As a firefighter, you know the importance of regular health check-ups. But what about financial check-ups? Just as catching health issues early can prevent them from spiraling out of control, the same principle applies to your financial well-being. A mid-year financial review is your chance to diagnose any fiscal ailments before they become chronic conditions that threaten your retirement dreams and your family’s financial future.
Key Areas to Review in Your Mid-Year Financial Checkup
Reflect on the past six months. What’s changed? Even if your family situation remains the same, other factors might have shifted in ways you might not fully realize, potentially impacting your financial plan. Making small adjustments now can have significant long-term effects. Whether it’s tweaking your budget, rebalancing your investments, or updating your insurance coverage, these minor tune-ups can keep your financial strategy on track and your financial engine running smoothly all the way to retirement.
Revisit Your Financial Plan
Take a moment to evaluate your progress toward your financial goals. Has your salary changed? Have your expenses shifted? Maybe you’ve picked up over time or taken on a leadership role. These changes can affect your retirement timeline and savings strategy. Update your goals based on your current situation and ensure your financial plan aligns with your firefighting career trajectory. You also may have achieved one or more of the goals on your list, meaning it’s time to adjust your budget and possibly create a new goal.
Life Changes and Beneficiaries
Life doesn’t stand still, and neither should your financial and estate plans. Have you gotten married? Divorced? Welcomed a new child or grandchild? Bought a house, relocated, or changed jobs? These major life events can significantly impact your financial picture and therefore warrant a careful review and update of your plans. Don’t forget to update beneficiaries on all your accounts and insurance policies, as well as your will and advanced medical directive.
Insurance Coverage Assessment
As a firefighter, you face unique risks that require specialized insurance coverage. Take time to review your policies. Are you adequately covered for disability? Have your life insurance needs changed? Remember, being overinsured can unnecessarily drain your resources while being underinsured can leave you vulnerable. Strive for that Goldilocks zone of “just right” coverage. If you’re unsure where that zone is, you can learn more in THIS article, or you can reach out for assistance.
Investment Portfolio Rebalancing
Market fluctuations can throw your carefully planned asset allocation out of whack. Mid-year is an excellent time to check if your investment mix still aligns with your risk tolerance and retirement timeline. You might need to sell some winners and buy some underperformers to get back on track. If you’re unsure of how to go about investing, we have just the article for you; it delves into safe, secure strategies and time-honored principles, such as rebalancing, dollar-cost averaging, keeping fees low, and diversification. Still unsure? We can help!
Tax Situation and Budget Review
Take a hard look at your budget. Are you still on track with your savings goals? Has inflation taken a bigger bite out of your paycheck than you realized? Mid-year is also a great time to think about tax-saving strategies for the remainder of the year. Could you benefit from increasing your retirement account contributions or executing a Roth conversion? Are there deductions you could be taking advantage of? It may feel good to get a tax refund come tax season, but that could mean you were overpaying in taxes the whole time, and that money could have gone to better places, such as an investment account, paying down debt, or an improved lifestyle.
The Benefits of a Mid-Year Financial Checkup
Conducting a thorough mid-year review offers several benefits:
1. Greater Control: A recent study concluded that about 77% of Americans don’t have a formal financial plan, and 37% have done no planning at all.¹ To us, that’s like trying to drive a car at night with no headlights. Yeah, you’ll get somewhere, but probably not where you need to go, and you drastically increase your chances of a disaster.
2. Increased Happiness: The results are clear: those with a financial plan save more, achieve their goals faster, and lead happier lives overall.² Now that you have the headlights on, you can not only drive faster but also do so more safely overall. Watching your savings grow and your debt reduced to a shadow of its former self will reduce the cortisol in your system, pump up your dopamine, and greatly increase your chances of a secure retirement. There’s really no excuse to wait!
3. Better Preparedness: In 2023, there were 434,064 non-business bankruptcies in the US³ for a variety of reasons: job loss, inability to pay off debts, divorce, medical debt, overspending, and financial emergencies, just to name a few. While it’s difficult to ascertain how many of those who filed for bankruptcy had a financial plan (and stuck with it), we feel it’s safe to say that many likely did not. With a plan in place, you can be sure that you’re living within your means and prepared as well as possible for the unexpected.
Taking Action
Ready to perform your mid-year financial checkup? Here’s a quick checklist to get you started:
– Review and update financial goals
– Check and update account beneficiaries
– Assess insurance coverage
– Rebalance investment portfolios
– Review budget and identify areas for improvement
– Explore tax-saving opportunities
In Conclusion
Regular financial check-ups are essential for catching small issues before they become big problems. After your years of service and sacrifice, we don’t want your health and happiness to be at risk due to a lack of awareness about the importance of a financial plan or let it fall into ineffectiveness due to a lack of regular reviews.
Just as you wouldn’t neglect your physical health, don’t let your financial health fall by the wayside. Click the button below to schedule a consultation with Protection Red, and let’s work together to ensure your finances are as fit as you are.
Resources:
2. https://www.empower.com/the-currency/money/research-financial-happiness
3. https://www.uscourts.gov/news/2024/01/26/bankruptcy-filings-rise-168-percent
