extra RAM all day long. External HD are quite inexpensive, though it all depends on what your day to day needs are. For me my biggest files are generally pictures and music, which I can store on an external drive.
I'd go with 16/512 for the reasons others have stated but, honestly, it depends on how much RAM and storage you need for your usage. Nobody can really tell you that unless you go into detail about what you do (even "Photoshop" or "Safari tabs" can depend on what exactly you're doing with them).To compound this with a variation I'm torn between m1 MBA 8gb/1TB or 16gb/512gb... Any new thoughts? Thanks.