By now, you probably have a good sense of how your year will play out, making this summer a perfect opportunity for a financial reset. Here are my top five strategies to strengthen your financial position and set you up for an even more powerful 2025.
1. Tax Planning: The purpose of tax planning is to pay the least amount of tax over your lifetime, not necessarily to reduce your taxes this year. This requires looking ahead 3 to 5 years and making some projections about your financial life. Taxes are complicated, and good planning requires a considerable amount of time. It's far better to do this now when you have time to implement recommendations within this calendar year, outside the busy tax seasons of fall and spring.
2. Detailed Review of Your P&L and Balance Sheet: You have hundreds, maybe thousands, of transactions happening in your bank and credit card accounts. Even the best work will leave room for improvement. Spend a couple of hours going through your detailed reports, ensuring things are categorized correctly and nothing is missing. Major tax blunders often result from messy books. Doing some heavy lifting now will save you a lot of time next year and ensure you’re not paying an unfair share of taxes. (If you need a P&L, let's chat.)
3. Update Your Net Worth Tracker: At the end of the day, it's about building your net worth to give you options in the future. Net worth doesn’t tend to move quickly, so once or twice a year is sufficient for most people. Where are you right now? Where do you want to go? Let the data guide your decisions.
4. Review Your Insurance: If you’ve been following my content, you know we had a house fire in March, and it’s been eye-opening how insurance really works when you have a big loss. Thankfully, I had updated my insurance to ensure proper coverage given the changes in my life and assets. When was the last time you looked comprehensively across all of your insurance and had a conversation with your insurance broker? If it’s been more than a year, put that on your schedule. One of the biggest reasons people fail to build the wealth they want is due to setbacks that could have been prevented with proper insurance.
5. Identify and Eliminate Financial Stressors: Juggling many financial responsibilities can significantly impact your health over time. What are you holding onto that you can let go of? What can you eliminate that would help you sleep better? Chances are there is something; get present to it, make a plan, and get rid of it by the year's end.
Taking these steps for a mid-year financial reset can set you up for a stronger finish to the year and an even more robust 2025. By proactively managing your taxes, cleaning up your financial records, tracking your net worth, reviewing your insurance, and eliminating financial stressors, you can create a more secure and prosperous future. Make the most of this summer to lay the groundwork for continued financial success.
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