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 tasks to your to-do list. Homebuying season is on the horizon, millions of Americans are getting an influx of cash via a tax refund, and Financial Literacy Month gives us all the opportunity to improve our financial acumen.
Like so many areas of life, making the most of these financial events and dates will be easier if you're organized. That's where Money can help.
Each month, we'll bring you a quick, practical list of deadlines and tasks to complete to keep you on top of things. We can't exactly guarantee that following our checklists will give you more money, but we can promise to break down some of the confusing elements of finances and help you strategize to save and spend smarter.
Here's your checklist for the month of April.
1. Pay your taxes by April 15
Yes, the IRS postponed the 2020 federal income tax filing deadline by about a month, but there are still millions of taxpayers who need to get their stuff together this month. The deadline for paying estimated taxes for quarterly filers is still April 15. Who has to file quarterly? Workers who don't have taxes withheld from their paycheck throughout the year. The group includes freelancers, independent contractors and self-employed individuals. Those workers pay estimated taxes to the government four times a year, so this payment is for taxes owed from the first quarter of 2021.
2. Use your tax refund efficiently
While the government has granted more time to file taxes, roughly 50 million Americans have already submitted their paperwork and received (or are waiting for) a refund. Roughly three-quarters of Americans get a tax refund each year, and the average amount in 2020 was about $2,700. That cash represents one of the year's biggest chances to make progress saving or paying down debt, especially for the millions of Americans who live paycheck to paycheck.
If you've got a refund headed your way, 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 coaches clients on financial planning and money management.
With the remaining money, McLay recommends her clients first prioritize beefing up their emergency savings fund. You want to aim to build up to six months' worth of necessary expenses. Once that's on track, focus on paying off any high-interest debt, like credit cards. After that, you can use the money to save toward other financial goals, like buying a home, make a retirement account contribution, or attack other debt, like student loans.
3. Hit the books
Learning more about personal finance isn't going to change your fortunes overnight, but it can help prepare you to make better money decisions in the future. That's why celebrating Financial Literacy Month (in April) by learning something new is a decision that can have long-lasting benefits.
Financial literacy is "just like any other language, but most of us never learn it in school or at home or at work,” McLay says.
You don’t have to become an investing expert or personal finance guru in a single 30-day span. Instead, pick a single area you’re interested in or one topic you feel particularly illiterate about. If, for example, you were out to brunch with friends, McLay says, and the subject of the stock market came up, would you feel comfortable contributing to the conversation? What about if the topic were real estate, credit scores or debt management?
Just as there are a variety of topics you can teach yourself about, there's also a variety of resources you can lean on. McLay suggests the Broke Millennial books by Erin Lowry, Get Money by Kristen Wong or anything written by Ash Cash for general personal finance knowledge.
If books aren’t your thing, you can try out podcasts like Stacking Benjamins, Afford Anything and Be Wealthy & Smart. The Financial Gym also has its own podcast called Financially Naked.
4. Spring clean your finances
Are you still paying for that HBO subscription even though you haven’t watched a show on the network since Game of Thrones ended? Are you thinking about canceling that virtual personal trainer because your weights have sat neglected in the closet for two months? Have you been meaning to run a credit report ever since you got that alert that your personal information may have been compromised in a leak last year?
Great — now is the time to do all of those financial odds and ends you’ve been putting off.
Start by taking stock of all the subscriptions you’re paying for. You may think of them as minor expenses, but they can add up. A 2019 report from consulting firm West Monroe Partners found that the average person spent $237 a month on subscriptions services and that more than eight in 10 people underestimate what they're spending. Another estimate, from budgeting service Mint and the New York Times, pegged the amount at more than $600 a year.
To tally up your total, McLay recommends printing out the past two to three months of your debit card or credit card statements and going through your expenses line by line. Cancel anything you don't need or use regularly.
Next up: negotiating fees or rates. You can call and ask for a better deal on your cable, car insurance, phone, even sometimes the fees your bank charges. Try stressing to the customer representative that you've been a reliable customer who's paid on time, and don't be afraid to tell them (politely) that you're shopping around for better deals.
Then check your credit report and credit score. Many credit card companies will give your credit score information for free. You can also access your credit report, which will outline all the data that's factored into your score, from each of the three credit bureaus for free every week until December 31, 2023 by going to AnnualCreditReport.com.
Look through the personal information, active accounts and payment history to make sure everything is accurate. If your score is lower than you'd like or there are some weak spots on your report, that's not a necessarily a quick fix, but it is something you can start working on this month. Here's a guide to build credit fast, and another to repair bad credit.
Finally, if you have retirement accounts, look up your more recent statements and check your asset allocation to make sure it doesn't need an update. The simplest option is a target-date fund, where the majority of your assets of are in stocks when you're younger, and the ratio slowly shifts from stocks to safer investments like bonds as you age. If you’ve got a 401(k) account from a previous job, now is also a great time to consider rolling that over into an IRA.
Yes, a lot of this will feel tedious, McLay says. But it’s just like cleaning out the garage or your closet: you’ll feel much better when it’s done. A tip to get all this done after putting it off for so long? Take a day off work — dub it a financial health day — and dedicate the full day to crossing each of these items off the list.
5. Prepare for home buying season
In a normal year, spring and summer are typically hot months for buying and selling homes. Of course, the housing market has had anything but a normal year; low interest rates on mortgages have helped drive a fiercely competitive market and home buying never really slowed down last year.
Still, if you’re looking to stick to the traditional schedule, April is the time to prepare. Start by getting pre-approved for a loan. A mortgage pre-approval letter will outline how much a lender is willing to give you, so it will help you set your budget. You'll 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've no doubt heard about the wildly low interest rates of the recent past, rates have started to creep up. The numbers are still low by historical comparison, but rising rates may affect how much you can afford to spend on a home.
More from Money:
Millions of Taxpayers Still Have to Meet an April 15 Tax Deadline