Twelve money adjustments you should be making now
2015 is more than halfway over. Here are 12 money adjustments you should make to ensure your finances are sound.
We're already more than halfway through another year — and already in the latter half of the decade (can you believe it!?) — which means fall and winter are right around the corner. As those seasons approach, you'll find yourself back to the grind, taking the kids to school and practices, buying school supplies, preparing for the holidays, and inevitably shelling out bill after bill while you're doing it. To help you best prepare for what's coming, let's take a look at your mid-year finances and find positive ways to improve before 2016.
1. Review Your Budget and Adjust as Necessary
There's no better place to start than at the beginning — and that's with your budget. Take a look at the budget you created at the beginning of the year (assuming you have one, of course; if you don't, create one today) and see where you're at financially. Are you bringing in the same amount of money as you were at the beginning of the year? More? Less? Have any of your expenses increased or decreased since that time? Are there expenses you can eliminate? Are there expenses that no longer exist? Ask yourself all these questions as you review your budget and adjust it accordingly so that it stays up-to-date and an accurate reflection of your financial situation.
2. Check Your Savings Plan to Keep it on Track
One of my regular New Year's resolutions is to set a reasonable and achievable savings goal to meet by December 31. I based the number I'd like to have in the bank by year's end on my income and budget, and I choose a goal that's challenging but not out of reach. (Setting the bar too high almost always ends in failure, so keep it manageable, even if it's meager.)
If your savings plan isn't on course, figure out why and change direction. That doesn't necessarily mean that you have to make up for six months' worth of non-contribution to your savings account, but rather re-tooling the goal more realistically the second half of the year. Something is better than nothing, and hopefully you'll start off on the right foot next year after six months of habitual contribution.
3. Reevaluate Your Expenses and Make Cuts
This goes hand-in-hand with reviewing your budget, but sometimes we try to kid ourselves into thinking that small expenses — like smartphone apps, subscriptions, On Demand rentals, and more — are insignificant. They are if they are rare (like three to four times a year), but if you're spending money on these items on a regular basis, you need to check yourself.
Also take a look at monthly charges, like gym and other memberships, and decide if they're really worth it. If you're not using these memberships regularly, cancel them — and if they're not cancellable (because you signed a contract, for instance), use them. You're paying for it, so you need to get your money's worth.
4. Start Holiday Shopping Early to Save More
We can go back and forth all day on when is the best time to shop for holiday gifts, but I will always maintain that it's midsummer. Like right now.
First, some stores still have fall and winter accessories hanging on the racks (mostly in the clearance section), so you're already getting a great deal there. But then come the holiday sales, including Memorial Day, Independence Day, and Labor Day, which only add to the savings. In fact, from my experience, even non-holiday weeks during the summer have produced amazing sales. I just received a marketing email from J. Crew Factory, for instance, touting up to 75% off the entire store, plus an additional 50% off clearance. I also just bought a ton of fun, colorful calf-length socks from Abercrombie & Fitch, which were abundant and deeplydiscounted (from around $16 a pair to $2.50 a pair) in the store's clearance bins.
That's not to say that there won't be great deals later in the year — there will be — but just a heads-up to keep your eyes open for gift items that are on super sale this time of year so you can save your time and money later on when you need it most.
5. Bank Your Savings
Ah, now here comes the fun part of all that money you're saving.
Calculating your retail savings from all those early gifts you're buying and putting 50% of the difference in your savings account is a great way to build up your slush fund without overthinking it. The general premise of this savings tactic is to keep track of your savings from each shopping trip, whether it be from in-store discounts, savings apps, your own coupons — whatever — and putting half of that number in your savings account. You're still walking away a bandit, but now you have savings to show for it, too. You can tell me how amazing that feels later.
6. Renegotiate Your Financial Contracts Where Possible
All of us have financial contracts in our lives, and now is the time to renegotiate them to perhaps score a better rate, especially on technology.
"Many consumers forget that they can renegotiate their phone, Internet, and cable service contracts mid-year to secure a better monthly rate or receive free upgrades," says Clair Jones, tech expert at LocalInternetService.com. "During this time of year providers often experience a seasonal lull in sales, and many run specials to attract new customers and retain existing accounts. All you have to do is call and ask if there are any new promotions that could help you lower your bill."
Pick up the phone.
7. Order Your Free Annual Credit Report
Every consumer is entitled to one free credit report per year from each of the three major credit bureaus — Equifax, TransUnion, and Experian. You should take advantage of these free reports (which you can get any time of year, and stagger them throughout the year, by the way) to stay on top of your credit rating and to review and follow up on any errors that you may find. It's important to note that these reports don't include your credit score — just your consumer activity.
"Your credit report is one of the most important steps in managing your money and finances," says Katie Ross, education and development manager for American Consumer Credit Counseling. "You should check your credit report at least three times per year from each of the three credit reporting agencies and you can do this through AnnualCreditReport.com. Your credit report is all part of building wealth and positive financial intentions along the way. Without a healthy credit report this too can impact your financial goals."
8. Start Preparing Your Taxes for Next Year
I know, I know — it seems like you just put your taxes in the mail. True, it wasn't that long ago, which is why it's probably fresh in your memory. This year, stay ahead of the curve by planning your taxes ahead of time. Keep your receipts organized, start an Excel sheet to track your expenses, and mind all those tax-deductible items that will save you big bucks on April 15.
Sarah Nieschalk, enrolled agent for Tax Defense Network, a tax resolution company, offers a few quick tax tips that can save you money and headache in 2016:
- Give to a charity. Gifts to charities are tax deductible and you get the satisfaction of helping your fellow man. Don't donate just during the holidays. You can donate time, goods, and funds, and all are deductible.
- Keep records of state, local, and personal property taxes. Believe it or not, paying those annoying taxes and fees are deductible at the end of every year. You might be leaving money on the table by not itemizing your deductions.
- Take advantage of tax credits. Child care, adoption, education, energy-efficient home improvements, and more. Did you know that simply buying a hybrid vehicle could be a tax credit? You needed a new car anyways — why not get a credit for being awesome?
9. Revisit Your Auto Payments and Adjust Your Priorities
I love technology, but for some reason I never latched on to auto payments. Just something about it I don't like. Maybe it's the psychological factor of someone — or something, rather — taking my money opposed to me giving it to them. I'll let you know when I'm ready to pay, thankyouverymuch. Nonetheless, mid-year is an ideal time to revisit your auto-pay bills to make sure everything is on the up-and-up and to make any adjustment necessary.
"July is a great time to recheck those automatic payments that we have coming out of our checks and adjust savings and investment to match new priorities," says Jeremy Hallett, CEO of online life insurance agent Quotacy. Specifically, it's perhaps during the first half of the year something major changed in life — maybe a marriage, a new job, new house, or the addition of children. All of these are opportunities to update financial goals and plans, while also making sure you have adequate protections in place to care for loved ones."
10. Review Insurance Policies to Accommodate Changes
While you're revisiting your auto-pay bills, Hallett also suggests reviewing your insurance policies. His beat is life insurance, but it's not a bad idea to make sure your other policies don't require any updates either.
"As major life events happen, it's imperative that individuals review their life insurance to ensure that their families are adequately protected," Hallett says. "As a general rule of thumb, we recommend that life insurance cover 10x income plus any major debts, like a mortgage or upcoming kid's college. And it doesn't cost much. For less than $300 a year, a 35-year-old can get a $500,000, 20-year term policy."
11. Scour the House for Ways to Cut the Clutter and Make Fast Cash
Call me a weirdo, but one of my favorite activities is going through the house and finding things to sell. I loathe any kind of clutter, but I love to make money, so it totally makes sense. If you want to fluff up your savings account or just add a few more bucks to your budget, sift through your junk and unwanted items and decide what you can part with. These days there are dozens of ways to easily sell items, like on eBay, Amazon, and Facebook. There are even specific services online that will pay you for your technology, clothing, and more. It honestly couldn't be easier to turn trash into treasure these days.
12. Examine Why You Haven't Reached Any Financial Goals
And finally, take this mid-year opportunity to assess why, perhaps, you didn't reach some of the financial goals you set at the beginning of the year. What got in the way? Why did they fall by the wayside? How can you prevent this from happening again? And how can you get back on track? These are all important questions to ask yourself if you had good financial intentions six months ago but now find yourself stalled.
"Without some examination of the first six months and possible change in behavior and goals for the second six months, there is a strong chance the rest of year will be unsuccessful too," says Mike Brady, president of Generosity Wealth Management. "I'm a big believer in having goals that are attainable, and the personal satisfaction that comes from it. Since half the year is over, pick one thing to accomplish in the next six months that you can absolutely achieve. Perhaps it's paying off a credit card, or six months of continuous savings. Instead of trying to do five or six things at once and being unsuccessful at all of them, just pick one or two things and fully commit to completing them, and then start 2016 with two or three other things. Build gently so they become real habits, instead of over ambitious New Year's resolutions that don't stick."
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