A 4-step, mid-year financial check-up

July 15, 2022

Allworth Co-CEO Scott Hanson shares a few mid-year financial reminders.

“It’s 10 PM. Do you know where your children are?”

Do you remember the above public service announcement (PSA)?

A little refresher: Beginning in the late 1960s, until sometime in the 1980s (and in some markets, later), each night, hundreds of television stations across America would broadcast a version of that PSA.

What began in the 1960s as a “televised text message” eventually leapt into popular culture, with eccentric celebrities such as artist Andy Warhol, actress Grace Jones, and front man Paul Stanley of the rock band KISS, popping up on TV screens across the country to ask parents a simple question: “It’s 10 PM. Do you know where your children are?”

In fact, 100s of celebrities, politicians, and athletes recorded a version of that PSA.

I can tell you, having watched several of these old PSAs this week, that, rather than feel like relics of the past, surprisingly, they somehow still resonate as powerful and even haunting.

In fact, my YouTube-sponsored visit to this bygone era inspired me to create my own PSA for this week’s article, which is: “It’s the halfway point of the year, do you know where your financial resolutions are?”

I’d like you to think back six months to the 1st of the year. Did you make any financial resolutions? Any money, saving, or investment pronouncements?

Did you take the time to write them down, or did you merely make a vow?

“It’s the halfway point of the year, do you know where your financial resolutions are?”

Inflation, a bear market, and fears of a recession. As we cross the halfway point of what we will probably all look back on someday as a rather unsettling economic time, for those of you who set financial goals for 2022, here are 4 questions to help you measure your progress.

1. If you aren’t retired, have you “upped” the contributions to your retirement accounts?

Do not conflate saving for retirement with what the markets are doing today.

Savers save. They save in good times, and they save in bad. And while market turbulence is great fodder for news headlines, try not to focus on what it did today, or last week, because whatever it’s been doing could change by tomorrow.

You should strive to max out your retirement account contributions, but, short of that, your goal should probably be to increase them by at least 1% each year.

And, if you can swing it, an even more ambitious goal would be to increase your savings percentage amount to match any percentage increase in your yearly income.

2. Have you maintained or created a viable emergency fund?

The precise amount you need in an emergency fund is difficult to pinpoint (typically, the more the better), but three months’ worth of expenses is a good start, while six months' worth would be better.

When an emergency strikes, the immediate aftermath is financial chaos. Even if you have hundreds of thousands in equity in your home and a diversified and well-funded portfolio, in the shadow of an emergency, you’re probably going to spend a lot of your own money.

And if you don’t have enough cash to cover your expenses? You’re going to run up your credit cards.

Without an emergency fund – even if your emergency is eventually covered by insurance – you may need to borrow money from your bank, only to find that six months later you’re still carrying the debt (and accruing interest).

3. Have you paid off, or at least made progress, on any debt?

We are currently experiencing a unique economic storm front. Probably never in our lifetimes have we seen a bear market and record inflation deliver such a disconcerting downpour.

And it would be understandable to have the urge to throw your hands up.

I implore you to fight that urge with everything you have.

The job market is incredibly strong, and salaries are up due to competition. That means that, unlike 2008, when the job market was dismal, in today’s market most of the people who want a job still have one.

And that means money is coming in.

But inflation means we are spending significantly more each month than we were a year ago, and rising interest rates mean that your debt is getting more expensive.

Make it a goal to not fall behind. Tighten your belt where you can, rein in your spending, and get that debt paid off.

4. Have you reviewed your mid-year tax situation?

The last thing you want to do (especially this year) is wait until the end of the year to inquire about whether you’ve taken every step possible to save on your taxes.

Being proactive is how you’ll save the most money next April.

When it comes to your accountant, if you’re the hands-off type, while that’s typically probably fine, these are not exactly ordinary times.

If it’s been a while since you’ve spoken with your accountant, the halfway point of the year is a great time to ask: Am I doing everything I can to save money on my taxes for 2022?

Reach out now to place yourself in the best position to avoid tax surprises.

And remember, while PSAs can save lives, money, or even just be irritating, some will never go out of fashion.

“It’s the halfway point of the year, do you know where your financial resolutions are?”

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