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The long Memorial week-end and early days of summer often signify a shift to a slower, more casual time of year, free from school schedules and other activities.  It can also be a time of renewal, a reminder to dust off the cobwebs and get rid of the dirt and grime that have built up through the winter season.  And it’s the perfect time to evaluate and clean up your personal finances as well.

Examine your budget . . . and stick with it

A budget is a centerpiece of any good personal finance plan.  Start by identifying your income and expenses.  Next, add them up and compare the two totals to make sure you are spending less than you earn.  If you find that your expenses outweigh your income, you’ll need to make some adjustments to your budget, such as reducing discretionary spending.

Keep in mind that in order for your budget to work, you’ll need to stick with it.  And while straying from your budget from time to time is to be expected, there are some ways to help make working within your budget a bit easier:

  • Make budgeting a part of your daily routine;
  • Build occasional rewards into your budget;
  • Evaluate your budget regularly and make changes, if necessary; and
  • Use budgeting software/smartphone applications.

Evaluate your financial goals

Early summer is also a good time to evaluate your financial goals.  Take a look at the financial goals you’ve previously set for yourself – both short and long term.  Perhaps you wanted to increase your cash reserve or invest more money toward your retirement.  Did you accomplish any of your goals?  If so, do you have any new goals you now want to pursue?  Finally, have your personal or financial circumstances changed recently (e.g., marriage, a child, a job promotion)?  If so, would any of these events warrant a reprioritization of some of your existing goals?

Review your investments

Now may be a good time to review your investment portfolio to ensure that it is still on target to help you achieve your financial goals.  To determine whether your investments are still appropriate, you might ask yourself the following questions:

  • Has my investment time horizon recently changed?
  • Has my tolerance for risk changed?
  • Do I have an increased need for liquidity in my investments?
  • Does any investment or asset category now represent too large (or too small) a part of my portfolio?

All investing involves risk, including the possible loss of principal and there can be no assurance that any investment strategy will be successful.

Try to pay off any accumulated debt

When it comes to personal finances, reducing debt should always be a priority. Whether you have debt from student loans, a mortgage or credit cards, have a plan in place to pay down your debt load as quickly as possible.  These tips may help you manage your debt:

  • Keep track of your credit card balances and be aware of interest rates and hidden fees;
  • Manage your payments so that you avoid late fees;
  • Optimize your repayments by paying off the high-interest debt first; and
  • Avoid charging more than you can pay off at the end of each billing cycle.

Take a look at your credit history

Having good credit is an important part of any sound financial plan and now is a good time to check your credit history.  Review your credit report and check for any inaccuracies.  You’ll also want to find out whether you need to take steps to improve your credit history.  To establish a good track record with creditors, make sure that you always make your monthly bill payments on time.  In addition, you should try to avoid having too many credit inquiries on your report (these are made every time you apply for new credit).  You’re entitled to a free copy of your credit report once a year from each of the three major credit reporting agencies.  Visit www.annualcreditreport.com for more information.

Assess tax planning opportunities

We’re just past the tax filing deadline so this is an especially good time to assess any tax planning opportunities for the current year.  You can use last year’s tax return as a basis and then make any anticipated adjustments to your income and deductions for the coming year.  (Be mindful of potential tax changes that Congress may enact later this year.)

Be sure to check your withholding – especially if you owed taxes when you filed your most recent tax return or were due a large refund.  If necessary, adjust the amount of federal or state income tax withheld from your paycheck by filing a revised Form W-4 with your employer.

Do you have questions on any issues identified during your financial tune-up or as they pertain to your potential tax liability for the current year?  Give us a call.  We’re here to help.

Image credit:  bridgewatermbc

Article adapted with permission of Broadridge Forefield Investor Communications