Mid-Year Financial Checkup: Strengthening Your Wealth Plan

As 2025 reaches its halfway point, July is an excellent time for affluent clients to review their financial strategies. This mid-year checkup ensures your plan is on track to meet your personal and financial goals, with adjustments to reflect your evolving needs. We focus on four key areas—insurance, liquidity reserves, budgeting, and investments—to keep your wealth plan robust and aligned with your aspirations.

1. Reviewing Your Insurance Coverage

Insurance is a cornerstone of wealth protection, shielding you from risks that could disrupt your financial progress. A mid-year review ensures your coverage matches your current lifestyle and assets.

• Property and Liability Insurance: Confirm that your homeowners’ or renters’ insurance covers the current value of your home, valuables, or secondary properties. Consider umbrella policies for added liability protection, especially if you entertain frequently or own high-value assets. For auto insurance, ensure policies reflect your vehicles and driving habits.
  
• Life and Disability Insurance: Life changes, such as a new child, marriage, or business venture, may require updated life or disability coverage. Verify that policies support your family’s needs or business continuity plans, like funding a buy-sell agreement.
  
• Health Insurance: Check that your health plan meets your medical needs, including access to preferred providers or specialists. Explore supplemental options, like HSAs or long-term care insurance, to protect your wealth from future healthcare costs.
  
• Action Step: Gather all policies and note any gaps in coverage. Request updated quotes from insurers and consult your financial advisor or insurance broker to align coverage with your goals. Set a timeline to address discrepancies.

2. Assessing Your Liquidity Reserves

A well-funded liquidity reserve provides security and flexibility, allowing you to handle unexpected expenses or opportunities without disrupting your investments. Mid-year is ideal for evaluating its adequacy.

• Target Size: Aim for 6–9 months of living expenses, reflecting your lifestyle (e.g., travel, dining, or property maintenance). If you’re self-employed or have variable income, consider 9–12 months. Calculate your monthly costs and compare them to your reserve.
  
• Account Placement: Keep reserves in liquid, low-risk accounts, such as high-yield savings or money market funds, to balance accessibility and returns. Compare yields from online banks or brokerage accounts to optimize earnings.
  
• Replenishment Plan: If you’ve used your reserve—for example, for a home renovation or business investment—set a plan to rebuild it. Allocate a portion of your income, such as $500–$1,000 monthly, until it’s restored. If your income has grown, adjust the reserve to match your current needs.
  
• Action Step: Review your reserve balance and calculate its coverage. If underfunded, automate monthly transfers to rebuild it. If well-funded, consider redirecting excess to investments or debt repayment, in consultation with your advisor.

3. Refining Your Budget

A disciplined budget keeps your finances aligned with your goals, but life’s changes can require recalibration. A mid-year review helps you stay on course.

• Spending Analysis: Review your spending over the past six months using bank statements or budgeting tools. Categorize expenses (e.g., housing, leisure, subscriptions) and identify areas of overspending, such as dining out or unused memberships. Look for opportunities to optimize, like consolidating services or negotiating bills.
  
• Adjust for Changes: Account for shifts in income or expenses, such as a promotion, new mortgage, or charitable commitments. Update your budget to reflect these changes, ensuring it supports your goals, like saving for a vacation home or funding education.
  
• Debt Management: Prioritize paying down high-interest debt, such as credit cards, using the avalanche (highest interest first) or snowball (smallest balance first) method. If you have low-interest debt, like a mortgage, evaluate whether accelerating repayment outweighs investment opportunities.
  
• Action Step: Create a revised budget for the rest of 2025, setting clear goals, like cutting leisure spending by 15% or paying off $5,000 in debt by year-end. Schedule monthly check-ins with your advisor to track progress.

4. Optimizing Your Investment Portfolio

Your investments drive long-term wealth growth, but they require regular oversight to stay aligned with your objectives and risk tolerance.

• Performance Check: Review your portfolio’s performance over the past six months, comparing it to benchmarks and your goals. Work with your financial advisor to confirm your strategy suits your life stage and aspirations, such as retirement or legacy planning.
  
• Asset Allocation: Ensure your portfolio’s allocation aligns with your Investment Policy Statement (IPS). Rebalance if market shifts have skewed your mix, such as overweighting in equities or real estate. Avoid over-concentration in a single stock or sector to manage risk.
  
• Retirement Contributions: Verify your contributions to retirement accounts, aiming to maximize your 401(k) ($23,500 limit for 2025) or IRA ($7,000 limit)¹. If behind, adjust your budget to catch up. Explore tax advantaged options, like SEP IRAs, if you’re self-employed.
  
• Action Step: Log into your investment accounts and review performance and allocation. Schedule a meeting with your advisor to discuss rebalancing or increasing contributions. Set a goal, like boosting IRA contributions by $2,000 or diversifying into a new asset class.

Bringing It Together

A mid-year financial checkup is a proactive step to align your wealth with your vision. Here’s a streamlined action plan:

1. Insurance: List all policies, identify gaps, and request updated quotes. Align coverage with your advisor’s recommendations.
   
2. Liquidity Reserves: Assess your reserve’s adequacy and optimize its placement. Automate transfers to maintain or rebuild it.
   
3. Budget: Revise your budget, setting specific goals for spending and debt reduction. Monitor progress with your advisor.
   
4. Investments: Review your portfolio, rebalance as needed, and increase retirement contributions if feasible.

By addressing these areas, you’ll enhance your financial confidence and trajectory. Collaborating with your financial advisor ensures your plan remains tailored to your affluent lifestyle, positioning you for sustained growth and stability by year-end.

Advisory Services offered through Nepsis, Inc., An SEC Registered Investment Advisor. 

Source:

1. https://www.cnbc.com/select/401k-contribution-limit-2025