It's been a rough spring. And while you can’t control the stock market or your employer, there are still things you can do to take control of your money situation right now. We encourage you to make some time this month to take care of financial tasks, too.
Here are some suggestions for your May financial to-do list.
CHECK YOUR EMERGENCY FUND
The best way to weather low-income periods is to prepare with an adequate emergency fund, setting aside money for expenses such as a medical issue, broken-down vehicle or furlough due to the pandemic. Generally, you’ll want to save enough money to cover three to six months of your regular expenses. Once you build your fund, you can put extra savings toward other financial goals. An emergency fund can help you feel more at ease knowing that you’ll be able to pay your bills and meet your needs even if your income drops. If you can’t start putting away money now, your first goal should be to devise a plan on how to do so immediately.
Especially if you’re struggling to find your average spending on unnecessary stuff, break out your last few months of bank statements and credit card bills to take hard look at them — identifying needs, wants and wasteful spending decisions. Sometimes, it’s all it takes to discover huge leaks in your spending. If you don’t like what you see, put yourself on spending diet and whittle those numbers down.
Also, for fixed bills like car insurance it’s a good idea to ask for new quotes from your provider every once in a while. Also, for services like internet or phone, do some research on cheaper options.
SET UP A HIGH-YIELD SAVINGS ACCOUNT
If you can, a good way to save is to treat your savings goals as expenses and make a regular payment in the same way you pay bills. You may be tempted to pull funds from your savings during low-income months, but stashing some money in a separate, higher-yield savings account — like TCU’s Premium Money Market account — can cause you to pause and think twice before dipping in.
OPTIMIZE DEBT REPAYMENT
Now is a good time to analyze any high-interest debt, and if possible, move it to a credit card with a low interest rate or consolidate it with a personal loan. For many people, debt burdens drag down their financial progress. TCU can help you consolidate debt to make it manageable and expand your financial freedom to allow you to focus more on long-term goals. TCU’s personal debt consolidation calculator is designed to help determine whether debt consolidation is right for you.
CUT UNNECESSARY EXPENSES
Even if your income hasn’t changed, it might be time to take a hard look at your spending. What has snuck into your spending that you can live without? A good place to review is subscriptions. Cutting back on your $10 or $15 a month subscription doesn’t seem like much, but when you’re facing a tough situation, every little bit can help — and small fees add up quickly.
TAKE ADVANTAGE OF "529 DAY"
The college savings industry has embraced May 29 as “529 Day,” an opportunity to remind parents of future college students of the benefits to saving in a tax-advantaged 529 college savings account. According to Sallie Mae, fewer than 1 in 3 parents saving for college uses a 529 plan where grows tax-free, and you don’t pay any taxes on withdrawals used for college. You can also use up to $10,000 tax-free for qualified K-12 expenses.
Indiana's CollegeChoice 529 Savings Plans offers additional benefits, including tax credits for contributors. Starting in 2019, these plans and tax credits began including contributions intended for K-12 tuition in addition to those for higher education.
Michigan Education Savings Program (MESP) is similar to other managed 529 savings programs and features an age-based option, four multi-fund options, a single-fund option and a principal-protection option.
Remember that investments are for the long run and experts recommend to stay the course. If you’re tempted to stop contributing to your retirement account or opening a college savings account for your child, re-consider if you can afford it.
Also, above all, try to stay calm. These times may feel overwhelming and terrifying, but this is survivable and we will survive. Do everything in your control to overprotect your health and financial situation but try not to overreact.