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We’re officially halfway through 2021. Whether you’re reading this poolside or during yet another stand-in-front-of-the-AC-unit break, it’s a perfect opportunity to reflect on your finances over the past six months and plan for how you’ll budget your money during the second half of the year.

That’s especially true for families whose lives are getting closer and closer to “back to normal,” as they prepare for in-person work and school come late summer. With the first monthly child tax credit payment hitting millions of bank accounts this month (more on that below) and back-to-school spending just around the corner, it’s important to make a plan for how you’ll make the most of your new cash flow.

Luckily, you’re not on your own in navigating your 2021 financial halfway point: That’s where Money comes in. Here are your top spending, saving and budgeting to-dos for July:

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1. Half-yearly budget check-in

Remember January? For many of us, it’s probably blurred together in our memory with the other 16 months that the coronavirus pandemic turned life upside down. But now it’s time to dust off the cobwebs and take a look back at the winter and spring months of 2021.

Finance-related New Year’s Resolutions are incredibly common: In a poll from YouGov, 44% of Americans said they wanted to save more money in 2021. But giving up on your resolutions from over six months ago is also incredibly common, which is why now is the time to reflect on either how you’ve done so far, or how you want to be better with your money the rest of the year.

“It’s a good time for people to sit down and reexamine their spending, which likely slowed down over the past year,” says Tess Zigo, a financial advisor with Emerge Wealth Strategies. “But now you can start to question what you do and don’t miss, and what you want your spending to look like going forward.”

Are there any habits you’ve created that you want to hold onto? Or maybe you want to cut down on overspending in categories like ordering take-out or online shopping. Now is your chance to go over six months’ worth of spending data and find out.

It might be useful for you to think about your budget in terms of prioritizing what you value most. For many, the pandemic has given people a chance to think about what they currently make a priority and whether or not that’s actually what they want to be spending their money and energy on. You might find you have the ability to free up potentially major amounts of cash for the experiences you want to prioritize going forward. Zigo says she’s had clients who were originally planning big, expensive weddings throughout the last year, only to turn around and decide they would rather elope with just their close family present.

“A lot of changes are coming from a place of deciding what your new values are,” Zigo says.

2. Get ready for your first child tax credit payment

The first of six monthly payments from the newly enhanced child tax creditis set to hit families’ bank accounts on July 15, providing parents with up to $300 per child each month through the end of 2021.

These payments are thanks to a provision in the American Rescue Plan, which boosted the typical $2,000 child tax credit to $3,600 for children under the age of 6 and $3,000 for all others under 18, made the credit fully refundable and made it so that half of each credit is dispersed via six advanced monthly deposits to eligible families.

You should start thinking about how the money can best serve your family’s needs before the July 15 deposit. For those struggling to make ends meet, you can use the extra cash for essential bills like childcare or monthly household expenses. If your family is getting along fine in the present, but still struggling to save or pay down debt, then the monthly payments could be a great way to build up your emergency cash reserves in a relatively short amount of time, according to Zigo.

If you haven’t been following the changes to the child tax credit carefully, no sweat. We have answers to all of your biggest questions here.

3. Reduce your tax liability

Tax season might have only ended in May, but that doesn’t mean it’s a bad idea to start thinking about what you can do to reduce how much in taxes you’ll end up owing for this year.

Tax-advantaged savings accounts like your Health Savings Account (HSA), 401(k), or traditional IRA help you by reducing the amount of federal income tax you owe based on how much you contribute. So if you want to avoid owing money come tax season or you’re trying to get a bigger refund next year, then maxing out — or at least getting as close as you reasonably can to maxing out — those contributions is essential.

“It’s so important to focus on your taxes midway through the year because it gives you plenty of time to make any adjustments so you don’t take a major hit to your cash flow later,” says Brad Lineberger, president of Seaside Wealth Management.

For example, Lindeberger says it’s not uncommon for people to forget to increase their retirement contributions to the maximum amount ($19,500 for 401(k)s and $6,000 for IRAs) or overlook the catch-up provisions for contributions after they turn 50. Come December, they try to cram in as much they can into the accounts. But by taking care of it over the next six months rather than as a lump sum right before taxes are due, they can avoid the pain of depositing potentially thousands of dollars at once.

 

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