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Twelve Financial Check-Up Tools

July 2022

Barbara O’Neill, Ph.D., CFP®, AFC®
Distinguished Professor and Extension Financial Management Specialist Emeritus
Rutgers Cooperative Extension

In a previous Small Steps to Health and Wealth monthly message, I discussed eight ways to give yourself a mid-year financial check-up in early July: 1. online financial quizzes, 2. a net worth statement, 3. the "wealth test" from the book The Millionaire Next Door, 4. an income and expense statement, 5. a review of money set aside for irregular expenses, 6. financial ratios, 7. a credit card review, and 8. a retirement planning review.

Having just passed the halfway mark of 2022, now is a perfect time to assess your financial progress so you can take action over the next six months. An additional 12 financial check-up strategies are briefly described below:

  1. Incremental Progress Toward Financial Goals- Where are you now compared to where you want to be (PDF) at year-end? For example, if you want to save $5,000 in 2022, have you saved at least $2,500 to date?
  2. Budget Adjustments- You probably need to adjust planned spending (PDF) for the remainder of 2022 to factor in inflationary spikes for gasoline, food, auto and homeowner's insurance, and other household expenses.
  3. Housing Check-Up- Renters should ask about future rent costs and compare rental options. Homeowners should review needed home maintenance expenses. Both groups should review their property insurance.
  4. Income Tax Check-Up- A mock 2022 tax projection, based on income and anticipated tax deductions and credits to date, will indicate whether or not tax withholding and/or estimated payments are accurate. If not, taxpayers can complete a new W-4 form (PDF) with their employer or increase third and fourth quarter payments (PDF).
  5. Income Tax Bracket Projection- A 2022 mid-year income tax mock-up, using last year's tax return as a guide, will project the marginal tax bracket (tax rates from 10% to 37%) for your last dollar of income.
  6. Life Insurance Check-Up- It is smart to check in with a life insurance agent and/or use an online calculator periodically to compare coverage and costs. Also inquire about any term life coverage available at work.
  7. Other Insurance Check-Ups- Is property insurance adequate with at least $300,000 of liability coverage? Do you need an umbrella liability policy and/or have a long-term care plan with or without LTC insurance?
  8. Investment Risk Tolerance Check-Up- Recent stock market volatility has many investors on edge, making now a great time to do an honest investment risk tolerance assessment to guide future investment decisions.
  9. Investment Asset Allocation Check-Up- Using a current net worth statement (PDF) as a starting point, calculate the percentage of savings/investments held in stocks, bonds, real estate, and cash equivalent assets. If these weights have shifted significantly from your target asset allocation, rebalance the portfolio as needed.
  10. Social Security Check-Up- Workers should review their estimated Social Security benefit (at age 62, full retirement age, and age 70) and reported earnings annually. Retirees should review tax withholding on their Social Security benefit payments and whether or not a portion of Social Security benefits is taxable.
  11. Estate Planning Check-Up- Three key documents should be in place: a will, living will, and durable power of attorney. Beneficiary designations (PDF) and logins for digital assets (PDF) should also be reviewed and updated.
  12. Comparison With Others- Some people find it useful to compare themselves with the median net worth or income for people in their age category or location. Tools like Are You Rich? can provide useful metrics.

Take the time in July to do a mid-year financial check-up and get your finances in shape for 2022 and beyond.