Take Time To Complete A Midyear Financial Checkup

My business group uses July to take a midyear checkup. We look at our budgets, planned projects and keep one another accountable. 2020 has not been the year anyone expected. In addition to my business review, I am taking the time to look at where I am personally.

Here are key components of that checkup:

◗Review spending.

One big change for us was the 20% pay cut my husband took in March that will be in place until the end of September. While it is not an ideal situation, we are fortunate that we both are still gainfully employed. Our COVID lifestyle also helps. We are both working from home, so there are no gas bills, no eating lunch out and no need for new clothes.

We had planned several trips this year that have been canceled. Our expenses are also down because we are not going to Cincinnati Reds baseball games or eating out. We are spending more on groceries, landscaping, birds and home improvement.

◗Check your credit report.

You can obtain your credit report at annualcreditreport.com. Make sure it does not have inaccurate information. A review of the account histories can also indicate potential identity theft. Look for accounts you don’t recognize. This is one task I am not good at completing every year.

◗Check your insurance coverage.

In addition to doing an annual review, you should contact your insurance agent if you have had a significant life change. This includes home, auto, umbrella and life insurance policies.

◗Check your tax withholding, both federal and state.

Last year, we adjusted our federal withholding from our paychecks but forgot to adjust our state taxes and ended up owing a lot to the state this year. We have now started going to quarterly estimated taxes. You can find the IRS withholding estimator at irs.gov/individuals/tax-withholding-estimator.

◗Review your estate documents.

I am always surprised by the number of people who don’t have basic estate documents. My husband and I created documents when we were expecting our oldest child and then failed to update them until our youngest child turned 18.

A will/trust is especially important if you have dependent children. For example, in Indiana, if you are married with children, your spouse will get half and the children will get the other half.

Beneficiary designations are used to identify who gets the proceeds of an insurance policy or retirement account. It is also important to name a contingent beneficiary in case the primary beneficiary is no longer living. It is important to keep these up to date, especially in situations of divorce.

A letter of intent is not an official legal document but can be helpful when dividing personal or sentimental property or to give instructions for your final wishes.

A durable power of attorney allows the person you designate as your agent or power of attorney to act or transact business on your behalf. Without one, it will be up to the courts to decide.

A health care power of attorney is authorized to make medical decisions if you are incapacitated.

My husband and I are finding that we have a more relaxed life and more free time. My goal is to use this time wisely to get projects done that don’t make it to the top of the to-do list. The other silver lining is having my college-age son home for the summer, which means regular family dinners and additional family time that has been missing for most of the last three years.