Mid-Year Financial Tweaks and Tasks

It’s halftime for your 2023 finances and a perfect time to review where you stand, make mid-year adjustments, and complete recommended financial planning action steps.

Below are ten mid-year financial tweaks and tasks:

Tax-Deferred Savings Tweak- Perhaps you will get a raise on July 1. Consider completing the paperwork needed to save more money from July to December in your employer’s tax-deferred retirement savings plan. Even 1% more of pay in savings adds up over time.

Health Savings Account (HSA) Tweak- By mid-year, you know what you already spent for health care services through June. This information can help inform decisions about how much more to save up to the 2023 limits of $3,850 (self-only) and $7,750 (family coverage).

Flexible Spending Account (FSA) Tweak- Like HSAs, you know your health care spending so far. Use this information to adjust payroll deductions for a health care FSA (up or down). The 2023 maximum pre-tax contribution is $3,050. Ditto for child care FSA contributions.

Tax Withholding Tweak- The IRS Tax Withholding Estimator can determine if withholding is on track based on estimates of remaining 2023 income. Also, apply the IRS safe harbor rules to 2022 income and a “best estimate” of 2023 income to avoid an under-withholding penalty.

Savings Account Refresh- While “brick and mortar” banks pay less than 0.05% (i.e., half of 1%) on savings and money market accounts, online banks now pay about 3.75% to 4.5%. Search for banks that offer attractive rates and FDIC insurance and consider moving your money. Another cash equivalent asset to consider is FDIC-insured certificates of deposit (CDs) sold by online banks and brokerage firms.

Budget Refresh- During the first six months of 2023, inflation increased many household expenses including auto and homeowner’s insurance premiums, utilities, rent, child care, and food eaten at and away from home. Rework the numbers in previous budgets to better reflect current costs.

Net Worth Calculation- If you haven’t tallied the value of your assets and debts in a while to calculate net worth (assets - debts), now is a good time. Why? You have six months left in 2023 to make positive changes; e.g., saving more and accelerating debt repayment using PowerPay.

Financial Self-Assessments- Rutgers Cooperative Extension has six online financial self-assessment tools to help users identify strengths and weaknesses of their personal finances. Quiz results can identify opportunities for financial self-improvement during the remainder of 2023 by taking action on quiz items with a “never” or “seldom” response.

Investment Analysis- Now is the time to review investment performance during the first half of 2023. Why? To inform investment decisions going forward and to identify poorly performing securities that might be good candidates for potential tax-loss harvesting at year end.

Tax Bracket Analysis- By mid-year, it is easier to make more accurate projections of annual income. Consider doing a proforma 2023 tax return. This information can inform decisions made during July to December to avoid moving up to a higher tax bracket or triggering the net investment income tax (NIIT) and, for older adults, higher IRMAA Medicare premiums.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.