Summer at the Jersey Shore is finally in full swing, meaning we’re already about halfway through 2021. It might not be top of mind, but the halfway point of the year provides a great opportunity to review your financial situation.
After a year like no other, we’re all excited to enjoy the warm weather with friends and family. Whether that means heading down to Avon, Belmar, or any of the other beautiful beaches, it is time to have some fun.
While it feels good to be back out in our favorite spots and amongst our peers, it’s important not to overstretch our finances. The temptation is high to make up for all the lost time and throw financial caution to the wind. But, if you have some time over the coming weeks, take a moment to slow down and check up on your financial situation.
Here are six things you can do right away to make sure your goals are being met and your finances are in good shape before heading into the second half of 2021.
Mid-Year Financial Check Up: 6 Areas to Review
Review Your Cash Flow
It’s possible your cash flow looks a little different than it did in 2020. Many of us spent less on things like travel, vacations, eating out, entertainment and the holidays. And some of us earned less due to layoffs, furloughs, and job changes. Now is a good time to review your income and expenses for 2021, pause now and take a moment to identify areas where you may be spending more (or less) than last year.
Check Your Credit Score
Checking your credit score isn’t exciting, but it is an effective indicator of your financial wellbeing. This is especially important if you plan on doing anything major in the second half of 2021, such as buying a car, purchasing a home, moving into an apartment, opening a new credit card or taking out a personal loan.
All of these scenarios, and others, require a credit check. Being proactive in checking your credit score now can give you time to identify potential problems (such as a missed payment) and work to resolve them.
Some loan repayment programs may have also been suspended due to the pandemic. Be sure to review areas such as mortgage or rent payments, and student loan payments, to make sure you haven’t fallen behind.
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, 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
2020 tax season should be wrapped up for most folks by now. Did you get a refund? Or did you owe the IRS money?
The answer to this question is usually a good indication of what, if any, adjustments need to be made to your tax withholdings from your paycheck.
Double-check your tax withholdings, making sure that you have the proper amount withheld or determining if adjustments need to be made. Adjustments may be necessary if you’ve experienced certain life events, such as marriage or divorce. Making sure your tax withholdings are reflective of your current situation for 2021 can help you avoid surprises come tax season.
Plan For Your Advanced Child Tax Credit
New this year, eligible families will begin receiving advanced child tax credits in the second half of 2021. From July to December, families will receive six installments of the credit via direct deposit or mailed check. Starting now, you’ll want to determine what should be done with the money. Creating a plan ahead of time can reduce the urge to spend impulsively once the credit hits your account.
Re-Evaluate Your Goals
After over a year of living through a pandemic, you are sure to have gone through some unexpected changes in your life. Now that the pandemic is coming to an end, there are even more changes likely to come. Now is an opportune time to revisit the goals you made at the start of 2021 and make sure they are still well-aligned with your current standings. If not, take a step back to look at your entire financial situation and future needs, and create new goals that better reflect them.
Take some time to prepare for the second half of the year. As life returns to normal, reevaluate your financial standings. Determine whether you’re on track to meet your goals, or if things have changed, be sure to make the necessary adjustments.