Why Do You Need a Budget Check in the Middle of the Year
Now that we are halfway to 2021, it’s time to revisit your budget and see if you have met your financial goals. With all the tax breaks associated with the pandemic, consumer price inflation, and looming student loan expiration, it’s possible your spending and spending will change in the second half of the year – so why not get ahead of that and adjust your budget now?
Track the progress of your financial goals
In addition to keeping track of your monthly spending, a budget can help you track financial goals that span many months or years (such as saving money on holiday spending or retirement). By staying on top of those savings now and balancing your budget as needed, you are less likely to rely on high interest credit card debt in the future.
Overestimate your budget, especially your expenses
Start by listing all of your expenses. To be on the safe side, look at your monthly credit card statements for the last year and check all expenses. That being said, you might find some recurring costs, say, for an application that you hardly use. Also, try to look ahead: are there other spending, such as student loan payments, that will resume in October? Are they factored into what is essentially a post-pandemic budget?
Check your tax liens
If you haven’t had children, got married, or got divorced in the past six months, your tax liens are probably in good shape if you are an employee ( use this calculator to work out the approximate amount you owe). If you have children and your income will increase in 2021, you will want to verify your eligibility for the Child Tax Credit , as you may have to repay the loan if your income exceeds a certain threshold. And if you are a contractor or freelancer, remember that the next quarterly tax date is September 15th.
Check your credit reports
Your credit rating determines whether you are eligible for loans with favorable interest rates, but it is based on credit reports, which are often full of errors that can lower your rating. In addition, identity theft is a chronic problem, so you should make sure that no scammer is applying for a loan on your behalf. Visit AnnualCreditReport.com to receive a free credit report from all three major credit bureaus: Experian, TransUnion, and Equifax.
Review your attachments
If you have an investment such as an IRA or 401 (k), you will want to confirm that you are still on track for your investment goals. Consider rebalancing your portfolio if it is not actively managed, and reevaluate your portfolio of assets – stocks, bonds, and cash – if your priorities have changed.
Finally, adjust your budget
If you need to save more than expected for a financial purpose, or if expenses have risen recently, you will want to adjust your budget. When it comes to priorities, financial planners usually recommend that you fund your emergency fund first and then pay off the debt at the highest interest rate possible. After that, you want to make sure your monthly budget is manageable by adjusting your spending and saving as needed.