Midyear Checkup: 8 Steps to Finish 2015 Fiscally Fit

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Mid-Year Money Checkup

By Angela Colley

We're halfway through the year. Are you halfway through your financial New Year's resolutions? Many of us think we are, but quick checks prove we may have some catching up to do if we want to meet our financial goals by the end of the year.

Follow these eight easy steps for your midyear financial checkup:

1. Review your goals. Your money should always be working toward something. If you set a financial goal at the beginning of the year, now is the time to check on your progress. For example, if your goal was adding $1,800 to your savings account this year, you should already be $900 toward your goal. If not, plan how to catch up.

If you don't have a goal, make one. Besides adding to savings, you may want to add to your emergency fund, pay down debt, or make a down payment on a house. Once you have a goal, start tracking it. A pencil (with eraser) and paper may do, but online tools are available, too. For example, PowerWallet, available through the Money Talks News Solutions Center, is an advanced, easy-to-use tool for organizing and viewing all of your financial accounts in one secure place where you may set budgets, monitor spending and achieve your financial goals.

2. Check on your investments. Pull your recent statements and check up on your investments. Do you have a good mix of stocks, bonds and cash savings? What's up -- or down?

The right mix for you depends on your age, investment plans and risk tolerance. Money Talks News financial expert Stacy Johnson offers this general guideline:

To decide how much to put in loaner investments (the bank) and how much to put in owner investments (stocks or real estate) here's your rule of thumb: Subtract your age from 100 and that's the percentage you might want to put in stocks. So if you're 25 years old, you'd take 25 from 100 and put that amount, 75 percent, of your long-term savings into stocks. If you're 75 years old, you'd only take that kind of risk with 25 percent of your savings.

If your investment portfolio could use an upgrade, there are ways to invest even without much money -- like mutual funds. You no longer need $1,000 upfront to get in: Many funds will let you invest with an initial $250 and payments as low as $50 a month. Morning Star (MORN) has a mutual fund selector to help you find one. The Money Talks New Solutions Center has the top online brokerages, many offering low trade fees or introductory free trades.

And don't forget to check on your savings account. Are you getting the best rates available from your bank? You can compare rates in the savings section of our Solutions Center. Also, consider whether a credit union is right for you.

3. Check on your retirement plan. If you have a company-sponsored 401(k) plan, make sure you're enrolled and contributing enough to get the full company match. If you're not, ask your human resources department how to bump up your investment.

Don't have a company 401(k) plan or want to save more for retirement? Then consider an Individual Retirement Account. If you're younger than 70, you can contribute to a traditional IRA. To qualify for a tax deduction, you'll have to stay within the IRS limits.

The tax rules get a bit complicated, but the IRS has listed all of them in Publication 590, Individual Retirement Arrangements. Still confused? Check out our story on IRAs and 401(k)s.

4. Update your tax profile. If you've gotten married or divorced, had a child, changed jobs, or suffered a pay cut, your tax withholdings could be inaccurate and you could be paying too much. As my dad always says, "Taking too much out of your paycheck is like giving the government an interest-free loan."

To calculate a new withholding, use the IRS Withholding Calculator. You'll need:
  • A recent pay stub showing taxes withheld to date
  • The amount withheld (or expected to be withheld) for your FSA account
  • The estimated amount you'll make this year
If you find you can save by adjusting your exemptions, ask your employer for a new W-4 form and fill it out to adjust the withdrawal.

5. Pull your credit history. Visit AnnualCreditReport.com, get a free copy of your credit report and do a midyear checkup on your credit history. There are lots of ways to increase your credit score, starting with your free credit report:

Check all three reports for errors. If you find any, dispute them with the credit bureaus.

Pay down your debts. Aim to get your balances below 30 percent of your available credit limit (or paid off entirely).

Pay any past-due accounts and keep them current -- it's 35 percent of your score.

6. Check on your FSA. Do a quick review of your Flexible Spending Account. Find out how much you've contributed this year and tally up how much you've spent so far.

Since we're six months into the year, you should be halfway through your FSA account by now. If you're not, stock up or make a plan to get through that money by Dec. 31. Your grace period or carry-over options are limited. Here are a few FSA spending ideas:
  • Teeth cleaning
  • Annual physical exams
  • Prescription glasses and contact lenses
  • Prescription medicines
  • Over-the-counter medicines
  • Medical equipment like blood pressure monitors, first-aid kits and braces
7. Track your recent spending. I may be alone in this, but I'm at my financial best in the beginning of the year. It's after New Year's Eve, I've made my money resolutions, and I'm watching every dime I spend. A few months into the year, I start to slip. I've forgotten all the plans I made — and I'm back to my old habits.

To get myself focused, I track my expenses for 30 days around June or July. Every dime I spend (including cash purchases) is tracked by category. Then I go through and see where my money leaks are. Recently, it was dining out. I was $130 over my restaurant budget one month. But once I saw it in black and white, I could stop overspending and plug the leak.

8. Update your budget. If you created a budget at the beginning of the year (or several years ago), it may need some fine-tuning. For example, I realized I overestimated my monthly grocery bills by about $75. Now that I know, I can reallocate that $75 to my savings goals.

After you track your spending, add up the categories and compare them to your budget. Adjust your budget for any overages and put that money to better use — like padding your savings or paying down debt.

So how is your money doing? Are you on track to make your financial goals this year? Sound off in our Forums. It's the place where you can speak your mind, explore topics in-depth and, most important, post questions and get answers.

Jim Gold contributed to this article.
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