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2021 Is Halfway Over: How to Conduct a Mid-Year Financial Checkup Thumbnail

2021 Is Halfway Over: How to Conduct a Mid-Year Financial Checkup

About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C. area that works with clients virtually across the country. Lamar's work with his clients focuses on budgeting, employee benefits, paying down debt, buying their first home, and investing. Lamar is the Founder of Dream Financial Planning, a virtual Fiduciary Financial Planning firm specifically designed to help young professionals and minorities take control of their finances and fulfill their dreams. Feel free to schedule a complimentary consultation to learn how we use the DREAM Financial Planning Process ™ to help our clients achieve their goals. 

Summer is in full swing, meaning we’re a little over halfway through 2021. After a year like no other, we’re all excited to enjoy the warm weather with friends and family. So if you have some time over the coming weeks, take a moment to slow down and check up on your financial wellbeing. I've highlighted six things you can do right away to ensure your goals are being met and your finances are in good shape as we head into the second half of 2021.

Year-End Checklist 

This end-of-the-year checklist provides several planning opportunities and issues for you to consider.  However, you don't have to wait until the end of the year to start addressing these issues. Year-end topics can include tax planning, investment, retirement accounts, charitable giving, cash flow and savings, insurance, and estate planning. I've included a comprehensive checklist below that covers the types of year-end planning issues you should consider to create opportunities for your family in the current year and beyond.


In this checklist, I cover a number of planning issues that you should consider before year-end to ensure that you stay on track, including:

  • Various issues surrounding investment and retirement accounts, including matching capital gains against any investment losses in taxable investment accounts and confirming that all RMDs are taken.
  • Tax planning issues, including strategies dependent upon your prospects for higher or lower income in the future. You should also review where you sit relative to your tax bracket, as this is a good time to make moves to fill out brackets for the current year that also might prove beneficial down the road.
  • If you're charitably inclined, there are several strategies that will help reduce your tax liability that can be considered based on your situation.
  • If you own a business, tax reform has created some opportunities surrounding pass-through income from your business to your personal return. Accelerating or deferring business expenses presents another solid planning opportunity for these clients.
  • It’s wise to review your cash flow situation as you near year-end to see if you can fund a 529 plan for children or grandchildren or to see if you can save more in an employer-sponsored retirement plan like a 401(k).

Review Your Budget

Your budget for this year may look a little different than it did in 2020. Many of us spent less on things like travel, vacations, eating out, entertainment, and the holidays. If you didn’t revisit your spending budget for 2021, pause now and take a moment to identify areas where you may be spending more (or less) than last year.

Spending aside, your income stream may have changed as well - whether you received a promotion, started a new career path, or experienced a COVID-related job loss. If you’re still following the same budget as last year, but your income has changed, reevaluate your budget immediately.

Check Your Credit Score

Checking your credit score isn’t exciting, but it is an effective indicator of your financial wellbeing. This is especially important if you plan on doing anything major in the second half of 2021, such as buying a car, purchasing a home, moving into an apartment, opening a new credit card, or taking out a personal loan. All of these scenarios, and others, require a credit check. Being proactive in checking your credit score now can give you time to identify potential problems (such as a missed payment) and work to resolve them. In addition, you are entitled to one free credit report per year.

Review Your Retirement Contributions

If you save for retirement through an employer-sponsored fund such as a 401(k) or 403(b), take some time to check up on your account. This is true for everyone, even those who have opted to have funds automatically deferred. This year, the 401(k) contribution limit is $19,500 for those under 50 and $26,000 for those 50 and older.1 If you’re approaching retirement, you now have the opportunity to save even more in your account to get the most out of your employer-sponsored plan. Checking in on your yearly contributions now gives you plenty of time to catch up or contribute more before the year ends.

Assess Your Tax Liability 

Double-check your tax withholdings, ensuring that you have the proper amount withheld or determining if adjustments need to be made. Adjustments may be necessary if you’ve experienced certain life events, such as marriage or divorce. Making sure your tax withholdings reflect your current situation for 2021 can help you avoid surprises come tax season.

Plan For Your Advanced Child Tax Credit

New this year, eligible families will begin receiving advanced child tax credits in the second half of 2021. From July to December, families will receive six installments of the credit via direct deposit or mailed check. Starting now, you’ll want to determine what should be done with the money. Creating a plan ahead of time can reduce the urge to spend impulsively once the credit hits your account.

Re-Evaluate Your Goals

After over a year of living through a pandemic, you are sure to have gone through some unexpected changes in your life. Now that the pandemic is coming to an end, there are even more changes likely to come. Now is an opportune time to revisit the goals you made at the start of 2021 and make sure they are still well-aligned with your current standings. If not, take a step back to look at your entire financial situation and future needs, and create new goals that better reflect them.

Take some time to prepare for the second half of the year. As life returns to normal, reevaluate your financial standings. Determine whether you’re on track to meet your goals or if you might benefit from working with a Financial Planner.

Dream Financial Planning Process ™

Whether you're managing student loan debt, starting a family, or considering buying your first home, the DREAM Financial Planning Process™ is tailored to the unique needs of busy professionals in their 30s and 40s. This process focuses more on short-term goals while you grow and evolve in your personal and professional life. If you're looking for guidance on Financial Planning, optimizing employee benefits, budgeting, student loans, and managing your 401k or investments, we can help.

Complimentary Consultation

With uncertainty surrounding the economic stability of our country, it's okay to have fears and anxieties surrounding your own savings and investments. The most productive course of action from here is to reach out to Dream Financial Planning (or whoever your trusted advisor might be) and discuss your options. It's easy to have knee-jerk reactions when it feels like the bottom is falling out, but it is imperative to make decisions using research-backed data and a level head. If you'd like a Complimentary Review and risk assessment of your investment portfolio, feel free to send me an e-mail.

Monthly Newsletter

In my July Newsletter, I discuss how to avoid a surprise tax bill. There's also a U.S. News and World Report article where I share a few tips to help you financially prepare for starting a family. If you're planning to build your dream home and/or need a construction loan, that's covered too.


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  1. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits

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