was built on.
- Savings Rate and Contribution Levels: Have you been able to set aside money at the rate you intended to? If your income has grown since January, did your savings rate grow with it? If you have improved your cash flow or you've been overspending, this is a natural place for that money to go.
- Retirement Contributions: Most people set a contribution level and forget it. This is the moment to ask whether you're maximizing what's available to you — 401(k), HSA, backdoor Roth if applicable — and whether you can increase contributions or need to dial them down. If you turned 50 in the first half of the year, catch-up contributions should be considered.
- Debt: Where does it stand compared to the start of the year? Is your high-interest debt actively being reduced? If it's gone up, is it because of an emergency need, or is it tied to splurges or overspending?
- Investment Alignment: Markets are constantly moving, and this year has seen some volatility. Has your portfolio drifted from its target allocation and requires rebalancing? If you haven't revisited your risk tolerance in a while, it's worth ensuring it still reflects where you are now.
The Opportunity Is What Matters Most
Midyear reviews are both best practice and one of the top money habits experts point to. They're also a great way to remain actively engaged in your financial planning.
Understandably, check-ins can feel like a double-edged sword. On the one hand, they are meant to encourage accountability and keep us honest heading into the second half of the year. It's this sense of reckoning that causes many people to avoid them. But it's also an opportunity to make impactful changes while there's plenty of time to adjust course.
Most people can conduct a basic midyear review to gain insight into how they're doing financially and how much progress they've made against their goals. However, that assessment becomes more difficult if there's no plan to measure against or you have complex financials. That's where the expertise of a seasoned financial advisor can be valuable.
If you'd like guidance with your mid-year check-in, we're here to help. Schedule time to speak with our team.