Business

It's time to give yourself a good financial physical

The midpoint of the year is always a good time to evaluate whether you're on track to meet your financial goals.

With the U.S. economy being assaulted on multiple fronts, it is even more vital to run a fine-toothed comb through your financial practices and projections.

These are key questions you should be asking:

Where's your money going?

“It means taking stock of what's coming in and what's going out on a monthly basis,” said Michael Eisenberg, a member of the American Institute of Certified Public Accountants' National CPA Financial Literacy Commission. “Things cost so much more today. We didn't have these kinds of expenses a year ago.”

Case in point: U.S. consumer prices rose last month at their fastest annual pace in nearly two decades.

“It's very important to see if we need to cut in other areas,” Eisenberg said.

Try to project what your monthly spending will be in the future.

Are you on track to cut debt?

Paying off credit card debt is one of the smartest moves you can make, and it's especially important today, when job security is shaky.

“With credit, we promise to repay debt with income we have yet to earn,” Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling.

“Having no debt provides freedom to use future income as you see fit.”

Have you built a nest egg?

First, take a look at having enough cushion to cover your current expenses.

The standard advice is to have three to six months' worth of living expenses in an emergency fund, but given rising costs, you may need to put away more. “If they don't have that minimum, they must go back to their spending review and see where they can start building,” said Rick Salmeron, a certified financial planner.

Are you saving enough to reach your retirement goals?

Don't let the stock market's volatility shut down your investing for retirement.

“Given recent declines in the stock market, contributions into your 401(k) for the remainder of the year are actually even more important because your dollars will buy you more shares, since they are cheaper,” said Bryan Clintsman, certified financial planner at Clintsman Financial Planning in Texas.

Are your investments still diversified?

Diversification helps you weather the volatility in the market because all your money isn't tied up in one investment.

“In a market like this, many of your asset classes may be down, so if you're diversified, chances are you will find a winner somewhere,” Salmeron said.

Do you need to tweak your investment portfolio?

That's called “rebalancing,” which means adjusting the investments that may have fallen out of whack with your goals and tolerance for risk.

“Over the course of time, as different asset classes perform differently going up and down, your portfolio mix changes,” Salmeron said.

Do you need to adjust for income tax?

If you're going to be making less money this year than you had anticipated, you may need to adjust how much money you're sending to Uncle Sam in the next six months.

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