Sticking to a budget can be difficult under any circumstances, but our current global situation makes careful spending even more important.
As our world navigates the coronavirus pandemic, the time is now to take a conservative approach to your finances. Here are several ways to tighten your budget today so you can be better prepared for the future.
Planning for Uncertainties
Right now, everyone has questions: Will there be more layoffs? When will the economy start to recover? Can my investments rebound?
As we wait for these answers, the best approach is to plan for the unknown and be smart with spending.
If you’ve recently lost your job, have a reduction in income or think a layoff is imminent, go easy on buying anything that isn’t a necessity.
Some experts recommend creating a 50/30/20 budget. With this formula, you spend 50% of your income on necessities, 30% on what you want, and 20% on savings or debt payments. However, as we wait to see how the pandemic winds down, it’s wise to save even more if possible.
Pay Bills First
The best budgeting advice anyone will offer starts with paying your bills first, including credit cards, utilities, loans and your mortgage. Not paying bills can lead to service interruptions and negative marks on your credit reports that will have a ripple effect on your finances in the future.
If you haven’t done so already, now is a great time to have bills, such as the ones mentioned above, automatically drafted from your account with auto pay. When the amounts are deducted automatically, you won’t miss a payment (and damage your credit scores) or get fined late fees.
Avoid Impulse Shopping
If you’re stuck at home, you may be fighting the desire to shop the retail sales to help pass the time or inject a little excitement into your day. While all businesses will benefit from an infusion of cash, you must protect your finances first.
Avoid retail shopping altogether, unless something is a necessity, such as food, medicines, household goods or safety-related products.
Watch Dining and Deliveries
When living in lockdown, a restaurant meal sounds like the best idea ever. But before you place your order, check to see if there are delivery fees or meal minimums. If you can save these extras by cooking something up at home, that’s probably the better choice for now.
Find a Little Extra Everywhere
Look at where you historically spend and find a way to save a little bit extra every week, whether you define little as $5 or $50. Put the money aside in a special fund that you can access later if you get into a situation where you need it. Or, if things go as planned, so you can splurge.
During a lockdown, the best approach is a conservative one. As soon as the pandemic is behind us, you’ll have more saved for a much-deserved celebration.
