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8 Reasons Why a Mid-Year Financial Check Up Is Crucial

April 21, 2023

Table of Contents

    Table of Contents

      A mid-year check on your personal finances is a vital part of personal finance management. Read on to learn why.

      Over the last decade, personal financial planning has evolved and is no longer limited to investing money and waiting for returns. This is why a mid-year financial checkup is needed to regularly review and update it, just like we need regular check-ups on our health or our car.


      Financial planning is an ongoing process and needs periodic updates. Reviewing your finances for a mid-year check-in can help ensure that you are on track to reach your financial goals and avoid any costly surprises down the road. This is an important step in personal financial planning for any individual.


      Let’s have a look at some of the important reasons for mid-year check-in:


      1. Track your goals

      Simply identifying your goals and investing money to achieve them will not suffice. Your financial goals guide your spending and saving habits, so it's important to review and update them regularly. It helps to revisit your short-term, mid-term and long-term goals and ensure everything is on track. Whether you're saving for a specific goal, such as retirement, or working towards paying off debt, mid-year is a good time to see how you're progressing. This can help you make any necessary adjustments to ensure smooth progress.


      Life happens, and things can change, so make sure your financial goals stay relevant and achievable. Sometimes some goals become impractical with time and may need to be dropped from the financial plan. Similarly, if there is an upcoming expense, like a family holiday or buying a new item for a home, then it is important to align the new goals with your existing ones.

      2. Scan your investment portfolio

      This is the center piece of your financial planning as it has most of your money. Checking your investment portfolio will help you identify their current value and the significant market changes impacting them.

      This is also the right time to close any non-performing investments and shift the money to ones with higher returns. With this, you can re-look at your asset allocation and make sure your portfolio is still diversified as per the current market scenarios.

      3. Identify the problem areas

      In personal money management, identifying and correcting the problem areas on time play an important role. If there are any changes in the income or any new expenses have come up unexpectedly, you can adjust the finances accordingly.

      For example, if your spending is out of control and you fall behind on savings, the review can help cut back on spending and get back on track. On the other hand, the regular drill is also required to celebrate progress and achievement and to give yourself a pat on the back for all your hard work!

      4.To check the emergency fund

      An emergency fund is a part of your money that you only use in the case of an unexpected expense that was not accounted for. The importance of an emergency fund is non-negotiable, and it really comes in handy in case of unforeseen events.

      As a part of the mid-year review of your personal finances, checking in on your emergency fund is always a great idea to make sure it's still sufficient. If your emergency fund has grown since you last checked on it, congratulations! If not, now is the time to start growing it.

      No matter where you are with your emergency fund, it's important to make sure that you have one. An emergency fund can help you avoid debt and financial stress when unexpected expenses arise.

      5. Better tax planning

      Mid-year is a great time to plan your taxes and making sure you are taking advantage of all available tax exemptions and opportunities. This is especially important if you're self-employed or have other income sources outside of a regular paycheck.

      Take some time to review tax deductions and credits that you may be eligible for to minimize the tax payable. This is especially important if your income has changed significantly from last year.

      6. Re-evaluate your insurance coverage

      A mid-year review of your finances should also include checking your insurance coverage to see if it is still adequate. Your insurance requirements change as you do. For example, if you get married or plan to have a child, you'll need to update your life insurance coverage.

      It's also a good idea to review your health, car, and other insurance policies to ensure that they still meet your needs and provide adequate coverage at a reasonable cost.

      Sometimes, companies come up with better plans at lower premium rates, and it would be a good idea to switch.

      7. Debt payment

      The best way to manage your debt is to clear it off faster. While checking your finances, you should always analyse your debt portfolio and focus on how soon you can pay it off. If you have some extra income, try to pay off the high-interest debt from your bucket.

      In addition, reviewing debt allows you to identify other options, such as changing to a lower interest loan or switching the variable interest rate loan to a fixed interest rate loan.

      8. Credit score

      In your financial management journey, your credit score will be of utmost importance. A good credit score will always help you with better interest rates and terms while borrowing. In contrast, a low credit score will make it difficult for you to get your loans approved at a reasonable cost.

      Therefore, it's important to keep tabs on your credit score and make sure it's in good shape. There are various sources from which you can get a free credit score report. Check your score regularly to see where you stand and look for ways to improve it.

      There are a few things that can drag down your credit score, including late payments, maxed-out credit cards, and having too many hard inquiries on your report. If you see any of these things in your report, take steps to correct them.

      For example, if you have late payments, you can try working with your creditors to set up a payment plan so you can get back on track.

      Final Thoughts

      Reviewing your goals at regular intervals and making the necessary amends should be an ongoing exercise. Taking the time to review and update your financial plan can help you stay on track with your goals and motivated enough to achieve them.