Now that we’re almost halfway through the year, it’s a good time to conduct a mid-year checkup on your finances and figure out whether or not you need to tweak your budget.
Here’s how to evaluate how you’re doing — and what you need to do next:
Review Your Progress
Have you been making progress so far this year? Check your net worth for a snapshot of where you’re at. Are you in a better financial position than you were at the beginning of the year? If not, see if you can figure out why.
There’s a difference between having a lower net worth because some of your investments aren’t doing as well as you thought and having a lower net worth because you’ve increased your level of debt. Look at the reasons behind your difficulties, and see if you can pinpoint a few changes to make.
Also, take a look at your spending plan. Have you been sticking to it? Identify the areas in which you’ve been the most successful. Figure out how to keep that momentum going. Next, look at the areas where you’ve struggled. What’s behind your struggle? You might have set unrealistic goals, or you might have experienced an unexpected financial setback that threw you off track.
Be honest with yourself as you review your progress. This will help you as you make changes to your financial management.
Tweak Your Spending Plan
Now that you’ve reviewed your progress and discovered where you can improve, it’s time to tweak your budget.
If you habitually spend more than expected on eating out, you might want to think about taking money from one category and moving it to your restaurant category. My husband and I haven’t been watching TV very much, so we’re thinking of ditching the satellite and using the money for other things. We could add a little more to the retirement account each month, as well as boost our entertainment budget.
Look for patterns in your spending that indicate what your priorities really are.
Rather than trying to force a change to your spending priorities, look at how you can tweak your budget to more realistically reflect what’s most important to you.
This can be a great way to improve your satisfaction with your spending and your lifestyle, and it’ll also help you stick to your budget more effectively.
You might find that you’ve moved away from your priorities when you review your progress. If you see that you aren’t spending on your priorities, and are instead wasting money on unimportant things, it might be time to bring your spending back in line.
Now is a great time to reflect on how you’ve been doing so far this year. Looking at your finances may give you a wake up call about what you should be doing, and how you should be doing it. Take advantage of this time to simultaneously celebrate your progress and acknowledge what you can do to improve.
How’s your financial progress been so far this year? Where do you need to make improvements?
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