The coronavirus pandemic has transformed the way we work — and some of these changes don’t appear to be going away anytime soon. With many employees still working from home and others shifting into hybrid arrangements that don’t require full weeks in the office, a lot of workers may find themselves spending less on their commutes. When you don’t need to go to a physical workplace every day, you don’t need to shell out for gas, highway tolls, public transportation, or even take-out lunches and to-go coffees.
Maximizing the money you save on your commute in a remote or hybrid role could give your financial life a boost, even if you eventually return to the office full-time. Here are four ways to do just that:
1. Boost Your Retirement Accounts
Found money — like the extra cash in your pocket from a cut commute — can be a great opportunity to supercharge your nest egg. The longer you’re invested, the stronger your potential return. Using an investment calculator can show you just how powerful your contributions can be over time. Plus, your contributions can have an even greater impact if your employer matches any portion of them.
In 2021, the IRS allows you to kick up to $19,500 into your 401(k). Those who are 50 or older can contribute an extra $6,500. If you end up leaving your job and going to an employer that doesn’t offer as high of a 401(k) match, you’ll have already built a cushion to make up the difference. You can also take your 401(k) with you and roll it over into your new employer’s plan. Just bear in mind that most employers abide by a vesting schedule. While the money you put in is always yours, you may not have full access to your employer contributions until you’ve put in a few years of service.
2. Pay Down Debt
Having high-interest debt can make it that much harder to move the needle on your financial goals. If you’ve freed up some extra money, you might consider accelerating your debt payments. Chipping away at the accounts with the highest interest first could save you the most money in the long run. Alternatively, you can focus on whichever account has the lowest balance, a strategy called the “debt snowball” method.
If you have educational debt, now might be a particularly smart time to refinance your student loans. This involves taking out a new loan with a lower interest rate and then using it to pay off your current balances. From there, you’ll have one monthly payment, and you’ll ultimately pay less in interest over the long haul.
Taking the chance now to pay down debt can directly benefit your career in the future. If you pay off your debt today, you don’t have to worry about those recurring payments anymore. Maybe you can finally take that job you really want, even though the salary is on the low side.
3. Build Up Your Savings
Another option is to funnel extra money right into your savings account. The general rule of thumb is to have 3-6 months’ worth of expenses on hand in your emergency fund. This way, you’ll have a pool of money to see you through your next financial hiccup, no matter what form it takes. Keeping your emergency fund in a high-yield savings account can also allow you to earn a small return.
A solid emergency fund doesn’t just provide financial peace of mind. It can also prevent you from going into debt or having to borrow money from friends or family when disaster strikes. On top of that, you’ll have a financial safety net should you encounter a spell of unemployment or experience an unexpected lull in income. A topped-off savings account can also allow you to be more patient when searching for your next role because you’ll have cash on hand to get by.
4. Invest in New Training
Depending on your industry and employer, you may be required to take continuing education courses. If not, you still might feel drawn to additional training that could help you excel in your current role or prepare you for a career transition. You might want to consider using your newfound savings to invest in yourself.
Staying abreast of changing best practices within your industry can enable you to bring more value to your current position and help you grow as a professional — two details that can work to your advantage during raise and salary negotiations. You’ll also be giving hiring managers extra skills to consider when it comes time to interview with potential employers. Not surprisingly, a 2019 LinkedIn report found that 94 percent of employees would stick with an employer longer if they invested in learning and development.
Saving money is always a good thing. Using these savings to improve your financial life and accelerate your career is even better.
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