Latest Business News
Midyear Financial Cleanup: 3 Actions to Take Now
Reflect and Reset
Summer is a great time to slow down, reflect, and reset your money mindset. Take the opportunity to review your financial goals and determine if you need to make any adjustments. Certified financial planner Stacy Francis recommends starting small when it comes to cleaning up your finances, rather than becoming overwhelmed.
Speak with Financial Experts
Getting advice from financial experts can help kickstart your cleanup. Jordan Awoye, managing partner of Awoye Capital, suggests talking to your advisor in the middle of the year to stay accountable and understand your goals. This conversation can be a valuable opportunity to assess your progress and make necessary changes.
Manage Your Cash Flow
Take the time to evaluate your cash flow and create a budget. Consider using tools like Mint.com, Personal Capital, or YNAB to track your spending. Additionally, anticipate and prepare for future expenses, such as upcoming federal student loan payments. Corbin Blackwell, a senior financial planner, recommends making practice payments to yourself by setting aside money in a high-yield savings account to adapt your budget accordingly.
Check Your Tax Withholding
To avoid unexpected tax bills or penalties, review your tax withholding. Use the IRS Tax Withholding Estimator tool to determine if the correct amount of taxes is being withheld from your paychecks. If necessary, fill out an IRS Form W-4 to update your withholding. Adjusting your withholding can improve your cash flow and result in a smaller refund at tax time.
Maximize Retirement Savings
Take the time to review your workplace retirement savings plan and ensure that you are maximizing your 401(k) contributions. It's important to make sure that all of your funds are invested and not sitting in cash. Additionally, consider evaluating the performance of your investment portfolio and rebalancing if needed. If your company offers in-plan conversions, you may also want to consider moving some of your traditional, pre-tax 401(k) money to a Roth 401(k).
By following these actions, you can give your finances a midyear cleanup and set yourself up for financial success. Remember to start small, seek guidance from experts, and regularly review and adjust your financial strategies.
Conclusion: The Impact of Midyear Financial Cleanup on New Businesses
In the world of entrepreneurship, every decision and action can significantly impact the success of a new business. The concept of a midyear financial cleanup, as outlined in the steps above, holds immense value for both individual finances and the financial growth of a burgeoning company.
Reflecting and resetting financial goals is especially crucial for new businesses. With the fast-paced nature of startups, it's easy to become overwhelmed and lose sight of the bigger picture. By taking the time to review and adjust financial goals, new entrepreneurs can ensure they are on the right track and not veering off course.
Speaking with financial experts is an invaluable step in the midyear cleanup process. For new business owners, getting advice from seasoned financial professionals can provide unique insights and help avoid common pitfalls. These experts can offer guidance on various aspects, such as budgeting, cash flow management, and tax withholding, which are vital for the financial stability and growth of a new business.
Managing cash flow is a fundamental aspect of any business, especially for startups with limited resources. By evaluating cash flow and creating a solid budget, new entrepreneurs can effectively allocate funds, track expenses, and anticipate future financial demands. This proactive approach helps in avoiding financial mismanagement and ensures that money is being allocated to the right areas for business growth.
Checking tax withholding is particularly relevant for new businesses, as unexpected tax bills or penalties could significantly impact the bottom line. By reviewing tax withholding using tools like the IRS Tax Withholding Estimator, new entrepreneurs can stay ahead of their tax obligations and make necessary adjustments to improve cash flow.
Maximizing retirement savings may seem like a distant concern for new business owners, but it is crucial to keep future financial security in mind. By carefully reviewing retirement savings plans, ensuring maximum contributions, and evaluating the performance of investment portfolios, entrepreneurs can build a solid financial foundation for themselves and their employees.
In conclusion, the midyear financial cleanup discussed above is not only applicable to individual finances but also holds immense potential for new businesses. By implementing these actions, entrepreneurs can ensure their financial strategies are optimized, leading to greater financial success and stability for their ventures. Remember, proactive financial management is key for the long-term growth and profitability of new businesses.
Article First Published at: https://www.cnbc.com/2023/07/20/midyear-check-in-3-steps-for-cleaning-your-financial-house.html.svg)
