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How to Conduct a Mid-Year Financial Checkup (and Why You Should)

June 29, 2021

Staying on top of your personal finances—during a pandemic, no less—can be stressful. A mid-year financial checkup can help ensure you’re on the right track.

Why You Should Check in on Your Finances

Many people think the end of the year is the best time to conduct a financial review, but that’s not necessarily true. In fact, waiting a whole year in between financial check-ins doesn’t make much sense—especially in a year like this one. Between stimulus payments, a quickly changing economic landscape, and an itch to overspend, there are a lot of factors that can impact your money over the next six months.

10 Ideas for Your 2021 Mid-Year Financial Checkup

1. Redo your budget.

Your budget should be a top priority for any financial checkup. Depending on how you’ve fared over the past year, you may need to create an “essentials only” budget—one where every spare dime gets immediately moved from your checking account to your savings account—to get yourself back on track. If you’ve managed to save over the last few months, your budget might include line items for travel or entertainment.

Regardless, all budgets begin with taking an inventory of your living expenses and income, then seeing what expenses you can reasonably cut. From there, you can get a clear idea of what you need to save and what you can afford to spend for the rest of the year.

2. Review your credit report.

Checking in with your credit report helps you make sure you’re in good shape should you need to apply for new credit. But even if you’re not actively looking to borrow money, checking your credit report lets you make sure you’re not a victim of identity theft or fraud. It’s also the first step in correcting any inaccurate information.

3. Review your unemployment benefits.

The American Rescue Plan Act of 2021 (ARP), which was signed into law in March of this year, extends and expands many of the unemployment benefits that were part of previous pandemic-relief bills until September 6, 2021. If you are unemployed, see if any of the extended benefits apply to you. And check on your state’s expiration information, as many states have decided to extend their benefits. Knowing what options are available to you will help you maximize your benefits.

4. Consider a new job.

Jobs are rebounding throughout the nation, and both remote and contract work is becoming much more common. There may be new, more lucrative opportunities just waiting for you to apply. As part of your mid-year financial checkup, consider updating your resume and building up your online presence to attract employers. Even if you aren’t actively looking for new work, getting a job offer elsewhere can be a good negotiation tool for a raise.

5. Renegotiate your lease.

If you feel stressed about making rent again this month, you’re not alone. Although the economy is slowly bouncing back, many Americans are still struggling to pay their rent on time. While this is not an ideal situation for renters or landlords, there may be an opportunity to renegotiate the terms of your lease.

Start by looking at listings similar to your place online. Some markets have seen a drop in rental rates, so your landlord may consider offering you a rent reduction in exchange for extending your lease. This could alleviate their stress as well, as they won’t have to advertise and find a new tenant. Before you commit, make sure you know what you can reasonably afford to pay. Once you have your numbers, talk to your landlord. Many people report having a better experience when the meeting is face-to-face (even if it’s FaceTime or Zoom) and remember to be open and honest about your financial situation.

6. Review your health insurance.

If you’ve been furloughed or laid off during the past year, check the status of your health insurance. In addition to extending unemployment benefits, the American Rescue Plan Act also included a change in the COBRA subsidy for certain individuals through September 30, 2021. If your financial situation has changed and you want to sign up for a new plan, see if you qualify for the special enrollment period, which runs through August 15, 2021.

7. Review contributions to your retirement accounts.

During “normal” times, employees are generally advised to contribute as much as possible to their 401(k), Roth IRA, or another retirement plan. If your job has remained secure throughout the pandemic, it may make sense to keep funding your retirement savings. You may even want to increase your contributions or reassess your allocations if stay-at-home orders helped you cut down on expenses during the past year.

However, if you’ve lost your job or you’re self-employed, it’s likely you’re still vulnerable to pandemic-related revenue loss. If that’s the case, you may want to free up your cash flow by lowering your contribution limit. You may even decide to pause your contributions altogether to focus more on saving money for an emergency fund or near-term needs.

8. Check in on your taxes.

It’s always a good idea to review your tax withholdings mid-year to ensure you’re not over- or under-contributing (and then make adjustments accordingly). But because last year brought a lot of changes that can impact your overall tax situation, it’s even more important. According to the website WiserAdvisor, which helps consumers find the right financial advisor for their financial planning needs, “A semi-annual assessment of your taxes can help you reduce your tax burden and mitigate tax consequences. Moreover, major life changes—like marriage, having a child, getting divorced—can also alter the amount of tax you pay.”

9. Reassess your debt strategies.

If you’re having trouble finding the motivation to repay your debt, consider the “debt snowball” method. With this strategy, you pay as much as you can each month toward your smallest debt while paying only the minimum due on your other debts. When the first debt is paid off, you move on to the next smallest, and so on until you work your way up to your largest.

If you’re motivated to pay off your debt but feeling overwhelmed by interest rates and overall costs, the “debt avalanche” method could be the strategy you need. With this method, you begin by paying your debts with the highest interest rates first, paying only the minimum on your other debts, then moving on to the next highest, and so on. This method requires more discipline, but it will save you more money in the long run (often hundreds of dollars in interest!) and help you pay off debt faster.

10. Revisit your financial goals.

If the pandemic has caused you to delay some of your big plans, like the purchase of a new home or car—or even an early retirement—you’re far from alone. But some experts believe this new reality is an opportunity to bring about true financial change. “As we assess what’s next as individuals and a society, we have a fresh opportunity to envision the future,” says John Schlifske, CEO of Northwestern Mutual, in a piece for Fortune.com. “After more than a year of disruption and loss, it’s a great time to rewrite the rules to emerge stronger, more resilient, and with greater financial security.”

Taking Action After Your Mid-Year Financial Checkup

A mid-year financial checkup should give you a clear idea of what actions you need to take to stay on track for your goals. Even if you’ve been hard hit by the pandemic, these tried-and-true recommendations can help you catch up.

1. Rebuild your emergency fund.

According to a recent study conducted by CNBC and Survey Monkey, 14% of Americans—up to 46 million people—say they wiped out their emergency savings over the course of the pandemic. If that’s you, don’t panic—that’s why we have emergency funds. But now it’s time to start rebuilding. Allocate a certain amount each month towards your savings, and then commit to sticking with it until you have at least three months of living expenses covered. It can take a while, but it’s worth it.

2. Monitor your spending.

Go through your last few months’ bank and credit card statements and make a list of all expenses. From there, see where you can cut back. And don’t stop at shopping and eating out—take a close look at all your monthly subscriptions and memberships, too. Chances are there are at least a few services you’re paying for that you’ve forgotten about.

3. Get a break on your insurance rates.

Many major insurers have responded to the changes brought about by the pandemic in ways that can save consumers money. For example, in 2020, when people were spending less time driving, several auto insurers offered refunds, dividends, and credits. Others paused cancellations caused by missed payments or offered premium discounts on existing or new policies. If your car, home, or life insurance provider didn’t make any pandemic-related adjustments, now’s a great time to shop around for a more affordable option.

4. Get cozy with your credit score.

A higher credit score can grant you access to credit card and interest rates, better car insurance rates, and higher borrowing limits. But don’t be discouraged if your score dropped over the last year. Instead, focus on making on time payments across all your credit accounts, and work on paying down debt—both of which affect your score.

5. Take advantage of summer savings.

From holiday sales to tax-free weekends, many retailers will be looking for ways to attract consumers and increase revenue this summer. Many travel companies, for example, are offering “can’t miss” deals to entice consumers to get back on the road after months in lockdown. If there’s room in your budget for an affordable trip or treat this summer, don’t miss out on the deals.

6. Renegotiate cable and internet bills.

If you’re struggling to keep up with your cable and internet bills, try renegotiating your rates with your current provider instead of immediately switching to another. You might be surprised by how much you can knock off your bill just by asking. There might be a special deal you haven’t heard about, or your provider might be willing to offer you a discount to keep you from jumping ship.

7. Consider your loan options.

If your credit score has improved in the last year, you could save money by refinancing your home, car, or student loans. In most cases, the goal when refinancing is to get a better interest rate or loan terms, so make sure you shop around to find the best lender for your financial situation. At LendingClub, you can check your rate instantly without impacting your credit score.

The Bottom Line

While conducting an annual financial review is a smart way to end the year, examining your finances at the midway point is a good practice to help maintain control over your money. A mid-year financial checkup allows you to assess your progress on financial goals and make any necessary adjustments—like retooling your budget, cash flow, spending, living expenses, and employment benefits. These checkups, combined with everyday financial health practices, can help you keep your personal finances on track, no matter what life may throw your way.

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