Pete the Planner: Was March a good money month for you? Don’t waste it.

Last month’s banking crisis is barely behind us. The debt ceiling debate is still in front of us. But you know what? I get this sense that people are in a good money mood. Frankly, it’s been a while since I’ve sensed this.

Yes, I realize the headlines suggest we should be hunkered down, waiting for the recession to wipe us out, but I honestly think people are trying to will their way into positive financial thinking. And the truth is, there are at least five legitimate reasons they might be right.

Before I dig into actual reasons why people are feeling optimistic, it’s worth noting that many people experience recency bias. In other words, they tend to put more emphasis on more recent experiences than they do on older experiences, and they believe the more recent experiences are more indicative of what they can expect in the future.

Based on the time of year it is right now, there’s some inherent positivity afoot.

The first sign of positivity is a simple one, but one that affects the psyche—March was a three-pay month for some people who get paid biweekly. If your employer pays you 26 times per year, there are two months each year in which you receive three paychecks instead of two. The fascinating aspect of this mild oddity is that people often credit themselves for the swollen checking account, not the calendar.

The calendar also tells us it’s tax-refund season. And while the average refund is lower than in previous years, people love it when the government gives them their money back. This lightens the mood and, again, fattens the bank account. It’s amazing what a higher checking account balance does for a person.

I’m not a medical professional, so please take my next few comments with a grain of salt. Spring has sprung. With it, the sun is shining, and the gray skies are (mostly) behind us. Seasonal mood disorder affects people and their financial decisions/outlook more than you might think. Which is to say, you aren’t alone if you generally have a more positive outlook on life right now. Out of respect to the medical professionals who actually fully comprehend mood disorders, I’ll stop here.

Did you catch the March inflation report? It was good(ish). Inflation is settling down, and in some cases, consumer prices have actually dropped. Sure, to some degree, we’ve become numb to inflation. But the fact that it’s subsiding certainly instills some confidence in the future.

I don’t know if you’ve looked at the stock market yet this year, but it’s doing OK. The S&P 500 is up about 8% so far, and if inflation stays in check, it’s quite possible the market will rebound significantly off its 2022 lows. Nothing puts people in a better mood than recovering from a paper loss in their investment accounts.

However, perception isn’t necessarily reality.

While it does feel like many headwinds have passed, I’m not fully convinced we’re in the clear. If you over-index for feeling good about your personal economy, it’s quite possible you’ll miss the opportunity to strengthen your financial position. We are predisposed to take opportunity and capitalize on it today, as opposed to making tomorrow easier.

Think back to the spring of 2020. Sorry. Many people were able to strengthen their finances driven by outright panic and fear. People paid down debt and built up savings. Our moods dictated our actions. Our view of the economy influenced our decisions. If you’re not careful, you could waste today’s good mood through immediate gratification, instead of further strengthening your finances.

I’m not asking you to live in fear once again. I’m asking you to recognize that your good mood might be driven simply by the calendar, not by actual financial gain. It’s a tough thing to balance, frankly. If you’ve recently had an influx of cash because of the factors listed above, consider topping-off your emergency fund first. And if you are still flush with cash after that, then certainly act on your good feelings and live a little.

The lesson here is an old one, but an important one: Don’t let a three-paycheck month convince you that your tide has turned.•

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Dunn is CEO of Your Money Line powered by Pete the Planner, an employee-benefit organization focused on solving employees’ financial challenges. Email your financial questions to askpete@petetheplanner.com.