How to Conduct a Financial Checkup Before End-of-Year

Kids are going back to school and summer is going to come to an end. After a year like no other, it's probably been nice to enjoy some warm weather with friends and family. If you have some time over the coming weeks, it's a great time to slow down and check up on your financial well-being.

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 we get too far into second half of 2021.

Review Your Budget

It’s possible your budget for this year 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. If you didn’t revisit your spending budget for 2021, pause now and take a moment to identify areas where you may be spending more (or less) than last year.

Spending aside, it’s possible your income stream may have changed as well - whether you received a promotion, started a new career path, or experienced a COVID-related job loss. If you’re still following the same budget as last year but your income has changed, re-evaluate your budget immediately.

Check Your Credit Score

Checking your credit score isn’t exciting, but it is an effective indicator of your financial well-being. 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.

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 

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 began receiving advanced child tax credits in July. 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. It's important to note that this is an advanced tax credit that eligible families would have previously received on their income tax return. If you have not opted out of the monthly payments, then you will not receive the tax credit on your tax return.

Re-Evaluate Your Goals

After over a year of living through a pandemic, you may have gone through some unexpected changes in your life, and there may even more changes to come. Now is an opportune time to revisit your goals 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 remainder of the year and re-evaluate your financial standings. Determine whether you’re on track to meet your goals, or if you may be in need of assistance from a trusted financial professional. If you are in need of assistance, feel free to...