Making a budget list of expenses to cut down is not easy if you’ve never done it before. But here’s the thing: it’s one of the most helpful tools to get you through the crisis. Those with previous experience in budgeting know that examining your finances is the best way to stay afloat during tough times. And the good news is that once things get better, you can start spending more again.
Making a budget to save money is supposed to be a quick temporary response to unexpected situations. And if anything’s been unexpected in 2020, it’s the spread of COVID-19. The number of people feeling the strain about money is likely to rise as the economic uncertainty is still in full swing. So, take the initiative and start making a budget, it’s the best strategy for dealing with coronavirus and get away with it. Here are our tips on doing it wisely and effectively.
Take Reality for What It Is
When life changes quickly, it can come as a shock. It’s completely normal to grieve for the abundance you might have had before. But to make clear decisions on how to move forward, you need to accept the new reality. If coronavirus has negatively impacted your incomes, it’s important to acknowledge the fact and figure out exactly the amount of money you’ll be receiving from now on. As a general rule of thumb, if your income has been cut 30%, you’d need to lower your expenses accordingly.
This is possible, of course, if you’re spending as much as you’re earning and not living off loans. If you were getting into debts before the pandemic, you’d need to do your best to save even more money.
If you’ve got some savings, you’re in luck. The perfect emergency fund should cover a few months’ regular expenses. But even smaller sums can be very helpful. Remember: you’ll only need the money to survive the crisis. It will be over soon, and your income will bounce back to its normal level.
Know the Difference Between Wants and Needs
Here are the basic needs you need to cover: transportation, utilities, shelter, medications, and food. Anything else, including your Wi-Fi service and insurances, can be seen as secondary, but still necessary. And everything beyond that, like gourmet foods or premium streaming accounts, can simply be cut off.
Although it might be hard, especially when you’re making a family budget, you will be deprived of many comforts you and your family have got used to. But think about it this way: maybe there are ways to make some expensive treats cheaper at home. If you bought something from the bakery every Sunday, try cooking pies yourself instead. You’ll save money and learn a new skill!
The same goes for making a budget for businesses. You may have to cut off some amenities your employees have enjoyed, like free taxi rides or staying in certain hotels on business trips. But on the plus side, the crisis can also force you to come up with more efficient time management strategies.
Maybe You Can Even Cut Corners on Necessities
Now is the perfect time to take a closer look at your necessities and see if you can save some extra money on them. Maybe you’re used to drinking water from bottles. But believe it or not, in most areas, the tap water is a perfectly healthy alternative.
Another way is to downgrade your Wi-Fi plan. Maybe playing online games like King of the Jungle or Counter-Strike will be difficult at lower speeds, but you can still easily chat with your friends on Facebook. One more thing to consider is negotiating new payment plans for your insurances. Suspending or at least reducing your payments is completely realistic; even banks, insurance companies and loan providers need to accept the reality of the crisis. It’s much better for them to come up with new schedules than to completely ruin the relationships with so many clients.
When it comes to debts, the most important thing is to manage them proactively. Don’t postpone making a budget to pay off debt for too long. It may seem uncomfortable and stressful, but getting a clear overview of your financial responsibilities is the best way to handle them well.
Go Over All of Your Accounts
When was the last time you reviewed all your online subscriptions? Most of them take the monthly fee from your credit card automatically. So, make sure you haven’t forgotten about any of the recurring payments. Most of these don’t pay for services that would be super important during a crisis. You can cancel the subscriptions immediately and save some money for food and other essentials.
Making Budget Cuts by Spending More Strategically
It’s never possible to stop consuming. But a great way to be more strategic is using cashback apps. They pay you back a percentage from every amount you spend. If you’re making your first budget, ensure to add the expected money from the cashback apps into the equation. You may discover that the percentage you’ll get back from every purchase, which can be up to 5%, adds up to a nice sum at the end of the month. Some of the best cashback apps to experiment with are Swagbucks, Earnie, and Wikibuy.
The most important thing to remember right now is that the recession caused by the pandemic won’t last forever. Making a budget will help you maintain a good living standard throughout the crisis. Soon everything will be alright. And guess what? You’ll have new confidence and knowledge about handling your money better. Feel free to use it to your advantage. Check out some tutorials online on making a budget on Excel. It’s easier than you think, and you can get started right away.
Chris Delgado is a Junior Copywriter with high ambitions and an undivided passion for economics. He is currently studying to get his degree, and his future prospects revolve around crypto trading and financial writing. In his spare time, he is a dedicated volunteer at a local homeless cafeteria.