Why it’s smart to revisit your savings goals for the new year now

Remember when you decided in January to spend less and save more in 2023? Financial advisors say summer could be a good time to revisit those goals. Think of it as “New Year’s in July.”

A quick financial review now makes sense because there’s still time to make adjustments if you’re falling behind on your goal — whether that’s building an emergency fund, reducing credit card debt, or resuming student loan payments, now that the pandemic is finally over (really!).

Many events that lead to spending are approaching, such as back-to-school time (supplies and clothes), Halloween (costumes and candy), Thanksgiving (food) and the winter holidays (gifts). “It’s a really good time to prepare for spending later in the year,” said Llanelli Espinal, author of Mind Your Money.

Nate Hoskin, a certified youth-focused Denver financial planner, recommends an in-person “audit.” If this sounds too much like something the Internal Revenue Service would do, think of it instead as a “check” of financial health.

Mr. Hoskin, who has a large Tik Tok Next, prompt a rigorous assessment of the goals you set at the beginning of the year. Let’s say you aim to save $500 per month but only save $200 per month. “Be really, really good,” he said, and ask yourself, “Why didn’t I reach this goal?” “

Did you estimate that you would make more money than I did? (Maybe my side hustle wasn’t as profitable as expected.) Or do you go out to dinner a lot? Inflation may have increased your costs, but now it’s cooling down.

Mr. Hoskin recommends printing bank and credit card statements, and using a highlighter to mark “trivial” items, which represent money you didn’t need to spend.

To get back on track, build your goal gradually. If you can save $200 a month, Mr. Hoskin said, great. Try saving $250 next month, then aim for $300. “Try to get to $500 a month by the end of the year,” he said.

If your plan is vague to save any money left at the end of the month – but there doesn’t seem to be any extra money – try the “save first” strategy. Automatically transfer 15 percent of your paycheck into a savings account (your bank, employer, or various money apps can help you arrange this), and then create a spending plan for the remaining money.

“It might help a lot to switch it up,” Mr. Hoskin said.

Ms. Espinal said you might try saving more from the habit and shifting money toward your goal weekly, or even daily.

Jesse Meacham, founder of You Need a Budget app, advises that you — and your partner, if you’re part of a couple — first make a list of what you want your money to do. Paying for a vacation abroad? Create an emergency fund?

Then, he suggested, go to your account statements and scroll through the last few months of transactions, maybe 20 minutes at most. Many banks and credit cards automatically label purchases, which can give a rough idea of ​​where your money is going. Note any spending that has advanced your priorities, but don’t hit on purchases that haven’t.

“No one is perfect,” he said.

With that knowledge, Mr. Mecham said, set goals for the cash in your bank account by asking, “What do I want to do with this money to get paid again?” You can use a budgeting app or a basic spreadsheet to plan out a plan.

If you are aware of both your available funds and your goals, Mr. Mecham said, you can better manage the trade-offs. Instead of thinking, “I am I can not Spend money on this,” you can say to yourself, “I would.” instead of Spend money on it.”

Paying off credit card debt is especially timely this summer given both card balances And Average interest rates on the card High. Free online debt repayment tool at calculator.net They can help you figure out how much extra you can pay and how long it will take to get off the balance, Ms. Espinal said.

Don’t get caught up in the arguments about using the “avalanche” method — prioritizing paying off debt with the highest interest rate — or the “snowball” method, which focuses on paying off the smallest balance first to build a sense of success.

“Most people should use a hybrid approach,” Ms. Espinal said. Start by paying off a small balance to gain confidence. Then switch to paying off higher interest rate cards (put money on the highest rate and make minimum payments on other cards until the first card is paid off) to save the most money.

Pick a specific screening date to make sure you get it before the end of summer, said Rob Williams, managing director of financial planning at Charles Schwab. “Putting it on the calendar can help you be financially healthy,” he said.

Here are some questions and answers about how to take a summer financial examination:

Summer is a good time to review withholdings — the amount of tax withheld from your paycheck — especially if you get a raise or have a major life change, such as getting married or having a baby. If you have too little withholding, you may have an unexpectedly large tax bill next April. IRS advances Online estimated Where you can answer a few questions to see if you should modify deductions. To make changes, submit a file Form W-4 with your employer.

Checking your credit report, which indexes your borrowing history, is a smart move and can usually be done relatively quickly online. The three major credit reporting bureaus — Equifax, Experian and TransUnion — are offering free reports at least weekly through the end of this year in www.annualcreditreport.com. If you notice any errors, contact both the credit bureau and the lender who provided the incorrect information, and Federal Trade Commission He says.

Many states offer summer sales tax “holidays” — the days or weeks when state sales taxes are waived for the purchase of certain goods, such as clothing or back-to-school supplies. New Jersey, for example, which has set its event from August 26 to September 4, includes a tax waiver on computers priced under $3,000. Some tax experts dismiss the events as political scams, but they are still popular with shoppers. The Association of Tax Officials a List each country separately on its website.