Mid-Year Financial Check-In
Mid-Year Financial Check-In: Are You Keeping Your 2021 Resolutions?
If the blazing temperatures weren’t a strong enough reminder that June has arrived, allow us to give you a mid-year wake-up call.
It’s hard to remember New Year’s Eve when simply checking your mail generates enough sweat to warrant a shower and your cloth upholstery burns the backs of your legs whenever you get into the car, but let’s flex our imaginative muscles for a moment. You were probably toasting champagne, wearing something sparkly, and reflecting on 2020’s successes and challenges. At some point, you probably set some resolutions—and if you’re like most people, a couple of them were financial.
The middle of the year is a good time to pause and check in—are you keeping the promises that you made to yourself in January? There’s nothing wrong with adjusting your plans, but if you’re starting to feel annoyed by this article, there’s a good chance that part of you subconsciously knows that you could be treating your financial intentions for 2021 with a little more respect.
Below, NEST has compiled some tips for assessing your financial situation, and some questions you might want to ask yourself to make sure that you’re handling your finances efficiently.
To get a sense of where you’re at financially, you can compare two things:
Your Balance Sheet (Net Worth Statement)
Your balance sheet contains your Assets (what you’ve got) and your Liabilities (what you owe). You can group your assets into three categories:
Cash / Cash equivalents (checking and savings accounts, money market funds, CDs)
Invested Assets (stocks, bonds, mutual funds, retirement accounts)
Personal Use Assets (home, car, yacht, and other personal property)
Your Liabilities can be split into two groups:
Short-term (auto loans, credit card debt)
Long-term (mortgage, some educational loans, home equity loans)
Your Cash Flow Statement
This one is pretty simple and can be represented by two columns: inflow and outflow. What you make, and what you spend.
Inflow includes your monthly or yearly income. Be sure to include all sources: wages, rental income, investment income, etc.
Outflow represents your expenditures, divided into:
Fixed (mortgage, insurance premiums, etc.)
Variable (food, entertainment, hobbies, etc.)
If you want to get super advanced, put your taxes in a separate category.
Most people would give the A+ gold star to a Balance Sheet and Cash Flow with assets outweighing liabilities and inflow exceeding outflow. There are many reasons this might not be the case, and that’s OK—but awareness of your financial situation is key.
Some Things to Consider…
No one likes to think about how time is slipping away, but sometimes we have to buck up and face the cold hard fact of our responsibilities. Here are some financial checkpoints to consider during your mid-year check-up. If you want to pour yourself a stiff drink first, we understand—and encourage it.
“An old will is better than no will,” but an updated will is best. Make sure it reflects your current situation.
Ensure retirement accounts and insurance policies have the correct beneficiary designations.
Consider starting a college savings plan.
Build non-retirement savings so you’re not living paycheck-to-paycheck.
Watch our most recent NEST Edge webinar to learn more about inflation and how to protect your peace of mind.
If you own a business, review your insurance and make sure you have a succession plan.
Review your short- and long-term goals—vacations, home buying, personal investments—and plan monthly contributions accordingly.
Don’t have goals? Start some. Retirement planning is a great place to begin.
There—we’re done! That wasn’t so painful, was it?
Financial planning can be overwhelming, but it’s way better than being blindsided. Check out our Financial Planning Services to see how NEST can help simplify and optimize your strategy. Now go enjoy all the sunshine and water that Austin has to offer!
DISCLAIMER: We are legally obligated to remind you that the information in this article is for educational (and entertainment) purposes only. This is not personalized financial planning advice.
For guidance about your unique goals and situation, please reach out to us at info@nestfinancial.net.