As the year inches closer to it’s halfway point, many of us may find ourselves swept up in the demands of everyday life.
With so much going on, it’s easy to let financial check-ins slip down the priority list, however setting aside time for a mid-year financial review could be one of the most valuable steps you take all year.
We spoke with Liz Colfer, director and chartered financial planner at wealth management firm Five Wealth, who offered valuable insights into how a mid-year financial check-in can help you monitor your progress and make smart adjustments before the year wraps up.
She highlighted several key benefits of conducting a mid-year review, along with three essential questions to help steer the process…
Helps you adapt to life changes
Major life changes can happen at any time of the year. That’s why the halfway point is a great opportunity to review your finances and adjust them to fit any new circumstances.
“People could have had a salary increase, might have moved house or might have moved to a different job and be looking at new pension schemes,” highlights Colfer. “We’re seeing a lot of clients at the moment coming out of fixed-term mortgages that they’ve had for a number of years and seeing the impact of those higher costs coming through.
“A mid-year review of your finances can help you adapt to these kind of life changes that happen throughout the year.”
Gives you an opportunity to reassess your goals or create new ones
“It’s a good time to think about what are you working towards and what those goals are,” says Colfer. “Where are you now in terms of achieving those goals? If you’re halfway through the year and you’re not quite on track with where you want to be, a mid-year review gives you a bit of time to readjust.
“It helps ensure that you’re being proactive, as opposed to leaving things until the end of the year.”
Provides a good time to make use of any tax allowances
“From a financial planning perspective, another thing to look at would be tax allowances,” notes Colfer. “Have you used your ISA allowance? If you’ve got cash reserves, the sooner you move money into an ISA in the tax year, the better. You don’t want to wait until the end of the year.
“It’s also a good time to think about using pension allowances and to make sure that your strategy is on track.”
It could prompt you to start putting money aside for Christmas
“You don’t want get to a large event like Christmas, and suddenly think, oh I’ve not quite got myself in the position I want to be in, and then spend the next 12 months repaying the debt that you got into at Christmas,” says Colfer. “So, you could start putting money aside monthly in a high-interest savings account that’s going to mature just in time to buy those presents and things that you want to do around Christmas.”
Here are three questions to ask yourself at your mid-year review…
1) What have I achieved over the last six months?
“It’s not always about focusing on what’s coming, actually reviewing what you’ve achieved as well is vital,” says Colfer. “I think it’s easy for people to be quite hard and negative on themselves about finances, but when you take a step back and see what you’ve managed to achieve, it can be quite powerful.”
2) How close, or far off, am I to reaching my goals?
“Think about what your end-of-year goals are and then work out where you are and how far you are away from meeting these,” advises Colfer. “Do you need to tweak what you’re doing or are you quite comfortable?”
3) What trade-offs can I make?
“We talk a lot with clients about educated trade offs,” says Colfer. “So, if you’re not on track to meet a particular objective, what does that mean? And are you comfortable with that? What’s the trade off?
“Do you want to take a step back and put more into savings to achieve that end goal, and are you willing to sacrifice things along the way? That’s the thing with money and finance, every decision you make is a trade off of something. If you’re going to save more, then you’ve got less to spend and you’ve got to make sure that you are comfortable with that.”
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