While April was about adapting to social distancing and staying at home, this month is about figuring out how to best navigate this new normal. Here are five ways you can improve your finances in May.
BUILD UP YOUR SAVINGS
If your income has remained steady, or you’ve received a stimulus check or even a tax refund, this could be a great time to save a portion of it. You might consider adding it to your emergency fund (we typically recommend keeping three to six months' of expenses in a safe account like a high-yield savings account), which is especially important during these uncertain times.
MAKE FUTURE PLANS
Even if the rest of this month feels uncertain, eventually things will go back to normal. So don’t wait to start saving for both your short- and long-term goals, no matter how far off they seem. Whether you want to save for a trip (you’ll likely be ready for a vacation once travel bans are lifted) or start investing for one that’s farther down the line, like college tuition or retirement, it never hurts to plan ahead.
LOOK AT YOUR SPENDING
Now that you're used to staying home, take a fine-tooth comb to your new spending habits. Even though you’re probably saving on dinners out and entertainment costs, it’s surprisingly easy for other costs to add up elsewhere. Maybe you’re enjoying the ease and convenience of online ordering a bit too much, or overspending on random groceries rather than planning your meals. Ask yourself which purchases have truly been worthwhile and adjust as needed.
SAVE ON DEBT
If you have student loans, a mortgage or credit card debt, find out if you can save on payments. Most federal student loans and interest rates were placed on administrative forbearance from March 13 to Sept. 30, meaning you'll avoid penalties for not paying during this period. But if you can afford to pay, keep doing so, because your entire payment will go toward your principal, without owing interest.
You may also have forbearance options if you have a mortgage, so ask your lender if you can pay at a lower rate or even pause payments temporarily (know that you’ll have to pay them back later). And if you have private loans or credit card debt, work with your lender to save on interest payments. Because interest rates are so low, you might also want to look into refinancing – a financial advisor can help you determine what’s best for your unique situation.
If you have the means, consider making a donation to a local charity to help those who are less fortunate. And if you have Mother’s Day gift shopping on your mind, you might also consider getting a head start on future birthday and holiday gifts to show your loyalty for local and small businesses.