Finance Expert: Conduct a Mid-Year Checkpoint on Your Wealth and Tax Strategy

Ah, summer. The season of warm sun, delicious barbecue and making unforgettable memories with family and friends.

It's also the perfect time to evaluate how your wealth and tax strategies are performing. While that may not have the allure of a beach or mountain vacation, it can create meaningful results. No matter your experience level, conducting a simple yet effective mid-year check-in can help you stay on track toward your goals and make any necessary adjustments before the year-end rush.

Here are five steps I recommend for reviewing your wealth and tax strategies.

1. Look at your long-term goals.

Creating your wealth and tax strategies should always start by defining your wealth dream — the amount of money you'll need to enjoy the lifestyle you want. This gives you a specific goal from which you can build your plan.

If you've done any financial planning in the past, your current strategies are likely built with some goal in mind. Our dreams often evolve, so it's important to periodically do some personal reflection to see if the goals you've set for yourself are still the right ones.

Use your mid-year review to check in with yourself and ask the following questions to clarify your wealth dream:

• What would you be doing if finances and time were not an issue?

• Does that vision match the goal of your current wealth strategy?

• What would you like to add or eliminate?

• What will you need financially to achieve this dream?

2. Refine your investments.

How quickly will your current investments get you to your wealth dream? Would you like to get there faster? Most of us — if we're being honest — would love to reach our dreams sooner. That's why your next step is to determine if you are missing out on any strategic opportunities.

As you review options, look for investments that have a strong return and come with tax incentives to essentially get the government to pay for your investments. You'll find plenty of these in the categories of business, technology, real estate, energy, agriculture, insurance and retirement savings.

Once you've chosen a category, narrow your focus. When it comes to investing, it's easy to be caught up in the idea of diversification. However, if you study wealthy people, you'll notice that most of them got rich by focusing on one wealth-building strategy. They may maintain their wealth with a diverse portfolio, but they achieved it with a niche.

The niche you choose is entirely up to you. Take the time this summer to explore different options and find the asset class that resonates most.

3. Maximize your tax savings.

One of the easiest ways to achieve your wealth goals faster is by keeping more of the money you earn instead of sending it to the government through taxes. One of the most effective ways to reduce taxes is through tax credits, which provide a dollar-for-dollar reduction in your tax liability. Tax credits are available for various situations, including having minor children, paying for daycare for children or dependent adults, installing solar energy systems, buying certain electric vehicles, adopting a child, and paying for tuition and school fees. A knowledgeable tax professional can help.

Next, review your finances to ensure you're taking all allowable tax deductions, which reduce the amount of your income that can be taxed. Deductible expenses can vary but commonly include business purchases, travel, education, training, meals, transportation and home office expenses. Other common deductions include state and local taxes, medical expenses, contributions to certain retirement plans and health savings accounts, and interest on a mortgage or student loans.

Additionally, consider adding entities to your strategy. Adding entities at the right time and electing to have them taxed appropriately are two of the greatest tools you can use to reduce your taxes. Work with your tax advisor to ensure you aren't missing any opportunities.

4. Decide what you will learn next.

No one will ever care more about the performance of your wealth and tax strategies than you do, so it's important to upskill yourself in these areas. Choose one area you'd like to learn more about over the next six months and look for books, podcasts, or people in your network that can help you gain expertise in your chosen area.

The most successful people are often the most curious. Ask questions and challenge yourself to learn new things. This can help you approach your finances with a growth mindset, take the right risks, and bounce back more quickly from setbacks.

The more you educate yourself about investing and tax strategies, the better you can be to make smart decisions to achieve your financial goals.

5. Level up your team.

No matter how much you learn, the right team of tax and wealth professionals to assist can greatly enhance your results. Use your mid-year review to evaluate whether it is time to adjust your team. Here are some signs that it's time to make a change.

• You only hear from your advisors once a year. The most effective tax advisors do far more than year-end tax filing. They connect with you regularly, ask thoughtful questions and make recommendations based on a proven system for permanent tax reduction. They're guiding you in both short- and long-term strategies. If you feel your advisor looks at working with you as just another business transaction, move on.

• They're too cautious. Don't miss out on legitimate tax deductions or other financial strategies because your advisors can't (or won't) handle them. If you get the sense your advisors are afraid of the IRS, find a new advisor.

• You just don't click. Your wealth and tax advisors are there to support you in one of the most sensitive areas of your life. You want someone with whom you feel comfortable working. If it doesn't feel right, it isn't.

With your mid-year strategy check complete, take some much-deserved time to relax and recharge, and rest easy knowing your wealth dreams are on track.

The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.