Four mid-year money moves to make right now

Here’s what to plan and prepare for your financial future

With the pandemic causing the past year to be anything but predictable, it’s understandable to feel unsure of where to start when preparing for the future, especially when it comes to finances.

But, with the half-year mark right around the corner, now is a great time to ask what’s next for you and your financial planning, beginning with a few key steps.

Have–and preserve–cash on hand

Knowing we’re not yet fully past the economic implications of the pandemic, cash is the best line of defense when planning for the unexpected. Liquid cash puts you in a safer, stronger position if there is disruption in the market or your career, helping you avoid the need to sell or rebalance your portfolio at an inopportune time. If and when the market corrects, you’ll also have cash available for a buying opportunity.

With the pandemic driving lower interest rates, consider debt consolidation or mortgage refinancing to add some extra cash to your pockets. While it may take time to receive approval, refinancing can help lower your monthly payments long-term. Any extra money you save through this financial decision can be put toward your cash reserve, including an emergency fund.

Another option is a home equity line of credit, which can provide you with cash on hand in the event of a possible job loss. While employed, request a line of credit from your bank, but hold on drawing from it. In the event of an unexpected impact to your income, you can tap into this to avoid pulling cash from other places, like your investments.

Prioritize portfolio review

As we approach mid-year, take some time to review your investments to ensure your portfolio is properly allocated, with an investment mix that aligns with your financial goals. For example, someone approaching retirement might consider updating their investment mix to own a smaller percentage of stocks, which offer growth over time, but can be less predictable day-to-day. An advisor can help to assess whether you are diversified enough in your investments and provide suggestions on how to rebalance if necessary.

Consider also taking a look at Roth conversions. While you can’t fund a Roth IRA beyond a certain income, a conversion is simply taking your traditional IRA that’s never been taxed and turning it into a Roth. You’ll pay tax on that amount now, rather than in the future, and never pay taxes on it again.

Revisit your budget

With the pandemic causing each of us to shift how we live our day-to-day lives, revisit your budget to confirm it still reflects the reality of where your money is going. Maybe you’ve consistently traded gas costs for a higher monthly utility bill, or cutting back on food and travel costs has freed up funds in your budget.

Review your purchases and expenses over the past few months to get a good sense of where your money is (or is not) going and restructure your budget accordingly. This is also a good time

to evaluate whether any money you’ve potentially saved by cutting costs can be put toward paying off student loans, bulking up an emergency fund or even saving toward a new financial goal.

Be sure your plan is up-to-date

If you haven’t already, schedule a mid-year check-in with your financial advisor. You’ll want to confirm the status of items like your retirement, education and charitable planning and benchmark progress against your goals. If you’ve had significant life changes in the past year, or are planning for changes in the near future, your advisor can help ensure the accompanying financial adjustments are incorporated into your plan.

While there’s no one “right” way to plan for what’s to come, an advisor can support you in staying on track to meet your financial goals this year and the years to come.

Royce Zimmerman is a Wealth Management Advisor with Northwestern Mutual Wealth Management Company. For more information

Categories: Business Insights, Finance