Many people have had to look at their finances with new eyes. The coronavirus continues to wreak havoc on people’s budgets, income, and financial stability.
The truth is, the odds of another financial crisis in your personal life is inevitable. Negative financial events such as a job loss, or illness, can leave us feeling hopeless and stressed.
Learn how to turn a personal financial crisis into a temporary setback that you can overcome. The chances of something happening that is beyond your control is high, and it could be expensive. Learn how to stretch your money during a crisis.
Increase your savings
One of the impacts of the current situation is that many have had to stay home for weeks at a time. With that, you may have lost income for that time. Instead of panicking, focus on finding ways to stretch your money farther.
A few ideas include cutting nonessential spending from your budget. Since you’ll be staying at home more, you’ll likely be able to save money. Money you would have spent eating out and traveling.
When you spend less than you make, you need to do something with that money. One of the best things you can do is to create an emergency fund or add to one. Think of it as insurance for life’s unexpected events. An emergency fund will protect you against life’s uncertainties.
When you start to build your emergency fund, your goal should be three to six months of expenses. You have to start somewhere, so get the emergency fund to R1500. Next, work toward R3,000 in this fund. Then, start working toward three months of expenses and, finally, six months of expenses.
Savings You May Not Have Thought Of
The COVID-19 crisis may have negative consequences on your finances, but there may be some silver linings.
Look at your budget to see how your spending habits have changed during the stay-at-home orders. You could be saving a significant amount of money if you’re not:
Eating out at restaurants
Traveling for fun
Socializing with friends
Commuting to work daily
Impulse buying at the grocery store
Shopping for new clothes
For example, if you normally spend R500 a month on eating out and you’ve been cooking all your meals at home for the last two months, that’s R1,000 in savings.
Seeing your savings from this perspective can help you find the bright spots, especially during a financial crisis.
Make a weekly or monthly budget.
The best way to manage financial stress during hard times is to assess your situation and develop a plan. Even in this time of uncertainty, it’s still possible to control what you can. And that includes how you spend your budget.
Financial awareness is key. If you aren’t utilizing a budget, it will be hard to know if you are currently living below your means. A budget is also the go-to resource for listing out your expenses. This will give you the ability to cut expenses from your life based on importance and priority.
Remember, the foundation of a realistic budget isn’t based on what you want to spend. It based on what you are actually spending right now.
It’s easy to write down some numbers on a piece of paper. The hard part about budgeting is making those numbers resemble your actual life. The more realistic you are about each of these numbers, the more likely you’ll be able to stick to your budget.
If you aren’t willing to put in some investigative work, budgeting won’t work. It’s that simple. You have to be aware of how much money is coming in and how much money is going out. You also need to know where your money is going.
Make a list of your fixed expenses. Those are your necessary expenses like food, housing, electricity, water, internet, and insurance. They don’t change much month-to-month. So they’re easier to plan around when creating your budget. Put any debt payments on this list, like credit cards, student loans, auto loans, and your mortgage. If money’s too tight to make your usual credit and loan payments, at least make the minimum payment. You don’t want to tank your credit score during a pandemic if you don’t have to.
If money is tight and you can’t afford to pay for everything, start prioritizing payments to make sure you pay for the most essential expenses first. For example, it’s important to prioritize paying for housing, food and insurance.
To help stay organized, make a list of your monthly bills and payments in order of importance. This way you’ll know what to pay first. Then write down any bill assistance programs you qualify for, as well as payments you can defer. Move those lower on your priority list so that you can pay your essential bills first.
Just Make Sure You Take Action
The worst thing you can do when strapped for cash, especially in a situation like the COVID-19 pandemic, is nothing. Sticking your head in the sand and ignoring the bills will only make things worse. Instead, come up with a plan to tackle the bills and cut expenses as much as possible. This will make the financial storm easier to bear until it passes.
14 Day Financial Detox Challenge
A financial detox is the process of giving your wallet some room to breathe. It’s pressing reset on your spending habits. And it’s being more intentional about how you view and relate to money