3 Best Money Moves for March 2022
This March could be madness, and not just in a college basketball sense.
There’s a lot going on this month that could affect your finances: a thorny tax season is looming, the Federal Reserve is expected to raise interest rates, and there are financial deadlines to watch out for.
Here’s the good news first: #1, warmer weather is on the way, and #2, we’ll break down everything you need to know into simple, easy steps (like we do every month).
These are the smart money moves you should make in March.
1. Wrap up your taxes early. (We think so this time.)
If you’re one of the 36 million Americans who have already filed their taxes, well done, you can keep scrolling. Of that number, the IRS has already started issuing about 22 million refunds.
These are the benefits of filing early.
Now, for the rest of you who haven’t filed yet, you should seriously consider doing so as soon as possible. In the February installment of our monthly cash flow, we recommended that you start paying your taxes early and file your return electronically to get a refund faster. It bears repeating, especially as new details have come to light regarding the IRS backing up this tax season.
As Money editor Julia Glum recently reported, the “overwhelmed and understaffed IRS” is dealing with a bigger backlog of 2020 tax returns than previously thought, outdated computer systems , serious personnel problems, etc.
All are reasons to file early. If you are expecting a return, it will likely arrive sooner if you file it early. If you expect to owe, you’ll know what you owe sooner and have more time to prepare your payment.
It really is a win-win.
2. A federal broadband assistance program has ended, but you can sign up for a new one
At the end of last year, about 9 million low-income households were enrolled in a federal program that heavily discounted high-speed internet plans. This program, a remnant of President Joe Biden’s March 2021 stimulus package, has come to an end. But a new, larger program is taking its place.
If you were one of the millions of families enrolled in the program, you were given a 60-day transition period to join the new broadband accessibility program that took its place. This transition period ends today, March 1st.
The new program is called the Affordable Connectivity Program. It’s very similar to the old one, but there are a few key differences. In short, the ACP is now accessible to more people, but the program is less generous. The previous $50 monthly grant drops to $30 for most people. If you weren’t eligible for the original program, check to see if you qualify for the new CPA, as it extends the income thresholds from 135% of the poverty line to 200%. Follow the link above for more details on eligibility and registration.
Of course, not everyone will be eligible for the federal rebate because it is aimed at low-income households. Not eligible, but still struggling to pay for broadband? You may be able to reduce your bill by lowering your speeds or simplifying your plan. Sometimes just telling your ISP that you’re looking for lower prices can get them to give you a discount.
3. Use it or lose it: March Flexible Spending Account deadlines
Get ready to stock up on over-the-counter medications, first aid kits, COVID-19 supplies and more. Why? A common Flexible Spending Account (FSA) deadline is on the horizon, which means many of you could have the money you need (yes, need) to spend in the next few days.
FSAs are a special savings benefit through your employer that allows you to set aside pre-tax money for certain health care expenses. The catch is that there is a “use it or lose it” stipulation for the money you put into the account. More than 50 million private sector workers have access to an FSA, according to the Labor Department. If you are one of them, you should check with your HR department as soon as possible about your company’s FSA deadlines.
Some employers set a December 31 deadline for spending money on an FSA. But many allow a “grace period” to use your funds. This grace period usually ends on March 15. If you don’t spend your FSA by your business deadline, that money is usually wasted.
Note that employers also often set March 31 deadlines for submitting receipts and claims for FSA purchases from the previous year, so if you spent on covered items or procedures last year, you still have the time to claim them.
Finally, there’s a new reason to make sure you understand your FSA deadlines this year. The second pandemic stimulus package allowed employers to extend their grace periods for up to 12 months for the 2020 and 2021 FSA schemes. This means you may have until December 2022 to spend the FSA money from last year. This law was totally optional, so it all depends on your employer.
4. Prepare for higher interest rates this month
You may have heard a lot about how interest rates will soon rise. Here’s why: On March 15 and 16, members of the Federal Reserve, also known as the Fed, will meet for the next meeting of the Federal Open Market Committee.
At this meeting, the Fed is expected to raise interest rates between 0.25% and 0.5% in an effort to contain inflation. Experts predict this interest rate hike will be the first of several throughout 2022.
What does this have to do with your wallet? A lot, in fact.
Writing for the Money, Anna-Louise Jackson recently detailed several things you should consider ahead of rate hikes. The most important of these: refinancing your loans (especially mortgages or student loans) and paying off high-interest debt.
In short, for you, the consumer, the cost of borrowing is likely to become more expensive in the weeks to come. However, there is a result. Interest rates – APYs, in this case – for savings accounts and certificates of deposit also tend to rise with Fed rates. This makes it a good time to shop around for a new savings account.
According to the Federal Deposit Insurance Corporation (FDIC), the national average interest rate for savings accounts is 0.06%. Even the best savings accounts currently only offer around 0.5%. We should soon see those APYs start to increase, which could mean more money in your rainy day fund.
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