Although this has been a difficult year in so many ways, some of us are getting to the end of it with more money in our budget than we expected. In fact, the personal savings rate, which sat between 7 and 8 percent monthly in 2019, skyrocketed to 33 percent in April of this year and has remained elevated from 2019 levels since.

As this year comes to a close, if you have more money in your checking account than a typical year, there are a number of ways to put it to use at year’s end to improve your financial situation — now and in the future. Here are six ways to use that money to fund your financial goals.


“Having some liquid, easily accessible funds available for emergencies is important,” says Jennifer Raess, CFP®, a member of the Advice Practice team with Northwestern Mutual. “Six months’ worth of expenses is often a good target. More than that, and you can hinder your overall portfolio’s ability to grow, because it’s not invested in the market.”

If your emergency fund isn’t quite where you want it to be, consider using some of your extra money to add to it. If you don’t have an emergency fund, consider using some of your extra funds to start one now.


While debt of any kind is generally not considered to be favorable, certain debt is seen as better than others. “So-called good debt can potentially help you build wealth over time, may increase your income or offer value in some other way,” says Raess. “Student loans are a good example because higher education can increase a person’s earnings potential.” Similarly, taking out a mortgage to buy a home can increase your net worth: Over time, the mortgage goes down via regular payments and the home potentially appreciates in value.

“On the other hand, bad debt, such as credit card debt, drags down your financial situation,” Raess adds. “If you have bad debt, the sooner you can get out from under it the better.”

Use some of your additional money to pay off bad debt, which tends to carry high interest rates. And if you still have bad debt after putting your extra money toward it, you may want to consider setting up a debt repayment plan.


“Saving for retirement may seem like something that you can focus on later,” says Raess. “The sooner you start saving and taking advantage of compound interest to grow your money, the more likely you are to achieve your retirement goals.”

Whether you have an employer-sponsored retirement account, like a 401(k) or 403(b), or an individual retirement account (IRA), you may want to up your contribution this year. The money you put in the account can continue to grow and compound, which can help you build your retirement savings more quickly.


You could use some of your extra money to accelerate savings for big-ticket goals such as a down payment to purchase a home, funding your child’s college education or buying a new car.

One trick to consider for big goals like these is to open a separate account to save for each. “Having separate accounts for each can help you know exactly how much you have dedicated toward the goal and can help you resist the temptation of pulling money out of the account,” says Kevin Hoffren, CFP®, a member of the Advice Practice team with Northwestern Mutual. “If you have a large account for many goals, often it feels like you have plenty of money and there may be a higher propensity to spend parts of it for other reasons.”


If you’re on track with everything else listed above, Raess says that’s a good opportunity to consider using your extra money to increase your payments on your other “good” debts, such as your student loans or your mortgage.


The economy could use the boost, and you probably could as well. This is one of the great things about financial planning. When you know you’re contributing to your goals in a way that you’ll achieve them, it can help you feel better about spending money today. If you feel like you’re in a good place (even just on the right track) with the items above and you have additional money at the end of the year, spend it on something that will bring you joy.

If you are uncertain about how to prioritize your goals, both Raess and Hoffren recommend working with a financial advisor who can help you think through what’s most important to you and build a financial plan to reach your goals.

All investments carry some level of risk including the potential loss of all money invested.

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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