5 Financial Matters to Put on Your Midyear Checklist

Every six months, consider examining your cash flow and retirement savings.

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Do you have a fund for home repairs? Plan ahead for major expenses.

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Half of the year is behind us, which means you still have half of a year to make course corrections. Here are a few financial checkpoints to explore that will help you detect potential problems.

1. At work. Look at your pay stub and think through your withholding, says Judith Ward, a senior financial planner with T. Rowe Price. Can you fine-tune cash flow by letting Uncle Sam have a bit less each pay period and diverting the difference to savings? “If you got back a lot more money than you expected after April 15, why let the government borrow your money?” Ward asks.

“If you’re earning more, save more,” says Ken Moraif, a certified financial planner and senior advisor at Money Matters, a wealth management and investment firm based in North Dallas. “Can you add just one more 1 percent to your current contribution? You won’t miss it, but an extra percent a year will add up. It seems like a drop in the bucket, but it will fill that bucket over time.”

Look at how a Roth individual retirement account could play into your overall retirement picture, even if you already have a healthy 401(k) account, Ward advises. With a 401(k), you don’t have to pay taxes on the amount you save now, but you do have to pay income taxes on the amount you withdraw when you are retired (presumably at a lower rate).

[See: 7 Ways to Take Advantage of Your 401(k).]

A Roth IRA is the exact opposite: You pay income taxes now on the amount you save in your Roth IRA, but you can withdraw the money after retiring without paying any income taxes. Ward says Roth IRA income in retirement provides stability and helps offset any income taxes you owe then. “That tax diversification is good to have,” she says.

2. At home. Have you started reaping income from your home or apartment? Make sure your homeowners insurance covers paying guests, recommends Jeanne Salvatore, senior vice president for the Insurance Information Institute.

Do you have home renovations or improvements underway? Update your property insurance to reflect renovations and updates. Make sure you know what your insurance covers, whether it's for replacement value or for the original cost of your home and subsequent updates. If you have done significant renovations, you will probably need to update your property insurance accordingly:

  • Don’t forget to add the value of new furnishings for the new space.
  • Don’t forget to take off any riders covering workmen.
  • Triple-check that you don’t have any outstanding liens from workmen or subcontractors.

How’s your emergency fund doing, and do you detect any emergencies on the horizon? Did the air conditioner resist coming out of hibernation? Will the roof make it through one more winter? Even if you are not making significant home repairs and replacements this year, take an inventory of looming problems and scope out the likely cost so you can build your emergency fund to accommodate the expected.

Are one-time expenses occurring on a regular basis? This year, the refrigerator dies. Next year, the car needs new brakes. The year after, your teenager needs braces. The funny thing is that these supposedly one-off expenses usually end up costing about the same, Moraif says. “Look at the exceptions to see if there is a pattern so you can anticipate the dollar amounts,” he says. “So you can build into your emergency fund the annual unexpected component.”

3. For family meetings. Family get-togethers can be a good opportunity to get everyone on the same page about estate planning, medical emergency planning and other financial topics of common interest, Ward points out. Don’t bring up these topics over the potato salad. Instead, arrange a time and private setting in advance so no one feels ambushed.

[Read: How to Separate Family Time From Your Finances.]

4. For the end of the year. How is your employer doing? By now, most companies have a good idea about whether they are going to meet their growth and profit goals for 2014, Ward says. If you work at a publicly traded company, check the investor relations website to see the latest financial releases and projections released to analysts.

If you count on any combination of profit sharing, bonuses and an employer 401(k) match, does this look likely? Adjust your own savings rates accordingly, Ward recommends. She advises that employees save 15 percent of their annual income for retirement, including any employer matching funds. If the matching funds are likely to drop, see if you can increase your own contribution to stay on track.

The holidays are on the horizon. Start saving $20 here and $50 there so you can cover gift-giving with cash and start 2015 without a debt hangover, Moraif suggests.

5. For 2015. Take one last look at your 2013 income tax statements. Was that the last year you will be able to claim some credits? College, home improvement and interest deductions might be different for the 2014 tax return. If so, do the math to make sure you have adjusted your withholding amount accordingly. That way, you won’t end up owing taxes because you assumed a repeat of 2013.

[See: 14 Legal Secrets for Reducing Your Taxes.]

“Do yourself a favor and get set up for the next year’s taxes," Moraif says. "Retrieve missing documents. Get organized now so you have that information readily available for next year.”

Schedule "think time" now with your financial advisor or certified public accountant or both, Ward advises. They tend to be less busy at this time of year (if you can catch them between vacations) and will probably have more time to talk through your goals.