Six months is enough time for a lot to change. Your income, your expenses, your goals, and even the broader economy may look different than they did at the start of the year. And a plan that made sense in January might not fit the reality you're living in now.
A mid-year financial review gives you a chance to check your progress and make adjustments before the second half gets away from you. Here are a few key areas worth reviewing.
Revisit Your Goals
You started this year with intentions. Maybe you wanted to max out your retirement contributions, build up your emergency fund, or knock out a chunk of debt. Whatever those goals looked like in January, mid-year is a good time to see where things actually stand.
Read more: What to Watch This Earnings Season
Are you still making decisions that align with your goals this year? Or do you need to reevaluate your spending and saving habits to better support them? At mid-year, you still have time to course correct or refocus your efforts if needed.
Alternatively, you may find that you’re farther along than expected. If so, acknowledge and celebrate your progress, as you think about what comes next. For example, if you paid off your car loan earlier this year, how are you repurposing that freed-up cash flow each month? Redirecting it into savings or investments could help accelerate progress towards your other goals.
It's also fair to ask whether your goals themselves still fit. Maybe you welcomed a new grandchild, received a promotion, or relocated to a new city. If that’s the case, consider whether your original goals still reflect what matters most to you today.
Check in on Your Portfolio
While making impulsive or emotionally driven investment decisions can be damaging, that doesn’t mean your portfolio should be left unchecked. In fact, reviewing your portfolio throughout the year is an effective way to make sure your investments remain aligned with your long-term strategy.
For example, if your target allocation is 60% equities and 40% bonds, market performance during the first half of the year may have shifted that balance.
As certain investments outperform and others lag, your portfolio can gradually drift away from its intended structure. Over time, this may expose you to more risk than you originally planned.
A mid-year check-in can help you determine whether rebalancing is appropriate. Doing so would, ideally, bring your portfolio back in line with your goals and risk tolerance.
This is also a good time to revisit how your portfolio aligns with your broader financial plan. If anything’s changed in your life that could impact your time horizon or comfort with risk, an update to your portfolio might be needed.
Review Taxes
Use the information from your most recent tax return to consider what your tax obligations may look like this year, and what you could expect to pay next April.
Are there any changes on the horizon that could impact your tax situation?
For example, you may be planning to exercise or sell company stock, sell a business, or begin taking retirement distributions. Each of these decisions can have meaningful tax implications.
If you anticipate a change in your taxable income this year, now is the time to plan ahead. You may need to adjust or increase estimated tax payments. You could also explore strategies to help reduce your tax liability, such as increasing retirement contributions or making charitable donations.
Major life events can also play a role. Marriage, divorce, the arrival of a child, or a move to a new state can all affect your tax picture and may require updates to your withholding.
Addressing these factors mid-year is a simple way to avoid surprises and create more flexibility in your overall plan.
Evaluate Insurance Policies
It’s important to periodically review your insurance coverage and determine if it still aligns with your needs. A mid-year check-in can help you identify potential gaps in coverage or areas where you may be paying more than necessary in premiums.
Certain policies, such as health and group disability insurance, may only be adjusted during your employer’s open enrollment period. However, other types of coverage can be reviewed and potentially updated throughout the year. This includes:
-
Liability insurance
-
Long-term care insurance
-
Home insurance
-
Auto insurance
If you have life insurance, you may not be able to change an existing policy, but you can evaluate whether additional coverage makes sense. “Laddering” term life insurance policies, for example, involves holding multiple policies with different time horizons, helping you align coverage with changing financial responsibilities while potentially locking in lower premiums earlier in life.
Use Mid-Year to Keep Moving Forward
A mid-year financial review doesn’t need to be overly complex to be effective. Use it as your opportunity to reconnect with your goals and make sure your financial decisions are still moving you in the right direction.
As you check in on your financial picture, a financial advisor and tax professional can help answer questions and provide tailored guidance for making the most of the months ahead.
John J. Diak, CFP® is the Principal & Client Wealth Manager at Oatley & Diak, LLC in Parker, Colorado. He assists clients through many difficult lifestyle changes such as business downturns, retirement planning, divorce, the death of a spouse, and family estate issues among others. Oatley & Diak, LLC is a family-run registered investment advisory (RIA) firm that provides clients with investment management and financial planning services in a hands-on, intimate environment. Learn more about them at oatleydiak.com.
This material has been prepared in collaboration with Crystal Marketing Solutions, LLC, and has been edited with the assistance of artificial intelligence tools. The information presented is based on sources believed to be reliable and accurate at the time of publication. This material is for educational purposes only and does not necessarily reflect the views of the author, presenter, or affiliated organizations. It should not be construed as investment, tax, legal, or other professional advice. Always consult a qualified professional regarding your specific situation before making any decisions.
A message from Advisor Perspectives and VettaFi: Discover something new! Click here to register for our upcoming webcasts.
Read more commentaries by Oatley & Diak
