8 Smart Things to Do With the Money You Didn’t Spend This Year

Most of us spent more of 2020 at home that we originally planned. While there’s no question that cancelled plans are disappointing, there may be one unexpected benefit: You might have extra money that you can put to good use.

We spoke with Jennifer Raess, CFP®, a member of the Advice Practice Team at Northwestern Mutual, to get some ideas for how you can leverage  these savings in 2021 and beyond.


Looking to get ahead on some financial goals? Raess suggests funneling your funds toward one or more of the following.

Boost your emergency fund. First things first: If you don’t have a solid emergency fund in place, now is the time to start one. “The importance of having an emergency fund is in the spotlight,” Raess says, especially in an unpredictable economy. “A lot of people may have been laid off or temporarily laid off and not had the income they had before. Having an emergency fund you can tap into in these situations can really help.” Experts generally recommend having six months of expenses covered in an emergency fund so that you're prepared for anything from a job loss to a relocation to an unexpected car repair. 

Pay down debt. Using unused funds to pay down credit card debt or other high-interest debt can be both rewarding and give you peace of mind.

Raess recommends paying down the debt with the highest interest rate first. And while your savings may not be enough to cover everything, starting small still counts. That could look something like paying off one extra month of credit card debt  in the new year. 

Save more for retirement. In addition to your 401(k) or other employer-sponsored retirement plan contributions for the year, Raess suggests considering taking your savings a step further. “If you qualify for putting money into a Roth IRA or a traditional IRA, this could be a time to do that, just to supplement the retirement savings you already have,” she says. 

Prepare for college. If you have children, consider adding your unused money to your kids' college funds. Note that this should be done only after you’ve built up your emergency fund and are on track to pay down your debt, Raess says.

Working with a financial advisor can help you determine where to put your extra funds and ensure that you’re on track financially. 


Having fun matters, too. Lifestyle investments can be emotionally rewarding and financially advantageous in the long run.

Refresh your home. After spending so much time at home, it’s natural to want to spruce things up a bit. A new couch or some fresh paint may do the trick, but also consider renovations that will increase your home’s value.

Raess notes that this can be a particularly savvy move if the upgrades you make are ones that would have required additional financing had you not had  the extra money to put toward them. Plus, “investing in your home and making those fixes when you can is something that just makes you feel good, so you can have pride in that ownership,” she says.

Treat yourself to virtual childcare. Parents who have been balancing work with full-time child care for  most of the year deserve a break. Virtual babysitting has become increasingly popular in the era of social distancing. You won’t be able to leave a child completely unattended, but a babysitter, tutor or piano teacher can interact with your child online to give you an hour or two of catch-up time.

Splurge on your future trip. While no one can predict when the world will  fully get back to leisure travel again, consider letting your savings grow so that you can upgrade a future experience, whether that means getting a honeymoon suite or business class tickets.

Spend on your health and wellness. With the new year just around the corner, now is not the time to ignore your physical and mental health. While gym  visits and spa days  might still be out of the question  right now,  you can still make investments in yourself, whether that’s through a virtual workout classa virtual visit to your therapist, an online class you’ve always wanted to take or even splurging on curbside pickup from your favorite fancy restaurant.

“Whatever it is that brings you happiness, I think it's really important to continue incorporating those things as you can, while still staying on track with your financial goals," Raess says.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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