We've reached the dog days of summer, meaning we are now over halfway through 2021. After a year unlike any other, everyone has been enjoying warm weather and good times with friends and family.
However, with school starting and life beginning to slow down once again, it's time to shift a little of your focus back on the health of your financial situation. With half of the year behind us, there's no better time to take a step back and give your finances a full check-up.
There are six major steps you can take to check that your financial goals and milestones are being met and you're in good shape as we head into the second half of 2021.
Review Your Budget
More likely than not, your budget for this year looks quite a bit different than it did in 2020. Most of us spent less on things such as travel, vacations, restaurants, entertainment, and even the holidays. If you haven't yet revisited your spending budget for 2021, talk with your financial advisor to identify areas where you may be spending more (or less) than you did last year.
Many experienced changes not only in their spending, but their income as well - this could be a promotion, a new career path, or a COVID-related loss or reduction of employment. If you have not revisited your budget from last year despite a change in income, it is crucial that you reevaluate your finances as soon as possible.
Check Your Credit Score
Checking your credit score isn't a particularly complex or exciting step, but it is an important indicator of financial health. This is especially important if you have any major decisions planned for the second half of 2021, such as opening a new credit card, taking out a personal loan, moving into an apartment, or buying a car or a home.
All of these and any other scenarios require a credit check; knowing your credit score allows you to remain a step ahead and brace now for any potential issues, such as a missed payment, and prepare to resolve them.
Review Your Retirement Contributions
If you save for retirement through an employer-sponsored fund such as a 401(k) or 403(b), take some time to check up on your account. This is true for everyone, even those who have opted to have funds automatically deferred.This year, the 401(k) contribution limit is $19,500 for those under 50 and $26,000 for those 50 and older.1 If you’re approaching retirement age, you now have the opportunity to save even more in your account in order to get the most out of your employer-sponsored plan. Checking in on your yearly contributions now gives you plenty of time to catch up or contribute more before the year ends.
Assess Your Tax Liability
Now is a good chance to double-check and confirm your tax withholdings, ensuring you have the proper amount withheld or bringing up necessary adjustments right away. Adjustments might be required if you have experienced certain major life events, such as marriage or divorce. Confirming that your tax withholdings reflect your situation now in 2021 is the best way to prevent surprises come tax season.
Plan For Your Advanced Child Tax Credit
As part of new additions becoming effective this year, eligible families will begin receiving advanced child tax credits in the second half of 2021. Starting in July and into December, families will receive six installments of the tax credit, either via direct deposit or mailed check.
If you are part of an eligible household, it is a good idea to have a full plan in place now for what to do with the money for each installment. Having a full, agreed-upon plan will reduce the urge to impulsively spend the money from the credit as soon as it hits your account.
Re-Evaluate Your Goals
After living in a pandemic for over a year, it is almost certain that you have gone through unexpected changes in your life. Even as the pandemic comes to an end, the changes will continue. Ensuring your financial situation is healthy and on-track now will place you in a better position to weather any storms and fully enjoy any celebrations as they come.
If your finances are not well-aligned with your desired goals, now is the time to revisit and create new goals to reflect your current and future needs.
Go into the second half of 2021 prepared after a conversation with your financial professional; they are a great resource for ensuring that you fully understand your financial situation and can help create achievable goals to meet and enjoy during retirement.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.