How To Update Your Budget For COVID-19

How To Update Your Budget For COVID-19

May 2, 2020
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How To Update Your Budget For COVID-19

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As uncertainty seems to be the only certain thing during these times, it's important now more than ever to spend some time going over your budgets, and maybe start setting aside some money for an emergency fund.

As the coronavirus is spreading around the world, everyone's finances are being affected. Businesses are closing to follow quarantine guidelines, people are working from home or filing for unemployment, and many people are having to pay close attention to their personal budgets and finances more than ever before.

Budgeting will play a large role in this. When you sit down to budget, focus on your income and your assets, which may look different due to Coronavirus if you or your family has been affected. If you have, then you may need to adjust your baseline for income – this can give you the best idea on how you will need to alter your budget from previous years.

Below we have listed some of the ways you can start saving more and spending less during these uncharted times to ensure financial stability in the future.

Take A Fresh Look At Your Expenses

Make sure you are categorizing your expenses, so you have a clear starting point on evaluating your expenses. Start by looking at your largest expenses first. For most families, this includes your housing, food, and transportation, but is essentially a detailed list of everything you spend each and every month (of your fixed expenses).

Your next list should be your variable expenses. This can include clothing, hobbies and recreational spending. Having an overview of how much you spend each month on these things can give you a better idea on what you spend on non-essentials and will hopefully highlight unnecessary spending habits.

Lastly, list out your irregular spending, or spending that do not occur every month. Insurance or property taxes are considered irregular expenses but should still be laid out, so you know when and how much you are spending.

TIP: If you make purchases primarily with credit or debit cards, great way to chart your finances is to use a free tool like the Mint App

Save And Invest More Money During Quarantine

The money you are saving from staying home: save it or invest it! With specialty stores and restaurants closing due to COVID19, many families are eating out less and spending less on non-essential items. If you haven't started eliminating unnecessary spending from your budget, it’s a great time to start. While it might not be the easiest to do while stuck at home, cutting down your spending in these areas can add up overtime.

Are you outsourcing anything? You can temporarily put those hold for the time being. You have plenty of time now to cut your own grass or do your own laundry to save that extra money.

The overall goal is to trim as much of the extra spending from your income and budget as possible. Paying someone $150 a month to cut the grass? Cut it yourself and invest that $150 or put it into savings.

Make Fiscally Smart Decisions During Quarantine

If you have something planned for later this year, it might be more financially responsible to cancel it for the time being, even if you will end up paying more at a later date. While this may not be the easiest decision, especially if you’ve been saving for a trip or a new car, it’s a safer bet to only make the minimum mandatory payments you can, and try to hoard as much extra cash as possible, because there is no telling when this pandemic will cease.

When cash does seem to be getting short, pay attention to ways you can make your debt load more manageable. With stimulus packages becoming available and relief programs being put in place, use them to your benefit – that is, after all, what they are there for!

Make sure when you do spend money, that you are doing it strategically. If you primarily shop online, make sure to use cash back websites. If using a credit card, pay close attention to the interest charges. Credit card debt can be easier to fall into when you are mindlessly spending.

Budgetary Constraints During Lockdown Are Only Temporary

The easiest way to trim your budget is to take a real look at what you are spending and what you are deeming as essential. Things like cable or streaming subscription services may seem essential, but financially might need to become optional.

Be smart about what you are spending and try to negotiate if you can. Everyone is in the middle of this pandemic, and thankfully some companies are beginning to be a bit more understanding about financial hardships. Even if you don’t have all of the answers, simply starting with a budget plan can be very beneficial.

Things will undoubtedly be changing in the near future, so when that happens simply adapt and change your budget as necessary.