The coronavirus continues to spread worldwide affecting everything from public health to the world economy. While it is important to take care of your physical and mental health, it is also imperative that you keep a check and manage your personal finances to stay afloat during this crisis.
While you might have never anticipated such a situation, it means that you need to be smarter and more vigilant about your monthly budget than ever before. This is the time to ensure that you get through this crisis without upsetting your future plans.
So here are five effective ways in which you can manage your budget wisely during the COVID-19 crisis.
1. Review Your Budget With Respect to Your Income
Your budget must be in sync with your earnings. If your income has taken a hit, then it’s time to redo your budget as per your new salary. For example, if your monthly salary has reduced by 30% then your monthly budget also needs to reduce by 30% or maybe even more if you can afford it.
If you have been saving in an emergency fund, then you can also tap into it, if required. And don’t worry if you don’t have an emergency fund - try creating one now and start with a small amount every day. Remember, no amount of money is too big or small when it comes to savings.
2. Categorise Your Monthly Expenses
What are your fixed and variable expenses? Enlist them separately to get a clear view of your monthly spendings. Rent, food, utilities can be listed under fixed while shopping, dining out, entertainment etc. can be listed under variable. You can further divide variables into regular and irregular payments. So expenses such as insurance payments can be listed as irregular payments since they need not be paid every month.
3. Eliminate Your Variable Expenses
Retooling your budget during a crisis means making some tough decisions on cutting your expenses. So naturally, your variable expenses like dining out, buying electronics or gadgets, gym memberships and other unnecessary subscriptions - all need to be immediately cut off from your monthly budget. Remember, the goal is to save as much as possible.
4. Re-evaluate Your Fixed Expenses
If you are staying in a rented house, then consider reaching out to your landlord to see if there’s a possibility to reduce rent for a few months. Likewise if you have a monthly loan payment then try reaching out to your loan provider to see whether a deferment is possible. These steps may or may not be fruitful but you will never know until you try.
5. Spend Smart, Save More
During a crisis, it is important to spend strategically and try to save up as and where possible. Look for websites and apps which offer cash back on your purchases, or try to postpone some expenses to the later part of the month so that you are closer to salary day. Also, remember to not overuse your credit cards during such times. Creating a huge debt for the next month is never a good idea.
Uncertainty will be your constant partner during a crisis like COVID-19 so it’s better to accept and keep making changes to your finances as and when required. Remember, we are all in this together, and we will come out of it together as well. Stay safe and make smart financial decisions with Wizely.