The extra day in a leap year can serve as a reminder to stop and evaluate. An extra day in the year represents an opportunity to earn more money, pay off debt, or think long-term about your finances.
Here are some of the best ways you can use a leap year to maximize your finances.
Check In for your budget
It’s easy to fall into bad financial habits, especially when it comes to budgeting. With an extra day on your hands, use it to check in (or do!) your budget.
Review your spending from 2023. Did your spending align with your goals and values? How is 2024 going so far? If you’re not thrilled with how you’ve been using your resources, now’s the time to get things in line.
If you haven’t already, download a budgeting app to track your expenses. Budgeting apps easily sync with your accounts, letting you track how you’re spending your money right from your phone. Spend some time this month looking at your budget to look for an opportunity to improve your habits.
Also, take a look at recurring expenses, such as your car insurance or monthly subscriptions. Could you negotiate a lower rate with a different company? Or, if there’s a service you use regularly, is there an annual payment option that can help you save money?
Deal with your debt
You can also use the extra day in a leap year to service your debt. A lot of high-interest debt – like credit cards – is accrued every day. Making just one extra payment can help reduce the interest that accrues on any balances you owe, helping you pay off your debt faster.
If you can’t make an extra payment by February 29, you can still take action to address your debt. Sit down with a notebook and write everything down. Make a list of all your debts and include the total balance, minimum payment and interest rate.
Once you have a clear picture of your situation, consider your options. Can you use a 0% interest balance transfer to pay off high interest credit card debt? Have you considered consolidating all your debts into a personal loan? Could you refinance one of your loans?
Take a look at our loan repayment calculator to see how different options affect your overall plan.
Use the extra day to consider your options and come up with a plan to reduce your debt in the coming months.
Increase your income
An extra day in the year means an extra day to make money. If you don’t already have a group, now is a good time to start.
For gig workers, spend the extra day delivering meals or running errands. If you’re a freelancer, commit to spending some time looking for new clients. And if you have a creative side – like building digital products – spend the day developing a new product or optimizing what you already offer.
If you don’t have a hustle but work hourly, ask your boss for a few extra hours. Use your extra earnings to make an extra debt payment or work toward a savings goal.
Implementation of Investment Strategy
A leap year can also be a good opportunity to boost your net worth. According to financial advisor Mark Hebner, the Leap Year was a historically good year for the stock market. His analysis reveals that there have been no negative returns during a leap year since 1940.
While historical performance is not always indicative of a positive future outcome, these are very good odds to work with. If you haven’t started investing yet, this could be a good year to implement an investment strategy.
One of the easiest ways to get started is to enroll in your company’s 401(k). Not only will this help you get started investing, but employers usually provide a match as part of your compensation package. This is free money that you can use to increase your net worth.
If you want to try your hand at creating your own portfolio, there are many apps you can use to do this. Fortunately, it’s never been easier to get started. You don’t need a lot of money to start investing – you can do it with less than $100.
Check your goals
The extra day in a leap year also gives you a chance to review your financial goals – or even set new ones. This could mean adjusting how much you need to save in your emergency fund or reconsidering how much money you need to set aside each month for retirement.
One of the easiest ways you can start making progress on your goals is to automate your savings. You can do this by designating a portion of your paycheck to go into a specific savings account each pay period.
You can also create special savings accounts by setting up designated savings buckets. Ally is an example of a bank that allows you to do this. You can put some of your savings toward a vacation while putting the rest toward another goal, such as an emergency fund. By automating the saving process you avoid the temptation to spend it.
Think long term
Have you ever sat down and thought about where you want to be in 10 years? 20 years? 40 years? At what age would you like to retire and what do you want your lifestyle to look like in the future?
Do you want to live in the city, in a cabin in the woods, or something in between? Do you want to travel often or spend time tending to your garden? Do you want to work hard, play hard – or are you more laid back?
Dream up an ideal life and then put in some numbers. How much would this lifestyle cost and when would you like to achieve it? Figuring out where you want to be in the future can make today’s sacrifices a little easier. So, take some time to be more strategic with your money.
If you don’t know where to start, consider working with a Certified Financial Planner to help you come up with a plan. It can save you in the long run.
Use your money to enjoy your life
While an extra day in a leap year is a great way to earn extra money or work towards a financial goal, you don’t have to rush if you don’t want to. Taking a day off to do something fun can be a powerful way to maximize your finances, too.
Use the extra day to go to your favorite coffee shop and plan a dream trip or create a financial vision board. This will help you create a “why” to align with your financial goals. Doing this will keep you motivated even on days when you don’t feel like working.
You can also use the day to do something nice for someone else. Plan to make a home cooked meal or take a walk in the park.
Time is the most precious resource we have. You can maximize your finances by spending the extra recharge day. When you’re ready to dive back into work, you’ll be refreshed to work toward your goals.
