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It’s hard to believe it’s already been six months since you made those lofty money-related New Year’s resolutions. With 2015 half over, it’s a good time to check back in on your finances to make sure they’re on track and to prevent any big surprises or problems through years’ end.
“There’s a lot of weddings and vacations that happen in the summer time,” says Joe Franklin, a certified financial planner in Hixson, Tenn. “But, of course, you want to make sure you’re still putting away enough money and progressing toward your financial goals at a decent pace.”
Here are five areas worth trouble-shooting:
- Your savings. Financial advisors recommend having between three and six months’ savings set aside in a liquid emergency account you can access quickly to take care of unexpected bills or to tide you over if you lost your job. Personal finance site HelloWallet has this handy calculator to help figure out exactly how much of an emergency fund you need based on your income, family situation, and other factors. Once your emergency account is fully funded, it’s time to focus on retirement savings. At a minimum, you should be putting away enough money to get any available employer match, but you should aim to increase that amount to at least 10 percent of your income in order to secure a comfortable retirement.
- Your investments. It’s easy to just “set and forget” your portfolio, but unless you’re in target-date fund or some other investment that automatically adjusts for the markets and your time horizon, you need to periodically check in and manage those investments yourself. “The first questions to ask is whether your portfolio is broadly diversified enough and if it’s doing what you expect it to do,” says Diahann Lassus, a CPA and certified financial planner with Lassus Wherley. “If the answer is ‘yes,’ then you want to look at your original allocation target and make sure you are still in alignment.”If not, you may want to consider rebalancing.
- Your flex spending accounts. If you get benefits at work, you’re likely putting money into flexible spending accounts that reimburse you for costs like healthcare, childcare, and commuting. Send in your receipts now for expenses incurred during the first half of the year. Unused money in a flexible spending account may get forfeited, so if you’re not close to halfway through the money you’ve set aside, look for ways to ramp up qualified spending, such as purchasing new prescription eye glasses or scheduling that dental work you’ve been putting off. (Note, if you’ve got a health savings account, or HSA, rather than an FSA, you’re funds roll over every year, so there’s no need to rush to spend those funds.)
- Your mortgage. Mortgage interest rates are still at historically low levels (although they’re headed up), and as real estate market continues to rebound, folks who were previously unable to refinance may now qualify. “Take another look at the value of your home to see if you have more equity now,” says Kelley Long, a certified financial planner with Financial Finesse.Refinancing makes sense if you can shave at least a point off of your current rate, and you’re planning on staying in your home for the next five years or more. If you are going to refi, move quickly, because rates are expected to continue marching upward.
- Your credit. You should be checking your credit reports annually to look for inaccuracies or signs of identity theft. Visit annualcreditreport.com to get the three big ones for free. If your credit score is low, focus on using less credit and paying down your loans so that you can boost that number.
