Before the pandemic, financial health was already low but now with record job layoffs and economic hardship happening because of this virus, many people are finding themselves at wits with what to do with their money. With that being said, our resident financial expert Jay Allen has a few tips on what you can do with your money today that will make a lasting difference for your future!
1. Budget For Future Expenses
A budget is at the foundation of good personal finance, and if you don’t have one already, it should be your first priority. However, don’t just plan for regular monthly expenses either. If your car is going downhill in terms of how it’s working or if you have an expensive surgical procedure that you’re able to plan for, start incorporating that into your budget by saving. There are a ton of great tools out there that help track spending and help you budget like Everydollar, Mint, YNAB, and GoodBudget.
2. Max Out Your 401(k) Match
If your employer offers a 401(k), 403(b), 457 plan, etc, you should contribute as much as possible. Traditional 401(k) plans offer an immediate tax deduction on contributions while Roth 401(k) plans will let you take out money tax-free in retirement. In 2020, the contribution limit to a 401(k) account is $19,500. Many employers will match a portion of a worker’s contributions, up to a certain amount. Of course, if you’re out of debt, I would go beyond the match to do 15% of your gross pay into retirement each month.
3. Consider Refinancing Your Student Loans
Refinancing student loans could be a smart money move for some people. Take a look at your rate to see if you can drop your interest rate considerably so that you can get that debt out of your life.
4. Open A 529 Plan
For years, families have opened 529 plans to fund their kids’ college educations. Money deposited into 529 accounts grows tax-free and can be withdrawn without a tax penalty for qualified higher education expenses. Under the new tax code, money in these accounts can also be used to pay tuition for students in kindergarten through 12th grade. For parents who plan to send their children to a private elementary school or high school, this is one more reason to open a tax-advantaged 529 plan.
5. Shop For New Insurance
Insurance rates can vary between companies, and it’s worthwhile to shop for new rates every year or two. Compare quotes from several companies to see if cheaper insurance for auto, homeowner, and life policies is available. A simple way to lower rates is to raise your deductibles, but definitely make sure to have a new plan before canceling your old coverage.
6. Switch To Using Cash
Statistics show that people who use Debit Cards spend 15-20% more money on things than if they used cash for the same items. If people use credit, that percentage goes up to 80%. Cash allows us to emotionally feel the money leave our hands which causes us to be more intentional with our purchases.
If you’d like to read the full article we referenced from MSN, you can click here!