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The extra day of the leap year can serve as a reminder to stop and evaluate. An extra day of the year offers the opportunity to make 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 your budget
It's easy to fall into bad financial habits, especially when it comes to budgeting. Since you have an extra day, you can use it to review (or correct!) your budget.
Review your spending starting in 2023. Did your spending align with your goals and values? How is 2024 going so far? If you're unhappy with the way you've been using your resources, now is the time to make things right.
If you haven't already, download a budgeting app to keep track of your spending. Budgeting apps easily sync with your accounts, so you can keep track of how you're spending your money right from your phone. Take some time this month to review your budget and look for a way to improve your habits.
Also take a look at recurring expenses like your car insurance or monthly subscriptions. Could you negotiate a lower price with another company? Or is there an annual payment option that can save you money when you use a service regularly?
Deal with your debt
You can also use the extra day in a leap year to pay off your debts. Many high-interest debts – such as credit cards – are increasing every day. By making just one additional payment, you can reduce the interest accruing on your debt, allowing you to pay off your debt more quickly.
If you can't make an extra payment on February 29th, you can still take steps to get your debt under control. 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 idea of your situation, consider what your options are. Can you use a 0% interest balance transfer to pay off debt from a high-interest credit card? Have you considered combining all of your debts into one personal loan? Could you refinance one of your loans?
Check out our loan repayment calculator to see how different options affect the 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 side hustle, now is a good time to start.
For gig workers, spend the extra day delivering meals or offering rides. If you are a freelancer, take some time to look for new clients. And if you have a creative side hustle – like developing digital products – you spend the day developing a new product or improving products you already offer.
If you don't have a part-time job but work hourly, ask your boss for some overtime. Use your extra income to make additional debt payments or work toward a savings goal.
Implement an investment strategy
A leap year can also be a good opportunity to increase your wealth. According to financial advisor Mark Hebner, the Leap Year was a historically good year for the stock market. His analysis shows that there have not been negative returns in a leap year since 1940.
While historical performance is not always indicative of a positive future outcome, these are certainly good opportunities 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 does this make it easier for you to get started investing, but employers also typically offer matching compensation as part of your compensation package. This is free money that you can use to increase your net worth.
If you want to try building your own portfolio, there are a number of apps you can use to do this. Luckily, getting started has never been easier. You don't need a lot of money to start investing – you can do it with less than $100.
Review your goals
The extra day in a leap year also gives you the opportunity to review your financial goals – or even set new ones. This may mean adjusting the amount you need to save in your emergency fund or reviewing the amount of money you need to set aside each month for retirement.
One of the easiest ways to make progress toward your goals is to automate your savings. You can do this by scheduling a portion of your salary to be transferred to a specific savings account each pay period.
You can also create special savings accounts by setting up specific savings areas. Ally is an example of a bank that allows you to do this. You can use some of your savings for vacation and use the rest for another goal like your emergency fund. By automating the savings process, you avoid the temptation to spend money.
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 do you want 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 somewhere 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 relaxed?
Dream up an ideal life and then give it some numbers. How much will this lifestyle cost and when do you want to achieve it? Understanding where you want to be in the future will make today's sacrifices easier to bear. 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 develop 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 make extra money or work toward a financial goal, you don't have to rush if you don't want to. Taking a day off to do something fun can also be an effective way to maximize your finances.
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 identify a “why” that aligns with your financial goals. This will keep you motivated even on days when you don't feel like working.
You can also use the day to do something good for someone else. Prepare a home-cooked meal or take a walk in the park.
Time is the most valuable resource we have. You can maximize your finances by spending the extra day charging. When you're ready to get back to work, you'll be refreshed to work toward your goals.
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