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The first few weeks of the coronavirus pandemic were wracked with uncertainty—and, for many, a lot of sudden free time—as everything from community events to daily commutes ground to a halt. But now that you’ve perfected your favorite recipes and caught up on your stack of unread magazines, you may notice that your calendar is starting to fill up again.
Life isn’t the same but, as it takes new forms, you also may find that you’re overdue for a financial check-up to make sure you’re on good footing for the next stage of your personal Covid-19 response.
Start with these four areas to find ways you may be able to improve your financial health ahead of whatever comes your way this pandemic winter.
1. Your Emergency Fund
Maybe you’ve held on tight to your emergency fund over the past few months, nervous about whether you’d need to dip into it to cover basic costs due to illness or a job loss. Or maybe your emergency fund was depleted at the start of the pandemic and hasn’t yet bounced back to its former balance.
Now is a good time to review your emergency savings plan. If there’s not much to look at in your savings account, try not to panic. Emergency funds are designed to provide a cushion if you encounter financial hardship. You’re not expected to rebuild your balance in a day, or even in a few months. It may take years before your finances fully recover from this extended period of uncertainty.
If you need to rebuild your emergency savings, make a plan to put money away over time—even if it’s just $5 per week right now.
If you have an emergency fund that covers three to six months of essential expenses, make sure you’re holding it in an account that keeps your emergency savings safe and earns you some interest income, even in the current low interest rate environment.
You may also want to reevaluate how much you’re contributing regularly to your emergency fund.
For instance, if you tend to put holiday shopping expenses on a credit card to pay off in January and February, perhaps you can divert one month of cash that would normally go into your emergency savings fund to pay for those gifts. Again, this tactic is designed for people who already have well-funded emergency savings.
2. Your Tax Situation
No one wants to get an unexpected tax bill, especially after months of dealing with pandemic stress.
If you’ve experienced any major life changes this year—say you’ve had a child, gotten married or bought a home—check your withholding rate to make sure you’re having the right amount withheld from your paycheck. The same guidance applies if you’ve had a significant income fluctuation this year, whether due to changing jobs, taking a pandemic-related salary reduction or starting a side hustle.
The IRS has a free tool that allows you to estimate your withholding. You may find that it’s worth adjusting your withholding for the remainder of the year, or that you want to plan to have more cash on hand in the spring if it looks like you’ll owe taxes.
If your employer paused withholding your employee share of Social Security tax this fall, make sure you’re saving that money for when it’s due back to the federal government in the spring. You’ll have to pay the regular 6.2% of your wages plus the amount that wasn’t collected in the fall. Our payroll tax holiday calculator can help you determine what you may owe.
3. Your College Plans
If you or anyone in your household is planning to enroll in college classes next fall, now is the time to fill out your FAFSA: The Free Application for Federal Student Aid.
This application is required for a college student to be eligible to receive need-based federal, state and school student aid, including grants, student loans and work-study programs.
While it may seem too soon to be planning for fall 2021, it’s important to act quickly if you anticipate needing help paying for school. A lot of financial aid funding gets doled out on a first-come, first-served basis, so delaying your application means you could miss out.
Don’t worry if you’re not sure where you’ll attend yet—you can list up to 10 schools where you may apply. Our guide to the FAFSA answers 21 questions about the application process.
4. Your Travel Rewards
Perhaps your 2020 travel plans got put on hold and your wishlist for 2021 is on hiatus too. Even if you can’t see the world the way you planned right now, take some time to review your travel rewards programs.
From frequent flyer miles to hotel points, check program expiration dates and any extensions that have been announced. It’s also an excellent time to round up any vouchers you may have received in lieu of refunds for canceled travel tickets. When it’s finally time to rebook your trip, you won’t want to rely on the carrier to have your voucher info or the same details you received when your plans had to be canceled.
Download copies of emails and any other online receipts you have and file them somewhere convenient, so you have all the evidence if you need it later.
You may also want to consider spending some of those points you’ve racked up, instead of waiting for the “perfect” travel plans in the future. You may be able to redeem your rewards toward everyday purchases or trade them in for gift cards. While you may not get the greatest value per point, this could make it easier to cover your basic expenses or budget for holiday gifts.
