5 Smart Money Moves for April
The IRS may have given procrastinators more time to file their taxes, but April still brings plenty of financial chores to your to-do list. Home buying season is on the horizon, millions of Americans are receiving an influx of money through a tax refund, and Financial Literacy Month gives us all the opportunity to improve our financial sense.
As in many areas of life, making the most of these financial events and dates will be easier if you are organized. This is where money can help.
Each month, we’ll provide you with a quick and handy list of deadlines and tasks to keep you up to date. We cannot guarantee exactly that following our checklists will give you Following money, but we can promise to break down some of the confusing parts of finance and help you strategize to save and spend smarter.
Here is your checklist for the month of April.
1. Pay your taxes before April 15
Yes, the IRS extension of the 2020 federal income tax filing deadline about a month, but there is still millions of taxpayers who need to gather their things this month. The estimated fee payment deadline for quarterly filers is still April 15. Who has to file a quarterly return? Workers who do not have taxes withheld from their wages throughout the year. The group includes freelancers, independent contractors and self-employed people. These workers pay estimated taxes to the government four times a year, so this payment relates to taxes due from the first quarter of 2021.
2. Use your tax refund effectively
While the government has allowed more time to file taxes, around 50 millions Americans have already submitted their documents and received (or are expecting) a refund. About three-quarters of Americans get a tax refund each year, and the average quantity in 2020 was approximately $ 2,700. This money represents one of the greatest chances of the year to make progress in saving or paying off debt, especially for the millions of Americans who live paycheck to paycheck.
If you have a refund, take about 5% or 10% of it and do something fun with that amount, says Shannon McLay, CEO and founder of The Financial Gym, which trains clients in financial planning and money management.
With the remaining money, McLay recommends that his clients prioritize building their emergency savings fund first. You want to aim to accumulate up to six months of necessary expenses. Once you’re on the right track, focus on paying off any high interest debt, like credit cards. After that, you can use the money to save for other financial goals, like buying a house, contributing to a retirement account, or tackling other debts, like student loans.
3. Hit the books
Knowing more about personal finance won’t change your fortunes overnight, but it can help prepare you to make better financial decisions in the future. That’s why celebrating Financial Literacy Month (April) by learning something new is a decision that can have lasting benefits.
Financial literacy is “like any other language, but most of us never learn it at school, at home, or at work,” McLay says.
You don’t have to become an investment expert or a personal finance guru in just one 30 day period. Instead, pick an area that interests you or a topic that you feel particularly illiterate about. If, for example, you were to have brunch with friends, says McLay, and the topic of the stock market came up, would you feel comfortable contributing to the conversation? What if the topic was real estate, credit scores or debt management?
Just as there are a variety of topics you can learn about, there are also a variety of resources you can draw on. McLay suggests the Broken millennial Erin Lowry’s books, Earn money by Kristen Wong or anything written by silver ash for general knowledge of personal finance.
4. Do the spring cleaning in your finances
Are you still paying for that HBO subscription even if you haven’t watched a show on the network since the end of Game of Thrones? Are you considering canceling this virtual personal trainer because your weights have been neglected in the closet for two months? Have you had any intention of taking a credit report since you received this alert that your personal information may have been compromised in a leak last year?
Great – now is the time to do all that financial junk you’ve been putting off.
Start by taking stock of all the subscriptions you pay. You can think of them as a minor expense, but they can add up. A 2019 report consulting firm West Monroe Partners found that the average person spends $ 237 per month on subscription services and that more than eight in 10 people underestimate what they spend. Another estimate, the Mint budgeting service and the New York Times, set the amount at over $ 600 per year.
To calculate your total, McLay recommends printing the last two or three months of your debit or credit card statements and going through your spending line by line. Set aside anything you don’t need or use regularly.
Next step: negotiate fees or rates. You can call and ask for a better deal on your cable, car insurance, phone, even sometimes the charges your bank charges. Try to point out to the customer rep that you’ve been a reliable customer who paid on time, and don’t be afraid to tell them (politely) that you’re looking for better deals.
Then check your credit report and your credit score. Many credit card companies will provide your credit score information free of charge. You can also access your credit report, which will describe all the data factored into your score, from each of the three credit bureaus for free each week until April 20, 2022 by going to AnnualCreditReport.com.
Go through personal information, active accounts, and payment history to make sure everything is correct. If your score is lower than you would like or there are weak spots on your report, this isn’t necessarily a quick fix, but it’s something you can start working on this month. . Here is a guide for build credit quickly, and another to repair bad credit.
Finally, if you have retirement accounts, check your most recent statements and check your asset allocation to make sure it doesn’t need to be updated. The simplest option is a target date fund, where the majority of your assets are in stocks when you’re younger, and the ratio slowly shifts from stocks to safer investments like bonds as you get older. If you have a 401 (k) account from a previous job, this is also a great time to consider transferring it to an IRA.
Yes, a lot of it will be tedious, McLay says. But it’s like cleaning the garage or your closet – you’ll feel a lot better when it’s done. Any tip for doing all of this after pushing back for so long? Take a day off – call it financial health day – and spend the whole day crossing each of these off the list.
5. Prepare for Home Buying Season
In a normal year, spring and summer are generally hot months for buying and selling homes. Of course, the housing market has seen anything but a normal year; low mortgage interest rates have helped fuel a fiercely competitive market, and home buying never really slowed down last year.
Still, if you’re looking to stick to the traditional calendar, April is the time to prepare. Start by getting pre-approved for a loan. A mortgage pre-approval letter will indicate how much a lender is willing to give you, which will help you budget. You will need to collect financial documents to provide information about your income, debts, and employment history. Money has a step by step guide on the process here.
Keep in mind that while you may have heard of the extremely low interest rates of the recent past, rates have started to crawl. The numbers are still low in historical comparison, but rising rates may affect how much you can afford to spend on a house.