The importance of managing money needs no mention. However, during a crisis like the COVID-19 pandemic, it acquires a whole new dimension as the economy is in shambles, and we are seeing the consequences finances already. The stress caused by the financial uncertainty is not so much visible, although individuals feel its impact says Jared Jeffrey Davis Sandusky, Ohio. Worrying about your finances can adversely affect your well-being and mental health. To stay resilient during the crisis, financially and mentally, you must learn to budget your expenses to steady your finances.
The tips below should guide you about how to do your budgeting during a crisis.
Jared Jeffrey Davis Sandusky, Ohio suggests examining changes in your spending
The crisis has triggered a change in your lifestyle and work, which has led to a new financial situation. Review the new financial scenario carefully to understand its good side, what improvements are possible, and how you must prevent a downturn. Start by doing a SWOT analysis of your finances and start making decisions by using the Eisenhower matrix.
Look at the changes in essential expenditure. For example, before the pandemic, your necessary expenses were 50% of your monthly income. As you are working from home, you can save on costs like transport, clothes, office lunch, etc. which can increase your monthly savings by approximately 10%. Similarly, your discretionary expenditure will also decrease as you are at home, and this can result in an additional 20% saving.
On the other hand, expenses for digital home entertainment and broadband and Wi-Fi will go up as you are working from home and spending more time on digital entertainment. Distinguish between essential expenditure for official and personal work. Look for free services and discounts as well as current government policies to reduce your financial burden.
Reallocate your spending
If your income has dwindled during the crisis, you can supplement it with the savings you generate. Another way is to use your saving to build an emergency fund, decrease your debt, or top up your savings. In case you are financially sound, you can use the surplus from saving to invest in the future or help a family member or friend who is in crisis.
Make your finances future-proof
From the result of the SWOT analysis, you come to know about your weaknesses to produce income. You might be too dependent on a specific location and have limited skills. You may have difficulty in adjusting to changing trends, and the nature of your work and its demand could be hindering your earning prospects.
Make a list of the obstacles to your financial progress and start tackling it by choosing the one that causes the biggest disruption. Consolidate your knowledge, learn a new skill, perfect your technique, etc.
A single-source income can be a threat to your financial situation, mainly if the crisis affects your normal working and earning. You must try to use new skills and explore new ways of earning by monetizing your expertise or starting a side hustle.
Remember that you need to change because life will never be the same again after the crisis.