Millennial Money: 4 Items for Your Mid-Year Checklist

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NEW YORK (AP) — A lot can happen in six months. That’s why, as we close out the first half of the year, it makes sense to check in on your financial life.

“With inflation, I think people are being hit harder this year than they probably have been in the many years leading up to this point,” says Jason Dall’Acqua, Certified Financial Planner and Founder of Crest Wealth Advisors in Annapolis, Maryland. “So it’s a good time to see how things have gone…as well as to plan what lies ahead for the rest of the year.”

So where to start ? Add these four items to your mid-year financial checklist.

1. REVIEW YOUR INCOME, EXPENSES AND GOALS

You don’t have to account for every penny you’ve earned and spent over the past six months. But taking a few minutes to check out a bank or a budget app can help you better understand your finances and make course corrections if needed.

“Right now with inflation, even if you had a budget in January, it’s probably not the same as today. There are things that are going to have to change. So it’s about just resetting and figuring out where you are today versus where you thought you were going to be today,” says Kayla Welte, CFP at District Capital Management who lives in Denver.

Look for opportunities to reduce your expenses if you’ve spent more than you planned. For example, you can dine out less or cancel subscription services you rarely use. “Any overspending you’ve made, you may need to cut back to account for that higher cost of things you absolutely have to buy,” Welte says.

If you set any financial resolutions or other financial goals earlier this year, check those as well. Have you saved as much as you planned for retirement or an emergency fund? Are you on track to pay off your debts?

2. SETTLEMENT DEBT

Debt is becoming more and more expensive to bear due to rising interest rates. Pay off your debts earlier, especially those with variable interest rates, to save money. These debts can include credit cards, personal loans or adjustable rate mortgages.

Focus on reducing your debt to the highest rate first, then move on to the next one. Dall’Acqua also proposes to switch from variable rate options to fixed rate options by refinancing, if possible. “If you can lock in the fixed rate now, you’ll likely save a lot on interest charges over time,” he says.

Be aware of forbearance loan end dates. For example, federal student loan repayments will resume on September 1, unless otherwise extended.

“At this point, they’ve been on hiatus for almost two years,” says Dall’Acqua. “So if that money has been lost in (people’s) overall spending, it will be a big shock when they then have to start paying again.”

Putting money aside now in a separate savings fund can help cushion the blow.

3. PLAN HOLIDAY SHOPPING

Inflation could make holiday gifts a bit more expensive this year. Create a shopping list and think about how much you can afford to spend. “Find out what it would take to start saving on a weekly or monthly basis and start putting that money aside now,” says Dall’Acqua.

Starting to shop early can also help you manage costs without going into debt. Many retailers run major sales in the summer, so you’ll find discounts long before Black Friday. Amazon’s Prime Day is coming in July. The same goes for the Nordstrom Anniversary Sale.

4. REVIEW YOUR TAXES AND BENEFITS

Welte recommends using an online tax calculator to check if you are withholding too much or too little. This can help you avoid unexpectedly ending up with a big tax bill or missing out on the extra money you might need now.

“If you do the math and you’re going to get a $6,000 tax refund, now would be a great time to change your W-4s, get more money in your pocket now to pay those excess costs that come with the inflation, rather than waiting until next April to get that refund,” says Welte.

If you need to make adjustments, fill out a new W-4 form (you can find it on the IRS website) and submit it to your employer.

While you’re at it, evaluate your benefits selections. These benefits can include health insurance, life insurance, health savings accounts, and flexible spending accounts, as well as perks like gym memberships.

Reviewing your choices in the summer can save you from being overwhelmed in October and November, when open registrations begin for most businesses, says Joe Bautista, CFP in Lake Oswego, Oregon.

The goal is to ensure that you choose the most cost-effective options that meet your needs. For example, “a PPO has higher premiums but lower cost if you tend to use health care, lower deductibles, and copayments generally. But if someone doesn’t use that health care, then he can overspend,” says Bautista.

Don’t worry about everything being perfect right now. As Bautista says, “Financial planning is dynamic, not static.” Periodically check your financial plans and update them as needed.

This column was provided to The Associated Press by personal finance website NerdWallet. Lauren Schwahn is a writer at NerdWallet. Email: [email protected] Twitter: @lauren_schwahn.