Othe days of arming have arrived. School is coming to an end. Hopefully a vacation or two is on the horizon.
There is definitely a spirit of relaxation in the air with the onset of summer, which makes it easier to mentally control your finances. Don’t let your post-Memorial Day malaise turn into financial autopilot throughout the summer. A little caution now can prevent the scorching summer months from burning a hole in your budget.
For this month’s episode of Money Moves, we’ll detail the money-saving magic of off-peak summer travel, what the Federal Reserve has to do with your savings account, an upcoming deadline financial aid for students and how to prepare your finances for a tough hurricane season.
Here’s how to start your summer on the right financial footing.
1. Try traveling off-peak this summer
If Memorial Day weekend is any indication, summer travel this year could return to pre-pandemic levels, auto club says AAA. The thing is, with inflated prices for gas and plane tickets, the price of your summer getaway could come with a hefty dose of shock.
As Money senior editor Sarah Hansen details, traveling during off-peak hours is one of the many smart ways to saving money during this inflationary summer.
For example, people save an average of $75 by booking domestic flights on Tuesdays or Wednesdays instead of weekends, Hansen reports. Larger seasonal trends also come into play. You can make additional savings by planning your vacation for later in August, September or October.
With gas prices at record highs, those hitting the road should be careful where they fill up. Due to tax and cost differences, gas prices can vary significantly state to state and even county by county. For example, heading north on Interstate 55, you’ll find average prices in Missouri hovering around $4.25, according to AAA. Move into neighboring Illinois and the average jumps to around $5.13.
Because demand is growing, AAA says you should book your trip as soon as possible because “finding last-minute deals is unlikely.”
2. Look for a new savings account
You probably don’t need us to tell you this, but interest on so-called high yield savings accounts has been ridiculously low lately. According to the FDIC, the national average interest rate for savings accounts is 0.07%.
Fortunately, that is starting to change and annual percentage yields (APY) are on the rise.
Why? The Federal Reserve (aka the central bank of the United States) raises interest rates to control inflation. Federal Reserve policymakers have already raised rates twice this year, and they are expected to raise interest rates again later this month.
Before your eyes completely glaze over, let me say that this high-profile, jargon-laden monetary policy can have a real impact on your wallet.
In short: when the Fed raises interest rates, borrowing from banks generally becomes more expensive for consumers. Interest rates on savings accounts, on the other hand, ends up becoming more attractive.
While banks are rapidly raising interest rates on new loans and mortgages, they are generally dragging their feet with rising APYs. So don’t expect your savings account returns to increase overnight.
Some banks, however, are faster than others. Online bank Ally, for example, just raised the rate on its high-yield savings account to 0.75% at the end of May. With another Fed rate hike expected later this month, the APYs of several banks will follow.
This is your cue to do some shopping for high yield savings accounts to ensure you get the best rate.
3. Complete the FAFSA to receive the remaining funds
If you were enrolled in college during the 2021-2022 school year and you never completed this year’s FAFSAJune is the last month to do so.
The Free Application for Federal Student Aid is a form the federal government, states, and individual colleges use to allocate billions of dollars in aid based on need and merit. Although state and college scholarships are largely over for the 2021-2022 academic year, you can still get federal student loans and need-based Pell Grants, even for courses you’ve already completed.
Each year, the FAFSA opens on October 1 for the next academic year. Although you should strive to complete it as soon as possible, as some funding is granted on a first-come, first-served basis, life happens. The good news is that you have until June 30 of the year you register to complete it. In other words, for the 2021-2022 academic year which is coming to an end, the application opened on October 1, 2020 and closes on June 30. Experts recommend that you fill it out every year, even if you don’t think you’ll be eligible for help.
If you forgot to complete the FAFSA for the current academic year and you’re taking more classes in the fall, chances are you didn’t complete the FAFSA. 2022-2023 FAFSA, That is. While all of this financial information is fresh in your mind, you should also consider deleting this, if you haven’t already.
4. Prepare for a harsh hurricane season
According to the National Oceanic and Atmospheric Administration (NOAA), this hurricane season is going to be another doozy. Atlantic hurricane season officially begins on June 1, and NOAA predicts up to 21 named storms, including up to six “major” hurricanes with winds of at least 111 mph. The agency says this season marks the seventh consecutive “above average” hurricane season.
If you live in a state on or near the Atlantic Ocean and/or the Gulf of Mexico, that’s not good news. Many people are still recovering from last year’s Hurricane Ida and even Hurricane Irma from 2017.
That doesn’t mean you should panic, but rather plan.
First, you should do a hurricane preparedness kit which includes cash, water, non-perishable food, flashlights and blankets.
Additionally, the U.S. Department of Homeland Security recommends that you compile a “financial first aid kitas well. This package should include important financial and legal documents from everyone in your household, such as multiple copies of IDs, birth certificates, and Social Security cards.
You will also want to compile contact details for various insurance companies – home insurance, flood insurance, private mortgage insurance, and health insurance, to name a few – which you will need to contact if you or a family member are injured or your property is damaged. Ideally, your documents should be kept in a waterproof container.
If you’re just getting started, this may all seem a little overwhelming, but your emergency kit becomes easier to maintain over the years once you’ve set up your basic kit. Ready.gov also has a ton of resources and worksheets to help you get your paperwork in order.
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