Though it might seem like only yesterday that you were ringing in the new year, believe it or not, we're now halfway through 2017 -- and with that milestone comes the need to evaluate your finances and see whether you're on track to meet this year's goals. Here's a step-by-step guide to help you along.
1. Check up on your savings
With the year half gone, now's the time to see how well you're faring in your savings efforts -- and take steps to compensate if you've fallen behind. For example, if you have a 401(k) at work and you have yet to contribute, you still have a good six months to start setting money aside for retirement. Similarly, if your bank account hasn't grown since the start of 2017 (or, worse yet, your balance has dropped), you can start taking steps to do a better job of saving, whether it's making smarter spending choices or cutting certain costs.
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2. Reassess your budget
It's a good idea to write up a budget at the start of each year to keep tabs on where your money is going. But now that you've been plugging along for six months, it's time to re-evaluate that budget and see if it's serving your needs.
For starters, be honest with yourself about whether you've actually been sticking to that budget in the first place. If not, then you'll need to figure out how to get yourself back on track. Along these lines, take a look at your spending over the past six months and see whether you've been allocating enough to each expense category. If, for example, you have $400 a month budgeted for groceries but you see you've been averaging $500 a month, you may need to adjust another category downward to compensate.
3. Figure out how you'll spend your tax refund
Though tax refunds aren't a given, it's estimated that close to 80% of filers receive one each year. If you're sitting on a sizable refund from 2016, before you spend it, think about how it can best serve your short- and long-term needs. If you're behind on emergency savings, for example, you're best off sticking that money directly in the bank. If you've been putting off home repairs, that cash might go a long way toward fixing whatever's broken. You might even decide to use that money for your yearly vacation, and that's OK, provided you don't have a more pressing need to address. The key is to be strategic about how you use that cash, because you may not see another influx that large until your year-end bonus comes in.
4. Set some year-end goals
Perhaps you're aiming to buy a house come 2018, or you're hoping 2017 will be the year you finally manage to max out your 401(k). You still have plenty of time to meet your goals, so jot some down and think about what you'll need to do to get there. You might, for example, have to cut back on leisure spending if your goal is to put $2,000 toward a vehicle by the end of the year.
If you don't have any specific goals in mind, here are a few you might aim for between now and Dec. 31:
- Contribute enough to your 401(k) to snag your full employer match. Otherwise, you're just leaving free money on the table.
- Sock away enough cash to cover a solid month of living expenses. This will be a crucial step toward completing your emergency fund, which, ideally, should suffice to replace three to six months' worth of income.
- Don't let your flexible spending account go to waste. If you have an FSA, start using up that balance so you don't forgo any cash come year-end.
- Ramp up your charitable contributions. You'll not only be supporting the organizations that are most meaningful for you, but you'll also be doing your part to lower your taxes for the year.
Before you get swept away by the busy nature of summer, give your finances some much-needed attention and see how you might improve them. A little effort this month could make for a financially sound 2017.
