It isn’t easy but there are a lot of ways to managing your finances during COVID-19 and learning how to take control of them even after this pandemic.
It’s important to recognize this is an exceptional situation that has impacted every single person in a several different ways. Restaurants, retailers, and other businesses were asked to temporarily halt operations.
We have all been experiencing the consequences of the COVID-19 pandemic, most of which have affected our budget. There is no doubt these are challenging times and its repercussions are stronger day by day. Even as an essential worker, it is likely your financial picture looks a bit different from before COVID-19.
Whenever there is a crisis, focusing on these basics can help provide some stability and control over your finances.
COVID 19 financial impact
COVID-19 is having a massive effect on the US Economy, even if it is not felt yet on everyone’s household budgets. From cancellation of sporting events and religious gathers to the closing of travel between the US and other countries, international trade is being severely disrupted.
The economic fallout from COVID-19 continues to hit some segments of the population harder than others. Lower-income adults, as well as Hispanic and Asian Americans and adults younger than 30, are among the most likely to say they or someone in their household has lost a job or taken a pay cut since the outbreak began in February 2020.
We always want to help our clients so here you will find some essentia tips for managing your finances during COVID-19:
Tips for managing your finances during COVID-19
Implement your budget and update if you already have it
This exceptional situation has made all our futures a little uncertain. In crisis, it is better to be conservative with your expenses, in order to stabilize your finances. Reduce spending where you can by determining what’s essential in your budget.
Being stricter with your budget allocations, prioritizing survival needs such as food, rent, and hospitalization will keep your budget appropriate to your needs.
Apply the 50/30/20 budget rule
- 50% of your income goes to basic needs
- 30% are for personal wants
- 20% of your income are allocated towards your financial goals like paying off insurance and debt.
- Build an emergency found
At this times of uncertainty and vulnerability, it is essential to have an emergency found that will cover your back in case you need it.
So in order to manage your finances during COVID-19, its recommendable to categorize your budget expenses and strategically spend your money. Since you will be cutting back your usual expenses while at home, add what you can to supplement your emergency budget to help you cover the next months’ expenses. Remember, no amount is too big or small to make a difference.
The goal is to keep unplanned expenses from interfering with your budget, which could cause you to borrow or use credit unnecessarily. When possible, it is a good idea to incorporate some frequently overlooked expenses in your budget, so they don’t end up consuming your emergency fund.
Contribute more to your savings
This pandemic has left us so many lessons, but one of the most important is that the unexpected can happen at any time. Start a plan for the unexpected future and start an uncertainty fund if you don´t have one already.
Our recommendation its to work on that long overdue passion project or try out new recipes. Practical skills are a top money-saver and you literally have no excuse not to do them. After all, what is the point of reducing your usual expenses if you will keep on using those delivery apps anyway?
Consider an alternate income
Aside from cost savings, there are still ways as to how you can generate income even when at home. Even before the pandemic, there were already a huge number of online jobs.
Online job opportunities are aplenty these days. Consider applying for one, which you can do in the evenings or weekends if you still have your current 9 to 5 job. Whether it is online tutoring or writing for blogs, you are bound to find one that fits your skill set.
In case that you are a business owner, some restaurants have restarted their operations to pave way for take-outs and deliveries. In addition, groceries and supermarkets are now available online, which allows consumers to be safe and respecting the isolation and saving time instead of waiting in lines.
Reduce your non-essential spends.
While essential expenses are every expense related to living, non-essential expenses are usually the expenses that you don’t necessarily need. For example, expenses such as rent, mortgage, utilities, groceries, or medication are essential ones that you need to pay for living.
However, things such as clothes, shoes, makeup, video games, gym membership, and, yes, even the Netflix subscription, are non-essentials. Think twice on whether that is an essential expense before you get bad debt.
7 ways to be a smarter consumer during COVID-19
1. Figure out what spending habits are essential and/or non-essential in your own particular case and spend accordingly
Because of income, lifestyle, etc., the spending needs for Individual One may differ greatly from those of Individual Two.
2. Make a list of the essential items you plan to purchase each time you shop
Double check your list. Are you 100% certain all the items on it are absolutely essential?
I have a one-cup coffee maker, for example. It brews superb coffee; however, it leaks a little around the basket when in use. Does this warrant purchasing for a new one? No.
3. Keep track of all your purchases for several weeks
Tracking your purchases will help you to notice some details like if you added up your purchases for a one-month period, for example, you will found that you had spent more than $100 on items you could have easily done without.
4. Rethink purchasing an item simply because it is on sale
Even at a greatly reduced price, you would save more by simply not making the purchase at all.
5. Find something to do that you are passionate about
If you are involved in doing something you love like photography, writing or art, non-essential purchasing will fall by the wayside. Also, you may discover you barely have time to make essential purchases.
6. Question whether or not you will use the new purchase often enough to warrant buying it
If you have one or two evening dresses hanging in your closet that are still stylish, still fit, and look marvelous on you and you only attend dressy functions once a year, is it practical to purchase a third?
7. Learn to recognize marketing strategies/temptations
Retailers, especially in today’s weak economy, are pressuring customers to buy with tactics never before thought of. Even technology is trying to get into the act.
For example, although shopping apps are probably one of the coolest and most useful inventions since the light bulb (well, almost), they also make it easier for you to make purchases you would not otherwise consider.
The COVID-19 pandemic unprecedented increase in healthcare expenditures negatively impacted global economic activities. The nationwide lockdown, social distancing, transport and travel restrictions imposed many adverse effects on countries’ economic growth, leading to a financial crisis.
However, the most important thing is to take care of solving and improving our situation to the best of our ability. Managing finances during COVID-19 can be an exhausting and frustrating challenge, but under the right guidance we can cope and improve our financial situation.
If you have questions or concerns about the impact of these difficult times on your bank account, your savings or your credit products, contact your financial institution. Make sure you have the contact information to get in touch with your financial institution.