Don't neglect your money goals, advisor advises: 5 steps for a mid-year financial checkup.

• A comprehensive financial assessment includes evaluating your cash flow, debt, savings, retirement accounts, insurance coverage, and estate plan.
• High interest rates can be a challenge and an opportunity.
• Ensure that you make sufficient quarterly estimated tax payments if you are a self-employed or a part-time worker whose income does not have taxes withheld.

As the first half of 2024 has passed, you may reflect on whether you've achieved your financial goals set at the beginning of the year or if you've deviated from the plan.

It is a good time to perform a "financial checkup."

According to certified financial planner Jaime Eckels, a wealth management partner at Plante Moran Financial Advisors in Auburn Hills, Michigan, simply setting a goal and forgetting about it is not an effective strategy.

"Accountability and check-ins are important, but they don't have to be done every two weeks or every month. A mid-year checkup is a great time to revisit everything."

Conducting a financial review entails examining various aspects of your financial situation, such as your cash flow, debt, savings, retirement accounts, insurance coverage, and estate plan.

Here are five steps to take:

Review your cash flow

Track your finances by recording the inflows and outflows from your bank and other financial accounts.

Experts suggest that when reviewing your monthly spending and savings, you should ensure that more money is going into your bank accounts than coming out.

Many Americans struggle to cover their daily or monthly expenses with their paycheck, leading some to resort to using their savings or credit cards to buy groceries. To avoid accumulating debt, it's crucial to pay attention to the unit price of groceries and opt for cash or a debit card when possible at checkout.

Consider cutting back on dining out and discretionary spending for the next month to see if your cash flow improves.

Focus on high interest rates

High interest rates can be a challenge and an opportunity.

It is crucial to pay off high-interest debt, such as credit cards or loans, given that interest rates are currently at 20-year highs, as advised by Terry Rasmussen, president and CEO of Thrivent, a financial services provider based in Minneapolis.

According to Federal Reserve data, credit card holders with an account balance have an average interest rate of about 23%. To improve your credit score and potentially lower the interest rate you may qualify for in the future, consider reducing your credit usage and paying down your debt.

Rasmussen stated that with higher interest rates, high-yield savings, money market accounts, and CDs may offer more potential returns than typical.

According to Bankrate, the average annual percentage yield (APY) for a savings account is 0.58%, while high-yield savings accounts typically offer an average of 4.88%.

Boost emergency and retirement savings

If you have depleted your emergency fund due to unexpected expenses, it's time to reevaluate your savings plan and increase your contributions.

"High-yield savings accounts are offering 4.5% to 5% on cash, according to Eckels, which should make people feel more comfortable keeping cash on hand and using it as an emergency reserve."

To avoid leaving free money on the table, it is crucial to contribute enough to your 401(k) plan or workplace retirement plan to receive the company's matching contribution. The maximum employee contribution to a 401(k) plan in 2023 is $23,000, but if you are 50 or older, you can contribute up to $30,500. Some experts recommend increasing pre-tax retirement contributions for those in higher tax brackets to reduce taxable income.

If you don't have a workplace retirement plan, you can open a traditional or Roth IRA on your own through your bank or brokerage. The maximum IRA contribution for 2024 is $7,000, or $8,000 if you're 50 or older. This year, the contribution limit has increased by $500.

Tackle taxes early

To minimize your tax burden for the year, it's not too early to start taking some actions now. Utilize the IRS website's tax withholding calculator to ensure that the appropriate amount of taxes is being deducted from your paycheck.

To avoid surprises in April 2023, consider increasing your federal withholding by updating your Form W-4, advised David Peters, founder of Peters Financial in Richmond, Virginia. As a certified public accountant and a CFP, Peters emphasized the importance of this step.

If you're self-employed or a part-time worker receiving income that does not have taxes withheld, it's crucial to make adequate quarterly estimated tax payments to avoid penalties. Failing to pay enough estimated tax or paying it late may result in a penalty, even if the IRS owes you a refund.

Protect your assets

When evaluating your financial health, take into account not only your present financial status but also ways to safeguard your assets.

Ensure that your health, life, and disability insurance coverage matches your current requirements and circumstances, while also verifying the coverage limits on your home and auto insurance policies.

Rasmussen advised exploring any discounts or bundling options offered by insurers to minimize insurance costs and enhance benefits.

She emphasized that the main objective is to safeguard your assets, offer sufficient liability insurance, and secure your family's financial future in the event of an unexpected tragedy.

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