First Build (Budget <$850) should I go for higher graphics card and CPU?

A 5600X might have better long term value as a CPU over the 5500, but that's just my opinion. What kind of games are you trying to play?

OK so the 6500XT 4GB can play Minecraft, Roblox, Fortnite just fine, but please get a CPU that is rated to PCIe 4.0 bus such as the 5600 or 5600X. This is because the 6500XT is a 4 lane card. Dropping to PCIe 3 speed really kills its performance, as much as 40% less. This article from Tom's Hardware explains: https://www.tomshardware.com/news/rx-6500-xt-pcie-gen3-gen4-tested So, definitely get a 5600 instead of a 5500 CPU. The 5600 (non-X) is the lowest cost AM4 CPU that supports PCIe 4. Also, keep that B550 chipset motherboard. The less expensive 520 and 450 do not support PCIe 4.

Power supply: The Thermaltake Smart is a terrible power supply. Please choose from this list, anything rated C ("budget" but OK) or better: https://cultists.network/140/psu-tier-list/ Notice the Thermaltake Smart 80+ is graded 'F" ("Replace immediately")

One last note about your list, is that 16GB a kit of 2x 8GB? Ryzen CPU needs dual channel for good performance. So only get a two module kit and make sure to install them in the correct slots for dual channel (see the motherboard manual).