A little over six months have passed since you made your financial resolutions for 2025. How well are you doing? How can you do better?
Tropical Financial offers health savings and retirement accounts that automatically grow, creating reserves for immediate needs and the future. To take advantage of them, you need a plan. To determine how your finances have fared, follow these steps:
- Review your net worth. What were your total assets and liabilities on New Year’s Day, and what were they on June 30? Compare the figures to determine whether your net worth rose or fell. If it decreased, you have extra work to do to meet your 2025 financial goals.
- Track your savings rate. What percentage of your gross or net income did you save each of the past six months? Use those figures to determine whether your average monthly savings rate is on target.
- Measure your debt levels. Break down your total debts on January 1 and June 30. Did your credit card balances rise or fall? If so, why? You might have incurred an unexpected major expense that had to be financed or have paid off a loan.
- Study where the money went. Analyze your bank and credit card statements to determine whether essential expenses, such as utilities, and non-essential expenditures like dining out, online subscriptions, and leisure travel, increased or decreased over time.
- Calculate retirement and investment contributions. How much have you contributed to tax-sheltered accounts in those six months?
Three cheers if you improved your net worth, added significantly to your tax-sheltered accounts, and lowered your total debt. You’re on your way to a financially rewarding year. If the numbers were unchanged between the two dates, debts increased, or savings fell, here are eight mid-year resolutions to get you back on track:
- Build a detailed budget. Monitor your monthly income and expenses. Separate your spending into what you need and what you want. Track your revenue, especially if you are self-employed or have a second job that does not produce steady income.
- Reduce non-essential spending. No one said this was going to be fun. Cut back on subscriptions, leisure travel and impulse purchases. Put a number on it, like slashing the total figure by 20% for the next three or six months. This guide from Tropical Financial shows eight ways to lower costs.
- Negotiate and decrease essential expenses. Shop around for lower-cost insurance and cell phone plans, and adjust your habits to lower utility bills. Sometimes, but not always, you can save money by bundling services. Ask your employer, credit union and other affiliations about group rates.
- Slash your debt balances. Some financial advisors recommend paying down the highest-rate credit cards and loans first. Others suggest paying off the smallest balances. Either way, a disciplined and aggressive approach to reducing total obligations should be a high priority. Talk to a Tropical Financial banker about whether debt consolidation could save you money.
- Automate savings and deposits. Did you know that Tropical Financial offers over a dozen ways to save including certificates of deposit? You can set up automatic transfers to savings accounts from each deposited paycheck or via periodic transfers.
- Put more income into tax-sheltered accounts. Increase your 401(k) or IRA contributions. If your employer has a matching plan, make sure you are receiving the maximum amount allowed. If you are 50 years or older, take advantage of IRS catch-up contributions on retirement accounts. If you are 55 or older, do the same with a health savings account.
- Start or rebuild your emergency fund. If a medical emergency or other unseen expense depleted your rainy-day fund, replenish it over the second half of the year. By the end of 2025, you should have a minimum of three months of expenses in a high-yield savings account. Tropical Financial has a guide to saving and an MMA that pays higher interest on higher balances. You will be better protected from financial shock if the balance covers you for six months.
- Join the gig economy. One-off projects, occasional part-time work, and freelancing that use your skills and talents can generate income that can be deposited directly into tax-sheltered accounts. Yes, you will still owe income taxes on your income, but your earnings on that money will not be taxed until you start to withdraw funds.
