Before you check out for summer vacation, consider taking advantage of your free time this summer to do a quick check-in on your financial health.
Between packing up the beach chairs and planning your next family outing, see if you can fit these 3 action items onto your summer checklist. Doing so will help ensure you are on solid financial footing and pay benefits as you head into the second half of 2015.
Set aside time with your significant other to talk about money
Money is one of the leading causes of conflict in a marriage. It can cause anxiety, stress, regret and even shame. But if we get ahead of issues by establishing common goals and the steps to achieve them, your mindset around money can shift from negative feelings to feelings of joy, excitement and fulfillment.
Try setting aside 30 minutes each week to talk about big expenses coming up, financial concerns, priorities, and goals. It may seem silly at first, but this exercise can quickly open the door to more healthy and natural conversations around money and may be a real game changer for you, your significant other, and your finances.
Check-in on your savings and spending goals
We’re almost half way through the year. Are the goals you set for yourself becoming reality, or have they taken a backseat to more pressing needs or wants? Take an honest look at your finances and course-correct if changes need to be made.
If you received a salary increase earlier this year, you may be wondering why it doesn’t seem like there are any dollars left at the end of the month. Unfortunately, unless you’ve built a disciplined savings strategy, you naturally tend to spend what you have on hand. Take a few minutes to track your spending and figure out where this excess is going.
If you’ve received a 5% pay increase, for example, consider shifting the extra 5% to your 401(k) deferrals instead of ramping up your lifestyle. By automatically increasing your savings to match the increase, you are eliminating the risk that human nature will influence your spending habits and come between you and your financial goals. Pay yourself first – you will reap rewards in the long run.
Review your tax situation
While it may feel as though you just completed your taxes for last year, now is actually a great time to check in on your 2015 tax situation. The good news is we are 6 months into the year, which means you have another 6 months to get your taxes on track if things have gone astray.
Will you have higher income this year because of a promotion/raise, stock option vesting, or a bonus? There are important moves you can make now to help reduce your year-end tax liability. Here are a few tax savings items that may be worth considering mid-year:
- Adjust your withholding if necessary. If income has increased, it’s possible you may need to change your withholding exemptions to withhold at a higher rate on that additional income.
- Consider increasing elective deferrals to your employer retirement plan.
- Contribute to a Health Savings Account (HSA) if eligible.
- If you turn 50 or older this year and are still working, you may be eligible to contribute an additional $6,000 to your company’s retirement plan as a catch-up contribution.
- Consider making an IRA or Roth IRA contribution if eligible.
- Consider charitable gifts as a way to benefit worthy causes and reduce tax liability.
- If you find your tax liability looks substantially higher, talk to your CPA to see whether estimated payments are needed to protect against a high tax bill in April.
These are just a handful of options to consider if you need to improve your tax situation for 2015. Work with a trusted tax professional to help you determine the best strategy for you.
Checking in on your financial plan mid-year will not only remind you of what you’ve accomplished this year, but it gives you a chance to change direction or make adjustments to ensure your goals become a reality.
Utilize your time this summer to check in on your financial health. Engage in meaningful conversation with your spouse or partner, evaluate your saving and spending habits, and review your tax situation. When you look back at year end, you’ll be glad you did.