Mid-year is an ideal time to pause and give your finances a thorough check-up. By summertime, you’ve had six months of earnings, spending, and saving – enough data to see what’s working and what’s not.

A proactive mid-year review can help you catch small financial issues before they turn into big problems and adjust for any life changes while there’s still time in the year to correct the course.

It can even help you avoid unpleasant year-end surprises (like an oversized tax bill) and might reveal opportunities to save money in the remaining months.

Below we outline five key areas to focus on in your mid-year financial check-in, with practical steps for both individuals and small business owners.

1. Income and Spending Review

Take a close look at your income and expenses for the first half of the year to ensure your budget is on track.

Revisit the budget you set at the beginning of the year and compare it against your actual income and spending so far.

Are there categories where you consistently spent more (or less) than planned? Make adjustments now so you can stay on track for the remainder of the year.

Here are some tips for this mid-year budget review:

• Compare Plan vs. Actual

  • Start by lining up your budgeted amounts next to what you actually earned and spent over the last six months. This will quickly highlight any variances. For example, you might discover you’ve been spending more on groceries or utilities than expected.
  • Adjust your budget to reflect these realities going forward – whether that means cutting back in certain areas or reallocating funds from an underspent category to a category that needs a boost.

• Account for Income Changes:

  • Consider any changes in income or life events that occurred since January. Did you get a raise, switch jobs, or start a side gig? Conversely, have you lost a source of income or taken on new expenses (like a new child or a move)?
  • Update your budget accordingly. Extra income might be directed toward savings or debt repayment, while new expenses mean you may need to trim other spending to compensate. The goal is to ensure your spending plan reflects your current reality at this point in the year.

• Identify Overspending (or Underspending):

  • ​If you’re overspending in certain areas, use this check-in to find solutions. Maybe dining out or subscription services are costing more than you realized – try setting a monthly limit for dining out or cancel subscriptions you don’t use.
  • On the other hand, if you budgeted for expenses that ended up lower, you can redirect those freed-up dollars to other goals, like debt payoff or savings. Taking action now can stop minor budget issues from becoming major setbacks later in the year.

• Bolster Your Emergency Fund:

  • Don’t forget to evaluate your savings safety net. Ideally, you should have at least 3–6 months’ worth of living expenses saved in an emergency fund for unexpected events.
  • Mid-year is a perfect time to check your progress on this fund. If you’re below the target, consider directing some extra money into it over the next few months (for example, using any tax refund, bonus, or simply tightening discretionary spending) so that you’ll be better protected against surprises. Your future self will thank you for building this cushion now rather than scrambling later.

2. Tax Withholding & Estimated Payments

Taxes aren’t just an April concern – a mid-year tax check can save you from headaches down the line.

Now is the time to make sure you’re paying the right amount of tax as you go so you won’t be hit with a large balance or penalties at year-end.

In fact, doing a summer tax checkup helps you avoid being surprised by a big tax bill and can uncover ways to save on taxes in the rest of the year.

Here’s what to focus on:

• Do a “Paycheck Check-Up” (For Employees):

  • ​If you receive wages (W-2 income), review your tax withholding on your paystubs. Life events like marriage, divorce, having a child, or changes in income can all affect how much tax you owe.
  • Mid-year is a great time to use the IRS’s online Tax Withholding Estimator tool to see if you’re on target. This tool will assess whether your current paycheck withholdings are adequate for your expected 2025 income and deductions, and it will recommend adjustments if needed. If the estimator suggests a change – for example, that you’ll owe too much or too little – you can submit an updated Form W-4 to your employer now rather than finding out in April.
  • Adjusting your withholding mid-year helps ensure you're paying the right amount in taxes—minimizing the risk of a surprise bill or an unnecessarily large refund come tax time.

• Review Quarterly Tax Payments (For Self-Employed or Business Owners):

  • If you’re self-employed, a freelancer, or otherwise receiving income without withholding (such as business profits, rental income, investment earnings, etc.), you likely pay quarterly estimated taxes. By now (mid-year), you should have made the first two quarterly payments for the year. Compare those payments against your actual income to date. If your business or income has grown in the first half of the year, it’s a good idea to adjust your 3rd and 4th quarter estimated payments upward to cover that additional income.
  • Conversely, if your income is lower than expected, you might reduce future estimates accordingly. The key is to avoid underpayment penalties and large year-end balances by keeping your estimates aligned with your earnings. (If you haven’t been paying estimated taxes but should be, or if you fell behind, now is the time to catch up. It may be wise to consult with a DJL tax professional to get back on track.)

• Check State and Other Tax Obligations:

  • Don’t forget about state taxes or other periodic taxes. Mid-year is a good checkpoint to ensure you’re current on any state income tax estimates, sales tax (for businesses), or payroll tax withholdings if you have employees.
  • The goal is to enter the second half of the year with confidence that your tax obligations are up to date—allowing you to focus on your personal and business goals without the stress of potential issues with the IRS or state tax authorities.

3. Retirement Contributions & Investment Adjustments

Halfway through the year is also an excellent time to assess your progress on long-term savings and investments.

Markets may have moved, and personal circumstances might have shifted since January, so a mid-year adjustment can help keep your retirement plans and portfolio on course.

Think of this as a mid-year tune-up for your future financial security:

• Check Your Retirement Contributions:

  • Review how much you’ve contributed so far in 2025 to your retirement accounts – such as your 401(k), 403(b), IRA, or SEP if you’re self-employed. Are you contributing regularly, and are you on pace to reach your contribution goal or the annual contribution limit? Ask yourself if you’re on track with the targets you set (for instance, contributing enough to get your employer’s full match, or maxing out an IRA). If not, consider increasing your contribution rate for the remaining pay periods of the year.
  • To maximize contributions, run the numbers on how much more you’d need to save from each paycheck to hit your goal by year-end. Even a small increase now – such as one or two percentage points more of your salary into your 401(k) – can make a difference. In addition to strengthening your long-term retirement savings, increasing pre-tax contributions now can also lower your taxable income for the current year—providing both immediate and future financial benefits.

• Rebalance and Refresh Investments:

  • Take a look at your investment portfolio and ensure it’s still aligned with your risk tolerance and goals. The first half of the year may have seen market gains or losses that left your asset allocation out of line with your plan. For example, if stock values surged, you might now be over weighted in stocks relative to bonds. Mid-year is a smart time to rebalance – selling a bit of what’s above your target and buying more of what’s below – to get back to your intended mix.
  • Also, consider whether your situation has changed: Are you closer to retirement or a major goal and need to dial down risk? Or do you have a longer horizon or new funds to invest that might warrant adjusting your strategy? Make any needed tweaks to your investment plan now so that you’re not scrambling at year-end. Consistent check-ins help you stay on track toward long-term growth while managing risk.

• Plan Remaining Contributions:

  • If you haven’t yet contributed to an IRA for this year or want to top off a Health Savings Account (HSA) or another savings vehicle, start planning for that now. You have until the tax filing deadline next spring to contribute to an IRA, but it’s easier to save gradually than to find a lump sum later. Consider setting aside money in the coming months for any year-end contributions you intend to make.
  • By automating transfers to these accounts or increasing contributions now, you’ll spread out the effort and take full advantage of compound growth. Mid-year is also a good checkpoint to ensure you’re not leaving any free money on the table – for instance, make sure you’re contributing enough to your workplace retirement plan to get the full employer match for the whole year.

4. Small Business Mid-Year Financial Review

For small business owners, the middle of the year is a critical time to evaluate your company’s financial health. You still have six months to implement changes that can impact your year-end results.

A mid-year business financial review can bring clarity and confidence, ensuring your business stays on track to meet its goals.

Here are key areas for a business-focused check-in:

• Review Year-to-Date Financial Statements:

  • Pull up your profit and loss statement, balance sheet, and cash flow statement for the year to date (for example, covering January 1 through June 30). Give them a close read. These financial statements are only as good as the data behind them – so first, confirm your bookkeeping for the first half of the year is complete and accurate.
  • Assuming your books are up to date, see what the numbers are telling you. How do your sales and expenses for the first six months compare to the targets you set or the budget you planned? Are there any unexpected profits or losses? By reviewing these statements, you’ll get a clear picture of your business’s current financial position and be able to spot any red flags.

• Compare Performance Against Goals and Prior Year Results:

  • Once you’ve reviewed your financial statements, the next step is to put those numbers into context. Evaluate your actual performance against the goals you set at the beginning of the year and compare those results to the same period last year.On the expense side, look for any categories where costs are rising faster than expected. Are those increases justified, or do they signal the need to reassess spending?
  • Use these insights to refine your strategy and adjust for the second half of the year. This is a valuable opportunity to revisit your business plan, revalidate your financial projections, and ensure alignment with any operational or market changes that have occurred. Let the numbers guide your decision-making to stay on track with your broader business goals.

• Evaluate Cash Flow:

  • Cash flow remains one of the most critical indicators of a business’s financial stability, making it an essential part of any mid-year review. Even businesses showing strong profits on paper can face challenges if cash flow is tight or poorly managed. Take time to review your cash flow statement or, at a minimum, track your bank balances and monthly inflows and outflows.
  • By proactively managing cash flow now, you can help ensure financial flexibility, avoid year-end surprises, and better position your business to capitalize on growth opportunities.

• Check Your Tax and Compliance Calendar:

  • Ensure all your business tax obligations are in order. By mid-year, you should have made the necessary quarterly tax payments (as noted earlier) to avoid interest or penalties.
  • Double-check that payroll taxes, sales taxes, and any other periodic filings are up to date. It’s easy to let deadlines slip during the busy year, but a quick mid-year audit of your compliance can save you from last-minute stress or fines.

• Trim Costs and Invest Strategically:

  • Mid-year is a natural time to reassess your budget and expenditure. Look for any expenses that are not yielding value. Certain subscriptions, services, or projects aren’t providing a good return – you can reduce or eliminate those costs in the second half. At the same time, identify areas that are performing well and consider if increasing investment could spur further growth.
  • The idea is to reallocate resources consciously: cut unnecessary costs and boost spending in high-impact areas as needed to drive year-end results. This kind of mid-year course correction can improve your profitability and efficiency.

• Organize Business Records:

  • Just as individuals need to organize their personal finances, businesses should use mid-year to tidy up recordkeeping (we’ll talk more about organizing records in the next section). Ensure your bookkeeping system is working smoothly – that might mean catching up on categorizing transactions, filing receipts, or updating software.
  • Keeping comprehensive, consistent records is crucial, so if you discover gaps or inaccuracies in your data, make it a priority to fix them now.

5. Organizing Financial Records

Keeping your financial documents and records organized is not the most exciting task, but it pays off in peace of mind and saved time. Mid-year is an excellent point to do a bit of “financial filing housekeeping.”

By now, you likely have accumulated a pile of receipts, statements, and paperwork from the first half of the year. Getting these items in order will help you stay on top of your finances and make tax preparation (and other financial tasks) much easier down the road.

Here’s how to tackle organizing your financial records:

• Gather and Sort Your Documents:

  • Begin by collecting all relevant financial documents from the past six months. This includes bank and credit card statements, pay stubs, bills, receipts for major purchases or deductible expenses, insurance documents, and any tax-related forms you’ve received.
  • Once gathered, sort them in a way that works for you – for example, by category (income, housing, utilities, medical, business expenses, etc.) or by month.

• Create a Reliable Filing System:

  • If you don’t already have a filing system, set one up now for both physical and digital records. For physical documents, this could be a set of labeled folders or an accordion file. For digital records, create well-labeled folders on your computer or cloud drive (and be consistent with file names).
  • Many people use a combination of both – saving PDFs of statements and scans of receipts, while keeping certain papers in a safe place. The key is to have designated places for all important documents so nothing goes missing.

• Embrace Digital Tools:

  • Consider reducing paper clutter by digitizing your records. Scanning important receipts and documents not only helps declutter, but also protects you in case the physical copies are lost or damaged.
  • Store digital copies securely (on a password-protected drive or a reputable cloud service) and back them up regularly. Going digital can make it easier to search for documents when you need them. Just be sure to implement proper security for any sensitive information.

• Set a Routine for Maintenance:

  • Organizing isn’t a one-time task – the real benefit comes from keeping up with it. Try to establish a regular routine for yourself to update and review your records.
  • By scheduling periodic financial reviews (say, at the end of each month or quarter), you ensure that things never pile up too much. Consistency is key: when you maintain your filing and bookkeeping regularly, year-end accounting or tax filing becomes much more manageable. Plus, you’ll have a clear, up-to-date picture of your finances at all times, which helps with decision-making.

• Know What to Keep (and for How Long):

  • As you organize your financial records, it’s important to understand how long certain documents should be retained. While guidelines can vary depending on the type of record, a general rule of thumb is to keep tax-related documents for at least three years. This includes receipts, W-2s, 1099s, and any supporting documentation for deductions or credits—since that’s the IRS’s typical audit window.
  • For other documents, retention depends on their purpose. Keep warranties and insurance policies as long as they’re active, loan agreements until the debt is fully paid (and ideally a bit beyond), and investment statements for at least a year—though many choose to save annual summaries long-term for reference.
  • When in doubt, it's better to hold onto documents than risk discarding something important. But staying organized also means knowing when to declutter. For a more detailed breakdown of what to keep and how long to keep it, check out our blog: How Long Should You Keep Tax Returns and Records? By getting your records in shape now, you’ll create an organized foundation for the second half of the year. It’s easier to focus on financial decisions and goals when your paperwork (or digital files) aren’t a jumbled mess. And come next tax season, you’ll be grateful that everything you need is neatly filed and ready to go.

Year-Round Support and Next Steps

A mid-year financial check-in is a valuable way to stay proactive and in control. Financial management isn’t just a tax season task—it’s an ongoing process.

Taking time now to assess your progress and adjust can lead to a smoother year-end and stronger financial results overall.

Whether you're fine-tuning your personal finances or guiding your business forward, the steps you take mid-year can make a lasting impact.

And remember, you don’t have to navigate it alone. DJL Accounting & Consulting Group, Inc., is here to support you year-round—not just during tax time.

If you have questions, need guidance, or want a second look at your financial picture, we’re here to help.

Here’s to a successful second half of 2025!

Disclaimer: This blog is for informational purposes only. Always consult a qualified professional for specific guidance.While we aim to keep information accurate and current with 2025 regulations, be sure to review guidelines annually for updates as they frequently change.