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Your 8 Step Summer Financial Checkup

Your 8 Step Summer Financial Checkup

June 02, 2023

Once summertime hits, time seems to slow down. The holiday season is over, your taxes are complete, and vacation days are already scheduled. If you find yourself with some much-deserved relaxation time scheduled for the upcoming months, you may want to use this opportunity to check in on your family’s finances. I get it, doing an analysis of your family's wealth may sound like the exact opposite of what you want to do this summer, that's why we broke the process down into eight simple steps to keep you focused,  on track and done in no time.

Step 1: Analyze Your Budget

A Bureau of Economic Analysis report showed average savings rate among Americans is only 4.7 percent. That is well below the 20% we recommend to clients. There are two ways to avoid spending more than you’re earning. First, is to step back and take stock of your monthly and annual budgets. If you don’t have a budget at all, use this time to make one. The second way is to "reverse budget" where you save first and then spend what is left.1

Many credit cards and banks will have breakdowns of your spending, this is a quick and easy way find out where you’re spending the most money. To get the best look at your spending habits, you may want to evaluate your savings and spending record over the past 6–12 months.

Step 2: Seek Out Tax Savings

Do you scramble to pull your paperwork together every March and April? This year, try taking a different approach to the tax season by evaluating your tax-saving strategies early. Work with your financial planner or tax professional to create a mock tax return, as this can help you understand your withholding options and tax-saving opportunities, such as 401(k) or 403(b) options, IRAs, and HSA contributions.

The tax code and tax laws are always changing, brush up on these changes. If you have any questions, communicating with your tax professional could mean that you have more time to prepare and strategize together for next year’s returns.

Step 3: Tackle Your Debt

An alarming 35 percent of adults carry credit card debt from month to month. If you’re guilty of putting off managing your expenses, now’s the time to start planning to pay them off. While most consumers have some amount of good debt on their plate (mortgages, car payments, etc.), it’s the bad debt (credit card debt, student loans, etc.) that you’ll likely want to focus on managing and eliminating.2

While you could be tempted to simply pay off what shows up on the bills each month, you may want to create a debt summary to get a better idea of your total debt’s big picture. By creating an annual debt summary, you and your financial advisor can better understand whether you’re gradually working down your amount of debt or falling farther into the hole.

Step 4: Revisit Short and Long-Term Goals

A lot can change in a year—marriage, death, divorce, growing your family, and experiencing a major career change. Even seemingly small adjustments, such as a job promotion or sending a kid off to college, can have a significant impact on your financial status. This is why it’s important to regularly review your long-term goals and progress toward them while revisiting and evaluating your shorter-term goals. 

Step 5: Evaluate Coverage and Providers

As you’re reviewing your budget and expenses, spend a little extra time looking at current providers. This includes your insurance but also internet, cable, and wireless service providers. If you're like me and set up auto payments, this could be an opportune time to revisit what you’re actually paying for.

Step 6: Reassess and Rebalance Your Portfolio

I don't believe in rebalancing your portfolio just for the sake of rebalancing. However, it is essential to review your portfolio and risk tolerance regularly to help keep it in line with your tolerance, goals, and market conditions. It's important to look at the big picture of your investments - doing so can help you determine if you need to diversify differently or reassess your risk tolerance.

Step 7: Review Your Retirement Savings

It doesn't matter if your retirement is decades down the road or within the upcoming year - reviewing your retirement savings every year is always a good idea. Taking the time to assess whether you’re maxing out your retirement contribution options will help you understand how the savings you’re making today will translate into retirement income later on.

Step 8: Assess Your Estate Plan

It’s never fun to talk about the worst-case scenario, but leaving your family with an outdated will, trust, or estate plan can lead to major issues in a time of stress. We encourage you to assess your legacy plan annually. Make sure you’re accounting for any newly acquired assets (houses, cars, pets, etc.) while checking that your designated beneficiaries are still willing and able to assist in the event of your passing.

While you’re likely daydreaming of reading books, going to beaches, maybe reading books on those beaches, or barbecuing in your backyard this summer, don’t forget to do yourself a favor and squeeze in some financial assessment as well.

If you would like to discuss your current situation schedule a free 20-minute call with the link below.

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About the Author

James M. Comblo, CFF
is the President & CEO of FSC Wealth Advisors. His greatest passion in the financial services industry is helping clients live the life they want, not the life they are forced to. To learn more about him click here.