Fine-Tuning Your Finances: A Mid-Year Checklist

You take your car in for tune-ups, have your air conditioner and furnace inspected before turning them on for the season, and have software that regularly scans your computer for viruses. But when is the last time you checked in on your financial plan?

If it's been a while, mid-year is a great time to review the progress you've made and adapt your plan to accommodate significant life events and other changes.

Here's a financial planning checklist for your mid-year review.

• Review your credit report.
• Review your insurance protection.
• Check on asset allocations.
• Schedule year-end tax planning with your CPA.
• Update your estate plan.
• Consider succession planning in your business.
• Take advantage of tax-free gifts.

Now, let's look at each of those personal finance checklist items in more detail.

Review your credit report

Even if you're not planning to take out a loan anytime soon, checking your credit report at least once a year is a good idea.

According to a study by Consumer Reports, more than one-third of Americans have at least one error in their credit report.1 Those errors can drag down your credit score, resulting in higher interest rates on mortgages, credit cards, car loans, and even car insurance policies.2

Checking your credit score once a year — before you apply for credit — allows you to spot mistakes and potential fraud.

You can get a free copy of your credit report from each of the three major credit reporting agencies at AnnualCreditReport.com.3 Due to the COVID-19 pandemic, you can currently get free weekly credit reports from each credit bureau, rather than free annual reports.

If you notice any errors on your credit report, such as accounts that don't actually belong to you, timely payments that were reported delinquent, or incorrect balances, contact the credit bureau and tell them you want to dispute the information on your report.

You can find instructions for submitting disputes with each credit reporting bureau here:

• Experian4
• Equifax5
• TransUnion6

Review your insurance protection

Review your home, auto, life, disability, and other insurance policies to ensure you have the right types of insurance and coverage limits to meet your needs.

Major life events — including marriage, having kids, changing jobs, moving, and retiring — can alter your insurance coverage needs, and uninsured losses can derail your finances. Updating your policies gives you a chance to protect your investments and potentially shop around for better rates.

Check on your asset allocations

Look at your investment portfolio — both taxable and tax-deferred accounts — to see how they're performing. If one asset class has performed well while others have dropped in value, you may need to rebalance your portfolio to get back to your target allocations for your retirement planning.

Be sure to discuss rebalancing with your financial advisor. They can help you with a rebalancing strategy that aligns with your long term goals. They can also minimize capital gains and other transaction costs in non-tax-advantaged accounts.

Schedule year-end tax planning

Tax planning isn't just for year-end. In fact, meeting with your tax advisor regularly to review your expectations for the year gives you and your advisor more time to develop educated tax projections and execute tax-saving strategies.

Gather your recent pay stubs and investment account statements and ask your CPA to mockup this year's income tax return to see whether you can expect a return or need to make estimated tax payments.

This is also a good time to check in with yourself about whether or not your tax advisor is still a good fit for you. It might be time for a change if your advisor is slow to respond to your calls or emails, their fees don't match the value they provide, or advanced tax planning isn't a service they offer. Making the decision to switch now ensures you have time to find a new one before next tax season.