Mid-year is a time when you’re probably thinking about an upcoming family beach vacation or a road trip to the mountains. But the lazy days of summer are also a great time for a quick financial checkup.
While you’re relaxing and slowing down a bit, remember any financial goals you set back in January. Then evaluate if you’re on track to accomplish them by year-end. If not, create a solid plan, or speak with a financial professional, to improve your financial security.
Use these three tips for a successful mid-year financial review:
1. Check your emergency savings.
Having extra money set aside can be the difference between surviving a financial emergency—such as losing your job or business income—or getting buried under it. According to a recent Unum study, nearly half (49%) of adults had less than $1,000 in savings. And 49% also experienced anxiety about their finances in the past year.
Maintaining a minimum of three to six months’ worth of living expenses on hand is ideal. But if that amount seems like an insurmountable goal, or you’re building an emergency fund from scratch, just start by saving small amounts on a regular basis. Then you can increase your savings rate over time.
Automate the process by having a portion of your paycheck direct deposited into a savings account or transferring funds from your checking to savings. While it might be tempting to invest your cash cushion, stick to a low-risk, FDIC-insured bank savings so you keep it safe from market volatility.
2. Plan for the unexpected.
In addition to maintaining a healthy emergency fund, another key way to safeguard your finances from the unexpected is to have the right insurance. Unum’s study found that half of households could pay bills for only two months or less if they were unable to work and earn an income. And 27 percent could last only for a month.
Disability insurance was created to replace a portion of your income (such as 60%) if you can’t work due to a covered accident or illness. Common disabilities include cancer, back injuries, cardiovascular disease, and joint disorders.
A disability policy protects you from the shocking reality that one in three adults will become disabled for at least three months sometime during their working years. Even Millennials have a one in four chance of suffering a disability during their careers.
The good news is that a typical disability policy is affordable, costing about $20 to $30 per month, according to LIMRA’s U.S. Workplace Benefits Disability Insurance Sales report released in 2017. You can use disability benefits any way you like, such as to pay a mortgage, rent, car loan, or even credit card bills.
Accident insurance is another important coverage that pays you directly for out-of-pocket costs related to urgent care. Typical expenses include emergency room visits, ambulance rides, surgeries, hospital stays, and physical therapy appointments. Just a single hospital visit can make the cost of accident insurance worthwhile.
Did you know that every ten minutes, more than 750 Americans suffer an injury that’s severe enough to seek medical help? Your healthcare insurance may not cover 100 percent of your medical bills.
Ask your human resources representative or benefits administrator what insurance is available at work. Whether it’s a car accident, health problem, or a death in the family, there are affordable ways to make sure you can handle any potential crisis.
3. Have fun without breaking the bank.
An important part of achieving and enjoying financial success is taking time away from work to recharge. Unfortunately, more than half of American workers end every year with unused vacation days. Don’t be one of them; take the opportunity to have a holiday this summer.
Even on a tight budget, you can get away by yourself or spend time with friends and family. Be flexible on travel dates when possible. Summer weekends are busy, so for the best rates check in on a Monday and out on a Saturday, or take a shorter mid-week trip.
Consider getting away to a city within driving distance and use hotel alternatives on sites such as Airbnb and VRBO. Renting your own place can be more affordable, plus having a kitchen allows you to save money by eating in for some meals.
Another easy and inexpensive option is a “staycation” where you become a tourist in your own town. Check out local attractions that you and your family haven’t visited, such as parks, museums, and playgrounds.
While having a mid-year financial checkup might not seem like a fun exercise, it can pay off. Once you have savings and insurance to fall back on, plus a little time off, you’ll feel more confident about your financial future.