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Why you need a mid-year budget check


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Now that we’re halfway through 2021, it’s a great time to revise your budget and see if you’re on track with your financial goals. With all the tax credits related to the pandemic, consumer price inflation and the impending expiration of the break on student loan repayment, it is quite possible that your expenses and expenses change in the second half the year, so why not get ahead and narrow your budget now?

Check the progress of your financial goals

In addition to keeping your monthly expenses under control, a budget can help you track financial goals that span months or years (like saving money for certain vacation expenses or for retirement). By keeping control of those savings now and balancing your budget as needed, you will be less likely to be dependent on high interest credit card debt down the road.

Reassess your budget, especially your expenses

Start by listing all of your expenses. To be complete, review your monthly credit card statements for the past year and verify each expense. In doing so, you might discover recurring expenses for, say, an app that you barely use. Also try to look to the future:Are there other expenses looming, such as student loan repayments, which resume in October? Are they factored into what is essentially a post-pandemic budget?

Review your tax deductions

Unless you have had a child, married or divorced during the last semester, your tax retainer is probably in good shape if you are an employee (use this calculator to calculate an estimate of what you might owe). If you have children and your income has increased in 2021, you will want to confirm your child tax credit eligibility, as you may have to repay the credit if your income exceeds a certain threshold. What if you are an entrepreneur or freelance writer, remember that the next quarterly tax payment date is September 7. 15.

Check your credit reports

Your credit score determines if you are eligible for loans that charge great interest rates, but it’s based on credit reports that are often full of errors that can lower your score. Additionally, identity theft is a chronic problem, so you need to make sure that a scammer doesn’t apply for a loan on your behalf. Visit AnnualCreditReport.com for your free credit report from the three major credit bureaus: Experian, TransUnion, and Equifax.

Review your investments

If you have investments like an IRA or a 401 (k), you’ll want to confirm that you’re still on track to meet your investment goals. Consider rebalancing your portfolio if not actively managed, and reassess your asset mix (stocks, bonds, and cash) if your priorities have changed.

Finally, adjust your budget

If you need to save more than planned for a financial goal, or if expenses have recently increased, you’ll want to adjust your budget. In terms of priorities, financial planners generally recommend that you top up your emergency fund first, and then pay off high-interest debts as much as possible. After that, you want to make sure that your monthly budget is manageable by adjusting your spending and saving as needed.

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