The Reporter (Lansdale, PA)

Financial vital signs that you should monitor right now

- Liz Weston This column was provided to The Associated Press by the personal finance website NerdWallet. Liz Weston is a columnist at NerdWallet, a certified financial planner and author of “Your Credit Score.” Email: lweston@nerdwallet. com. Twitter: @liz

A midyear financial review is often a good idea. This year, it’s almost essential.

With people going back to offices, travel resuming and Congress making significan­t changes to various laws affecting your finances, consider taking some time to check in on your money. You might be able to make some smart moves to reflect the new realities.

Budgeting

See where your money is going now. Using a budgeting app or taking a close look at recent bank and credit card statements can help. Then think about expenses you may face in the near future.

If you’re using your car more, for example, you might already be paying more for gas and insurance, but you also could face higher costs for maintenanc­e or repairs. If you have kids, you might plan for back-to-school costs, sports equipment and activity fees. Vacations, travel, weddings and other celebratio­ns may need to be budgeted for, as well.

It can make sense to trim some costs so you can afford these resurgent expenses. One possibilit­y: Rotate your streaming services and other subscripti­ons. These may have sustained you during lockdowns, but you could put some on pause now to save money while you continue to enjoy others.

Perhaps you have more income: You’re back to work after being unemployed, or you’re a parent about to get the first of six monthly child tax credit checks from the IRS. (These payments will be up to $300 per eligible child starting July 15). Making a plan for this income can ensure it goes where you want, rather than dribbling away in unplanned purchases.

Debt forbearanc­e

Forbearanc­e on federal student loans is scheduled to end this fall, with monthly payments resuming in October. If those payments would be a hardship, contact your lenders to see if income-driven repayment plans or other measures would help.

If you requested forbearanc­e on your mortgage payment or other debt, that has an expiration date, as well. Debt that’s in forbearanc­e isn’t forgiven, so you’ll typically need to plan to make up the payments you missed. Check with your lender about your options.

Flexible savings accounts

Congress more than doubled how much employees can contribute to flexible spending accounts for child care in 2021. Workers can put in a maximum of $10,500, up from $5,000 in 2020. The limit for health care FSAs remains $2,750.

This year, you’re also allowed to make midyear changes to your contributi­ons to either account, something that normally requires a change in life circumstan­ces such as marriage or having a child.

Your employer must opt in to these changes, but if it has and you can increase your contributi­ons, you could save significan­tly on taxes.

Frequent traveler programs

Last year airline, hotel and rental car companies softened the rules for their loyalty programs to reflect pandemic travel restrictio­ns. Many extended the expiration deadlines for points, miles and free hotel night certificat­es. But the pause on expiration­s won’t last forever. Check your rewards programs and make plans to use your rewards before they disappear.

Similarly, you may have credits from canceled travel that also will expire if you don’t use them. If you can’t use those in time, request an extension.

Health insurance

If you buy your own insurance, you may get a better deal on the Affordable Care Act exchanges now that Congress has expanded the subsidies, reducing costs for most people. If you don’t already have ACA coverage, there’s currently a special enrollment period that ends Aug. 15. If you get unemployme­nt benefits at any point during 2021, you can qualify for a zero-premium comprehens­ive policy. COBRA coverage to extend an employer health insurance plan is also free from April to September.

Retirement planning

Companies with 401(k)s are now required to let part-time workers contribute if they have worked more than 1,000 hours in one year or 500 hours over three consecutiv­e years. Contact your employer for details.

Congress eliminated the age limit for making contributi­ons to IRAs, so you can contribute past age 70½ as long as you have earned income such as wages, salary, commission­s or self-employment income. Also, the age that typically triggers required minimum distributi­ons from retirement accounts has been moved from 70½ to 72 for people born after June 30, 1949.

If you’re feeling generous, though, the age at which you can start making qualified charitable distributi­ons from an IRA remains 70½. These withdrawal­s won’t be added to your income if the distributi­on is made directly to a qualified charity.

 ??  ??

Newspapers in English

Newspapers from United States