If you’ve recently taken a wild ride on the housing market or just finished dealing with a uniquely confusing tax season, factoring in your blossoming social calendar can make thinking about your finances even more of a drag than usual. Even under regular circumstances, the summer months tend to be when people throw a bit more caution to the wind: A 2019 survey from MassMutual found that 52% of Americans spend more money during the summer than any other time of year.
“There are times of the year when people tune in a little bit more to their finances and times when people check out,” says Kristen Euretig, a certified financial planner and founder of Brooklyn Plans. “Summer tends to be a time when things kind of go out the window.”
What if we told you that you can take a guilt-free break from checking in on your finances this month? We’ve rounded up the most important money moves to make this June, none of which are particularly painful. Take care of these six financial tasks now, then prepare to kick back and relax as spring turns into summer:
1. Cut down on pandemic-based spending to make room for summer fun
Last month, we talked about budgeting for “back to normal” and mentally preparing to switch from saving while mostly confined at home to increasing your monthly spending habits as we all venture back out. But while COVID-19 made it easier for many of us to save, you might have also been spending more in certain categories that can easily be rearranged to make room in your budget for the return of things like dinners out, concerts and weekend getaways.
What are some of those expenses? Think gas and electricity, delivery fees and vehicle use. For those living in major metropolitan areas especially, many public transportation devotees with the means to have opted to use rideshare apps when traveling within the city to cut down on exposure to the coronavirus. According to Euretig, “that’s probably the one [spending area] that increased over the pandemic.”
Many also bought cars during the past year or have opted for car rentals as opposed to taking longer trips via plane, train or bus. A September 2020 survey from McKinsey & Company found that 31% of American respondents said they expected to shift from airplanes and trains to personal vehicles for traveling between cities for the remainder of the pandemic.
But for the fully-vaccinated, an easy way to make space for the increase in casual spending is to make the transition back toward budgeting for a monthly bus pass instead of pricier rideshares or cutting back on ordering takeout with hefty delivery fees to free up some extra cash for in-person dinners with friends and family.
“We need to make sure we’re planning for the reality that there are going to be increased lifestyle expenses,” Euretig says.
2. Prepare for hurricane season
June 1 marks the start of the six-month Atlantic hurricane season. If you’re a resident of the eastern seaboard, then this probably comes as no surprise, but you still may not be as prepared as you should be.
Home and flood insurance policies can help to cover the cost of damages incurred from weather-related damages — but only if you actually have the coverage. Use this time to go over your current policies so you can see if there are any gaps that need to be addressed before disaster strikes. Changes to insurance policies may only take a few days to go into effect, but insurers usually put a moratorium on updating your policy once a hurricane warning has been issued in your area.
3. Refinance your private student loans
Private student loan borrowers have not been eligible for the mandatory forbearance that federal borrowers have had access to for over a year now, but they do still have one potential option for easing their debt burden: refinancing. And right now is a particularly smart time to consider refinancing private student loans. Why? Rates for a 10-year fixed-rate loan averaged 3.6% at the beginning of May, a record low, according to loan marketplace Credible. Rates for 5-year variable-rate loans averaged 3.19%, down from 3.36% a year earlier.
What’s more, as economies continue to re-open, some experts predict that inflation will likely push interest rates back up toward pre-pandemic levels due to an increase in spending. Translation: those low rates may not stick around much longer.
“Historically there’s a lot of fear of inflation,” Euretig says. But even if inflation panic is being over-hyped, “if you already have private loans, refinancing them can make sense at this time.”
If you can qualify for a lower rate than you currently have, refinancing your student loans can wind up being an excellent long-term decision for your wallet, especially if you’re in the earlier part of your career. Theoretically over the next few years you could be making payments at 2020-2021 level interest rates (so long as it’s not a variable rate loan) while earning a higher, inflation-adjusted salary as you take on more advanced positions. Over time, as your salary increases while your payments stay the same, your monthly student debt burden could take up less of your overall budget.
Be sure to shop around before refinancing your private loans — different lenders have different underwriting, so you may be able to get better rates and terms from one company than another. (Here are more tips on refinancing student debt.)
4. File the 2020-2021 FAFSA before June 30
While we’re on the topic of paying for college, June 30 is your last chance to apply for financial aid through the Free Application for Federal Student Aid (FAFSA) for the 2020-2021 school year if you haven’t already.
Wait, isn’t the 2020-2021 school year winding down for most students? Yes, for most students. If you took courses in the fall or spring, never filled out the FAFSA and fill it out now, then you can get federal loans and Pell grants retroactively. Additionally, if you’ve enrolled in summer courses and haven’t filled out the form yet, you still have until June 30 to get aid as well.
This deadline only applies to those who haven’t filed for this past school year: If you’re headed off to your first year of college in the fall, you should definitely still fill out the 2021-2022 FAFSA if you haven’t already.
5. Make the most of Prime Day and all related sales
Good news for penny pinchers: For all intents and purposes, Prime Day 2021 seems to be a ‘go’ this summer. Some might recall that Amazon decided to push back Prime Day last year due to shortages caused by the coronavirus pandemic.
According to Bloomberg, this year’s Amazon Prime Day is set to take place on June 21 and 22. While Amazon still hasn’t announced what items will be included in this year’s sale, there are sure to be deals abound, especially on major Amazon electronics like Fire TV sticks and Ring doorbells.
While the endless discounts can be a great opportunity to get your hands on big-ticket items, people who have a tendency to overspend may want to prepare to be a bit more cautious with their online browsing. It’s a good idea to go in with a game plan in order to stick with making purchases you actually need and have saved for, rather than endlessly browsing and adding unnecessary items to your cart.
Bargain hunters can also ensure they get the most bang for their buck by going beyond Amazon: It may be called Prime Day, but big box stores like Target and Walmart also tend to have their own sales at the exact same time — sometimes with better deals than Amazon and without the Prime membership requirement.
6. Pay your quarterly taxes
Attention freelancers, gig workers, contractors and the self-employed: Taxes for the second quarter of the year are due on June 15.
Just like clockwork, Uncle Sam is back to collect on any estimated taxes due — including income from interest, dividends, capital gains and more.
Those that don’t file on time will usually be charged a penalty or interest from the IRS, with very few ways of avoiding it. If you do need an extension on your quarterly taxes due to an emergency, you should contact the IRS as soon as possible.
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