Why You Need a Mid-Year Budget Check-Up

Why You Need a Mid-Year Budget Check-Up
Photo: Yuricazac, Shutterstock

Now that we’re halfway through 2021, it’s a perfect time to revise your budget and see if you’re on track with your financial goals. With all the pandemic-related tax credits, consumer price inflation, and looming expiration of the pause on student loan payments, it’s quite possible that your spending and expenses will shift in the second half of the year — so why not get ahead of it and fine-tune your budget now?

Check the progress of your financial goals

Aside from keeping your monthly expenses under control, a budget can help you track financial goals that span many months or years (like saving money for some holiday spending, or for retirement). By staying on top of these savings now, and balancing your budget as needed, you’ll be less likely to rely on high-interest credit card debt later.

Reassess your budget — especially your expenses

Start by listing all of your expenses. To be thorough, comb through your monthly credit card statements from the past year, and verify each expense. In doing so, you might uncover some recurring expense for, say, an app you barely use. Also, try to look ahead: Are there other expenses looming, like student loan payments, which resume in October? Are they accounted for in what is essentially a post-pandemic budget?

Check your credit reports

Your credit score determines whether you qualify for loans that charge favourable interest rates, but it’s based on credit reports that are often full of errors that can drag down your score. Plus, identity theft is a chronic problem, so you’ll want to make sure some scammer isn’t applying for loans in your name.

Review your investments

If you have investments like a super, you’ll want to confirm you’re still on track for your investment goals. Consider rebalancing your portfolio if it’s not being actively managed, and reassess your mix of asset — stocks, bonds, and cash — if your priorities have changed.

Lastly, adjust your budget

If you need to save more than expected for a financial goal, or if expenses have recently gone up, you’ll want to adjust your budget. In terms of priorities, financial planners commonly recommend topping up your emergency fund first, then paying down high-interest debt as much as you can. After that, you want to make sure your monthly budget is manageable by adjusting your spending and saving as needed.

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