KNOWLEDGE CENTER: Are you left with extra money each month? Here are some options to use it wisely [Column] | Business
In terms of money management, the COVID-19 pandemic has changed people’s habits and budget in different ways. From incentive checks and extended unemployment benefits to reduced commute travel costs, many people have experienced some degree of change in the way they have accumulated, spent, and saved money.
For those who have consistently found that they have extra money after taking care of their monthly expenses, deciding what to do with excess cash is not an approach that fits one size.
However, there are some simple ways to manage your extra money in the short and long term.
Expand your emergency savings
If the pandemic has taught us anything when it comes to money, then financial situations can change quickly. See the article : 10 Generous Financial Gifts (Other Than Cash) for Grads. Millions of Americans have experienced some degree of job loss due to the pandemic, while others have had to shorten working hours to help children with distance learning, burdening their budgets.
If you find yourself at the other end of the spectrum and have excess cash, using it to increase (or trigger) your emergency savings is a great option.
One easy way to get started is to open a money market account. You’ll get a debit card and network and mobile access, and if you connect the money market to your checking account, you can quickly transfer funds from both accounts.
Invest in your pension
If you are already paying your pension bill, great! Consider using your extra cash to increase your contributions. On the same subject : 3 Potential Retirement Surprises You’ll Want to Get Ahead Of. If you have 401 (k) from your employer and they match, try approaching or over the appropriate threshold to invest free money from your employer into your retirement.
Other great retirement options include opening a Traditional IRA or Roth IRA, both of which have different sets of rules and benefits for retirement, so talk to your financial advisor about your retirement goals and investment opportunities and understand the important planning steps retirement.
Invest in your home
Over the past year, people have changed the way they use their homes. To see also : James Contini column on Roth IRAs.. Whether working from home or discovering to enjoy an oasis for a weekend that doesn’t require travel, homeowners are discovering new and unique ways to reinvest in real estate.
Do you have your own home improvement project in mind? Consider using the capital of your home to secure a mortgage loan or line of credit (HELOC) to finance part or all of the project. Then use your excess cash for monthly payments, allowing you to complete your project without delving into emergency or other savings accounts.
Save for taxes
If you owe money to federal, state, or local governments each year, consider saving excess money specifically for those payments. You may also be able to change your deductions IRS.gov, depending on your wishes.
With advance tax breaks for children that now provide millions of families with half an annual loan with a monthly payment until the end of the year, you can manage those payments to best suit your tax situation, including stopping the down payment if you want to claim full credit on your 2021 tax return.
By using any of these simple steps or a combination of all of them, you can use the excess monthly cash to reinvest in your future, in your home, or save for expected or sudden expenses in the future.
Shari Kruzinski is Executive Vice President, Retail Director at WSFS Bank. Her career spans more than 30 years in the banking industry and with WSFS. In her current position, Shari leads the overall marketing strategy, customer development and sales management for the Bank’s branch network and customer contact center.