Millennial Money: 4 items for your half-year money checklist
4 items for your half-year money checklist – We are almost reaching first half year of 2022 and we all knows a lot can happen in period of six months. That´s why, as we close out the first half of the year, it’s necessary to check in on your financial life for the second half year.
“With inflation, I think people this year are more heavily impacted than they probably have been in many years leading up to this point,” says Jason Dall´Acqua, a Certified Financial Planner. “So it´s a good time to see how things have been going, as well as plan for what lies ahead in the remainder of the year.”
So where should you start to review the things for the second half year? Add these 4 items to your midyear money checklist:
1. REVIEW YOUR INCOME, EXPENSES AND GOALS
You don´t have to count up everything you´ve made and spent during the last six months. But taking a few minutes to check a bank or budget app can assist you deeply understand your finances and reformation if necessary.
“Right now with inflation, even if you had a budget back in January 2022, it probably is not the same as it is today. There are some things that are going to need to be changed. So it´s just really resetting and figuring out where you stand today versus where you thought you were going to stand today,” says Kayla Welte.
Look for opportunities to scale back if you´ve spent more than expected. For example, you can control your dine outs or cancel subscription services that you seldom use. “Any excess spending that you´ve been doing, you may have to cut down to account for this higher cost of things that you absolutely have to buy,” Welte says.
If you set some cash resolutions or other financial goals earlier this year, have a look on those too and analyze your savings if they’re sufficient for your retirement or in case emergency fund as you planned earlier this year? Are you on track to pay off debt?
2. DEAL WITH DEBT FOR HALF-YEAR MONEY CHECKLIST
Debt is costing you more expensive to continue with due to soaring interest rates. Try to pay down debts sooner, particularly those with fluctuating interest rates, to save money. Clear examples of these debts might include credit cards, personal loans or adjustable-rate mortgages.
Pay attention on reducing your highest-rate debt first, then move on to the next highest debt. Dall´Acqua also suggests switching from variable-rate to fixed-rate options by refinancing, if possible. “If you can lock in the fixed rate now, you´re likely to be saving yourself significantly in interest costs over time,” he says.
Be aware of deadlines for loans in forbearance. For instance, federal student loan payments will resume on Sept. 1, barring another extension.
“At this point they have been on pause for nearly two years,” Dall´Acqua says. “So if that money has gotten lost within (people´s) overall spending, it´s going to be a big shock when they then have to resume paying.”
Setting aside money now in a separate savings fund can help soften the blow.
3. PLAN HOLIDAY SHOPPING
Due to Inflation this year, it could make holiday gifts a bit pricier this year. Create a shopping list now and analyze about how much you can afford to spend. “Figure out what that would require for you to start saving on a weekly or monthly basis and start putting that money aside right now,” Dall´Acqua says.
Starting on shopping for holiday gifts early can help you manage the cost without accruing debt. Many retailers start discount exhibitions in the summer, so you´ll find discounts well before Black Friday or similar events. And remember that Amazon´s Prime Day is coming in July 2022. So is the Nordstrom Anniversary Sale.
4. EXAMINE YOUR TAXES AND BENEFITS FOR HALF-YEAR MONEY CHECKLIST
Welte recommends using an online tax calculator to check whether you´re standing with too much or too little. This can definitely help you avoid slam with a big tax bill unexpectedly or missing out on extra cash you may need at this time.
“If you do the math and you´re going to get a $6,000 tax refund, it would be a great time to change your W-4s, get more money in your pocket now to pay for these excess costs that are coming up with inflation rather than waiting until next April to get that refund,” Welte says.
If you need to make adjustments, fill out a new Form W-4 (you can find this on the IRS website) and submit it to your employer for adjustments as you possibly need.
While you´re at it, evaluate your employee benefit selections. These benefits can include health insurance, life insurance, health savings accounts and flexible spending accounts, plus perks like gym memberships etc.
Reviewing your choices in the summer can prevent you from becoming overwhelmed in October and November, when open enrollment begins for most companies, says Joe Bautista, a CFP in Lake Oswego, Oregon.
The goal is to ensure you´re choosing the most cost-effective options that suit your situation. For example, “a PPO has higher premiums but a lower cost if you tend to use health care, lower deductibles and copays typically. But if someone doesn´t use that health care, then they can be overspending,” Bautista says.
Don´t worry about getting everything perfect right now. As Bautista says, “financial planning is dynamic, it´s not static.” Check in on your money plans periodically and update as needed.
This column was provided to The Associated Press by the personal finance website NerdWallet.
Lauren Schwahn is a writer at NerdWallet. Email: firstname.lastname@example.org. Twitter: @lauren_schwahn.
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