Lazy days of summer are perfect for financial check-ups

The Bakersfield Californian
May 27, 2014

The lazy days of summer have almost arrived. Graduations are coming and going. Thoughts of vacations are dancing in my head. I can almost smell the suntan lotion that I will soon slather onto my arms and legs to ward off the evil nasty burn.

But before we check out, it’s time for us to check up on our finances.

Mid- to late-summer is the perfect time to have a personal-finance checkup. Without the turmoil of the holiday season, summer can provide a relaxed opportunity to begin year-end planning.

Some questions to ask:

  1. Is your budget working? By the end of June, half the year has past. Were anticipated earnings and expenditures realized? If the answer is no, you still have six months to recover — cut back on spending and/or increase income. Maybe you may need to get a part-time second job if your financial picture is bleak.
  2. Should you re-balance your investments? Meet with your financial adviser to determine if your investment funds are performing as you wish. Adjust now before it is too late.
  3. Do you have a child going off to college? Sit down with your student and work out a budget. Have a clear understanding as to what support he or she can expect from you. Does your student need to get a part-time job to help pay for college? Have scholarship and aid opportunities been exhausted? Have the “money talk.” Does your student understand credit and other “grown-up” financial aspects of living away from home?
  4. Do you understand your insurance benefits? Generally in the fall, companies will hold “open enrollment” for their employees to consider such things as health care insurance. Understand what your current policy offers, how much it costs and how it compares to other options. For example, if you have a chronic health problem and require maintenance drugs, consider their costs and availability. During the open enrollment period, your employer will explain the details of other plans. But it is critical that you understand what your present benefits are before you attempt to compare them to new plans.
  5. Review your memberships. Often memberships to public museums and organizations are based on fiscal years, which end in June. Before automatically renewing, consider your use of the memberships. Are they worth the money?Pull out your just completed 2013 tax return. Likely you shoved it into a box shortly after you either applied for a refund or had to cough up more money for Uncle Sam. Review your return. For good measure, look at one or two earlier tax returns.
  6. Do you see a pattern? Do you see ways you could have saved on your taxes if you had thought ahead? If so, make a course correction mid-year. Have you had a life-altering experience, such as the birth of a child, marriage, divorce? Has your income gone up or down? You may need to adjust how much is being withheld for taxes.
  7. Set financial goals for the remainder of 2014. Do you want to take a “dream” fall vacation, or buy something special for the family during the holidays? Do you want to increase saving for retirement? Put your plan for reaching your goal in writing. You may wish to establish a separate savings account just to help your “dream” come true.

Your financial life should never operate on cruise control. Regularly scheduled check-ups, particularly at mid-year, are critically important.