Your Midyear Financial Checkup

Rafaela Gittens is a consultant in planning excellence at Northwestern Mutual.

Just like getting a regular exam with your health care provider, conducting a financial checkup is a great way to take stock of your fiscal health. It's a chance to celebrate your wins and catch potential red flags before any major damage is done. While you should make time to routinely get a pulse on maintenance habits, such as tracking your budget and checking your credit report, there are other activities that only need to be done periodically.

As we head into the second half of the year, here are six manageable tasks you can tackle—one per month for the rest of 2024—to help you keep your goals on track.

Your Midyear Financial Checkup

July: Check in on your retirement savings

Independence Day is a great time to celebrate—and to review your retirement accounts. After all, what’s better than having the financial independence to do what you want in retirement?

Retirement might seem like a distant dream, but that doesn’t mean you shouldn’t be actively addressing your savings needs now. Saving regularly is a good habit to start early, and it doesn’t have to be intimidating. You can start small by investing a set percentage of your salary in your retirement account each month. As your income grows, you can consider increasing your savings a commensurate amount.

To help you stay on course, it’s a great idea to consult with your financial advisor who can look at your entire financial picture and take inventory of where you are currently and where you want to be. Working with a financial advisor can help you create a personalized financial plan so you can reach your short-term and long-term goals.    

August: Make a plan to reduce your debt

Many of us are burdened by debt, and when you have several competing priorities, it can be hard to know which one to tackle first. But formulating an approach to address the situation will help you feel more in control.

The first step is to create a list of all your debt: the name of the lender, interest rate, total amount due and minimum monthly payment. Because we tend to look at things in silos, having a complete picture makes it easier to put together a strategy for paying it off.

When deciding how to prioritize paying off your debts,  there are various strategies you can choose. You can start with the smallest ones—to get them off the books and enjoy the win. Another strategy is to tackle the ones with the highest interest rate, as this will save the most money over time. You’ll want to continue to pay the minimum on all your debts, and then make additional, larger payments—as much as your budget allows—on the highest interest rate one until it’s gone, then move on to the second highest one, and so forth.

Wondering how to avoid accumulating additional debt? Creating an emergency fund and stashing it in a high yield savings account—can help prevent you from reaching for that credit card and running up the tab when an unexpected expense arises.

September: Confirm you have adequate insurance

September is Life Insurance Awareness Month, which is a timely reminder to verify your family is protected should something happen to you. When deciding what type of life insurance to buy, the sheer variety of options can be confusing. Your financial planner can help you determine the right amount and type you need—for instance, deciding between term or permanent life insurance. They will take into account your individual situation and use an insurance needs calculator to determine the optimal level of protection for your family.

Another type of insurance coverage that’s easy to overlook is disability insurance. In fact, many people assume they’re covered because most employers offer a short-term policy; however, these typically have limitations. Many of these plans are designed to cover six weeks and just part of your salary. So if you’re injured for a lengthy time or want to take an extended maternity leave, it’s likely you wouldn’t be adequately covered.

A long-term disability policy is designed to cover an extended period of time and often replace a higher percentage of income. As you compare policies, look at nuances such as coverage amounts and the length of the “elimination period,” which is the time between when you experience the event and when insurance kicks in.

October: Assess your estate plan or will

Making a will or estate planning is easy to put off—you might not think you have sufficient resources to need one or you might be uncomfortable confronting your own mortality. But if you don’t have a will in place, your estate will go through probate, and the state courts will decide how to distribute your belongings, which is  costly for your heirs.

Having an estate plan can help ensure your assets are passed on according to your wishes and in a tax-efficient manner. It includes documents such as your will or trust, beneficiary forms, advanced health care directive and power of attorney. One component that’s easy to overlook is the living will, which is crucial, and goes into effect if you’re incapacitated and can’t make your own decisions.

If you already have an estate plan, it’s wise to revisit it every two to three years—you want to make sure it still complies with your wishes and that all the account information is up to date. It’s especially important to verify the particulars whenever your family situation changes, such as with a birth, marriage, death or divorce, all of which can affect your designated beneficiaries.

November: Prepare for open enrollment

Open enrollment season, when you select your health care plan and other benefits for the upcoming year, kicks off at most employers in November. If you have been happy with your plan, you might be tempted to skip the research, but that could be a mistake as shifts happen constantly—from plans changing their list of preferred providers to employers altering how much of the premium they will pay. It’s a good idea to attend your company’s general information session to hear about updated options for the upcoming year, review price changes in cost and verify your preferred providers are still covered.

One substantial benefit to keep in mind is a health savings account (HSA) with a high-deductible health plan (HDHP). These health plans typically have a lower monthly premium and a higher deductible.  However, with these plans you can sign up for a HSA, and contribute pretax dollars to this account, and use the funds to help pay health care costs for that year as well as for future years. Because these plans are portable, you retain ownership even if you change employers. Some employers even make contributions on your behalf, similar to a 401(k) match.

December: Wrap up the year and create financial resolutions for 2025

The end of the year offers the ideal opportunity to reflect and also look ahead. You want to review and celebrate your accomplishments, then create goals and start laying the groundwork for the year ahead. For example, check to see if you maximized your retirement contribution, at least up to your company match, if offered. If not, make adjustments to get there, perhaps increasing it by a percentage or two.

Because your contributions are pre-tax, your paycheck won’t feel like it’s that much less, but you will reap significant benefits as these small amounts accumulate and grow over time. And to keep your resolve up, make savings automatic by directing a portion of your paycheck right to a high-yield savings account or another savings vehicle.

This is also a good time to visit a financial planner to talk about ongoing strategies to maximize your future retirement, such as contributing to a Roth IRA, which is funded with post-tax dollars. Down the road, that can be another source of income that can help reduce your taxes in retirement. And if you’re age 50 or over, you’re eligible to contribute additional money to your employer sponsored retirement plan in what’s called a “catch-up” contribution. Your financial planner can help you maximize the options available to you.  

If you’re feeling overwhelmed with holiday expenses, vow to avoid that situation next year by establishing a gift fund you can contribute to all year. Taking the time to figure out a savings plan for the upcoming year means you’ll be in a much better position when next December rolls around.