A Guide to Your Mid-Year Personal Finance Review

Question of the Week

A Guide to Your Mid-Year Personal Finance Review

Happy Friday, all!

Last week I gave you a guide to your mid-year business review, and this week we tackle your personal finance review. The more I help people plan, the more I realize that personal finances are less about math and more about clarity and emotion. There’s something very empowering about having your finances in order, making intentional decisions around your money rather than reacting, and feeling the satisfaction around using your money to live your fabulous life.

And, as I talked about last week, while there are many moving pieces, getting this clarity becomes a bit easier, taking one step at a time. And there’s no time like being halfway through the year to check in on where you are and what the next right steps should be.

So with that, here’s your guide to your mid-year personal finance review.


Remember, progress not perfection

Just a reminder: the purpose of the review is simply to create some awareness of your finances, evaluate where you are, and provide some clarity around corrective actions you can take.  I’ve found it helpful to focus on the habits that bring you closer to your goals and let go of those habits that no longer serve you. Remember, progress, not perfection.


Get to a quiet place and check in on how you’re feeling

Paradoxically, the first action item is a break in the action.  You’ll need to slow down, get to a place you won’t be disturbed, and check in on how you’re feeling about your financial situation. This process shouldn’t be a haphazard, random day. Instead, block off one day or a few if you can.

Next, go to a quiet place for your review. This step is crucial if you are doing a review with a spouse. Go somewhere you won’t be disturbed and have the mental space to check in on your situation.

Once you’re in this quiet place, ask yourself how you’re feeling about your financial life. Comfortable? Empowered? Stressed? Disorganized? Hopeful? Anxious? It may be a combination of all of these. Try to do your best not to judge the feelings (“good or bad,” “I shouldn’t feel this way,” etc.), instead recognize and note them for what they are.

The father of Financial Life Planning, George Kinder, of the Kinder Institute of Life Planning,  believes emotions alert us to what we want to change and give us the energy to make that change. They can propel us to take action even when logical minds can’t. So don’t fight your emotions. Instead, let them drive you towards a plan for making your life different.

This point can also be a great place to check in on successes and challenges. Celebrating your success can help you appreciate your progress and may provide insight into what’s working. However, when it comes to challenges and areas of improvement, you may find that you’re falling short of some goals that you set out for yourself—notice any patterns? Do you have anything particularly acute?

I love the advice of Carl Richards, Certified Financial Planner and creator of the Sketch Guy column in the NY Times: goals are just guesses. You can’t predict and, in many cases, control where you’ll be ten years from now or what the world will look like.

So instead of thinking that things need to be perfect or that you can’t change your mind, pick a direction and take the next right step. What are the current barriers or obstacles getting in your way? What steps can I take to start going in the right direction?


Review your net worth

Many advisors, myself included, argue that net worth is one of the single most important indicators of financial health. If this isn’t something you keep track of monthly, take this mid-year review to check in on it. It consists of a simple analysis of your assets and your liabilities. In addition, I’ve created a spreadsheet you can use to help you out with your calculation.


Assess your cash flow

As the saying goes, you can’t know where you’re going until you know where you’ve been. You can also use this time to figure out what your financial life looked like over the past six months. Don’t have carefully tracked data or spreadsheets? Pull out your credit card and bank statements and look at your total spending. You may not get a lot of detailed data, but you can compare your total expenses against your net income from your pay stubs or business profit & loss.

You can then create a spending system based on intentionality and savings using the three-bucket system. If you’re feeling motivated, you can sign up for a service like YNAB or Mint to start tracking your expenses in detail.


Refresh Your Insurance Documents

The 2018 Nobel Prize Winner in Economics Robert Thaler notes that “self-control issues are most likely to arise when choices and their consequences are separated in time.” In other words, though you pay for your insurance every month, you may not use it for years or ever. That makes it hard to focus on how important insurance is most of the time. But you can’t wait until you need it to buy it or review it. Then it’s too late.

You likely get new insurance every year or every half year. Take a few minutes to make sure you have your current coverage amounts and you’ve stored them in a safe place (preferably both physically and in the cloud.) While you’re at it, make sure that your estate planning documents are also in a safe place.


Check-in on your tax projections

You’d probably rather not think about taxes right now, but the middle of the year is an excellent time to review your situation.  Because you have a full six months of income, you can double your income and estimate how much tax you should owe. You can use plenty of online calculators, plug in the amounts you have, and assess what you will owe.

If you find that you’re behind on estimated tax payments, you still have half a year to catch up. Just calculate how much you’re short, divide it by the six remaining months, and add that amount to your tax bucket every month.


Write down what’s next

Going through the process should be very enlightening and get you to be more intentional about changes you want or need to make. It’s essential to write these changes down and develop actions steps that you want to take to help accomplish the new goals.

I suggest limiting the changes you want to make to two or three and writing the actions steps as:

  • What is it I can do about the obstacle I’m facing?
  • How am I going to do it?
  • When am I going to do it?
  • Who can keep me accountable?
  • How do I feel about it?

The good news is you don’t have to talk about everything all at once. Instead, prioritize each goal and take them one at a time.


Quote of the Week

“By starting with the easy things first and leaving the hardest for last, you can gradually hone your decision-making skills, so that by the end, it seems simple.” — Marie Kondo


Task of the Week

Take that first step and schedule some time to do your personal finance check-in. Something as simple as putting a date on your calendar can help start the ball rolling. I’d love to hear how it goes. You can contact me at the links below.