Courtney Jespersen* says the midyear is a good time to check on our budgets and ensure we reach our money goals for the rest of the year.
The year’s halfway point provides a great opportunity to take a close look at your financial health and goals.
Now’s a good time to “check yourself before you wreck yourself,” says Nora Yousif, certified financial planner and Vice President at RBC Wealth Management.
Here are three important reasons to check your budget right now — and easy things you can do to ensure you reach your money goals for the rest of the year.
You can learn from the past
Judging your budgeting behaviour is a productive way to see where you stand, according to Andrew Almeida, founder of Almeida Investment Management in New York.
Here’s how to do it: If you haven’t already, separate your monthly budget into categories, such as groceries, rent, entertainment and so forth.
Then see if you were over or under budget for each line item.
If you have 10 categories, overshot three last month and stayed on budget for seven, you’d be at 70 per cent.
So, give yourself a ‘C’ for June.
Almeida recommends doing this each month.
With six months of the year behind you, you’re in a good position to evaluate if you’re passing more months than you’re failing.
But don’t get discouraged; you shouldn’t expect straight As.
“No one’s going to hit it 100 per cent of the time,” Almeida says.
“Life is fluid.”
One easy and effective way to monitor how you’re doing is by logging in to your financial accounts, according to Brandon Renfro, an Assistant Professor of Finance at East Texas Baptist University.
“You can kind of see where your money went, and that will start to give you a better idea of problem areas or focus areas,” says Renfro.
Lean on your credit card and bank account apps to help you track your cash flow.
Some of these apps may even categorise the transactions for you.
You can prepare for the holidays
Once you’ve looked back, take a moment to think ahead.
After all, the holiday season is only a few months away.
Get ready now for this potential costly time of the year.
Start by setting a holiday season budget.
“A lot of people don’t consider that, but it’s a big year-end expense, which I think you should account for,” Almeida says.
“And if you haven’t by midyear, I think you should.”
If you’re not sure where to start, use the amount you spent last year on holiday gifts and festivities as a baseline.
Next, focus on taxes.
That means reviewing your income.
Look at is what money is coming in and pay attention to things like your pay stubs and discretionary income.
For example, did you pay off a debt in the first half of the year and now have more income you can contribute to your superannuation?
Make adjustments where necessary.
You can correct your course
By the time you finish these steps, you’ll likely have identified areas where your budget has room for improvement.
“If you’re way off your projected saving or spending goals, you can modify your habits for the rest of the year before it’s too late,” Yousif said.
That may include eliminating small things from your budget, such as a subscription or membership you no longer need.
And when you do remove something, redirect that money somewhere it can be more useful.
“For instance, maybe instead of just cancelling the gym membership and letting the money fall wherever it goes, go ahead and direct that to savings,” Renfro says.
That can help build your holiday fund, for example.
But what if you don’t even have a budget to check up on?
It’s not too late.
The midpoint of the year can give you a much-needed nudge to create one.
* Courtney Jespersen is NerdWallet’s consumer savings expert. She tweets at @CourtneyNerd.
This article first appeared at www.nerdwallet.com.
