No matter your age, the coronavirus pandemic has likely had an impact on your budget. You probably haven’t been traveling or going out much, but any funds you’ve saved may instead be sitting in stockpiles of toilet paper or supporting food delivery services. After three months of reacting, it’s time to start being more proactive and deliberate financial decisions.
Here are some tips, grouped by stage of life, for adjusting your household budget to financially survive and prosper into the next pandemic phase (and not see all your surplus go into paper goods!).
- If you are retired or close to retirement, evaluate your non-essential expenses. You have likely already adjusted your budget for a fixed income and, during coronavirus, seen most entertainment expenses go to zero or close. Still, stock market fluctuations and dips in retirement accounts may have you nervous. If you are feeling pinched:
- Assess your expenses and look for opportunities to cut non-essential items. It might be time to cut out a round of golf a week or order fewer craft supplies.
- Prioritize your spending on housing, utilities, food and medical care.
- Consider using some of your emergency cash fund. Take this step only if necessary, and to avoid potential retirement fund penalties.
- For families, the focus for pandemic budgeting should be on evaluating your costs and maintaining (or building) your emergency funds. Assess the way your spending has changed, then use that experience to help you adjust expenses and set aside savings going forward. Try these steps:
- If you don’t already have a budget, create one. There are some good apps available to help.
- Review regular expenses and look for opportunities to save. It may be time to act like your parents and set the thermostat a little higher. With families eating more meals at home, groceries are a larger part of the budget. Smart shopping techniques (sales, 2-for-1 deals, etc.) can save you a surprising amount of money.
- Evaluate your TV, internet, and cell phone bills. Carriers are constantly updating plans. If you haven’t reviewed yours for a while, chances are you can save money by moving to a new, more streamlined deal. If you subscribe to five streaming services, maybe your family can survive on two or three instead.
- If you’ve been sheltering in place, look at items you can continue to do without. If you’ve adjusted to at-home workouts, consider cutting your gym membership. Look at cooking as a new norm and cut down on both eating out and food delivery.
- Start building or adding to your emergency fund. You should have 3 to 6 months of living expenses stocked away in an accessible fund or savings account. Invest the savings from canceled summer camps and any postponed trips in your emergency fund to create more cushion, rather than spending it.
- Millennials and younger adults should shift from spending to paying off debt, cutting expenses, and saving money. Get a clear picture of your finances, set a plan and stick to it. Here are some tips:
- If you don’t already have a budget, create one. Same advice as above, and it will get your parents off your back. There are some good apps available to help.
- Evaluate your debts and start by paying off credit cards. If you have debt on multiple credit cards, pay off the one with the highest interest rate first. Try making weekly payments.
- Look at your discretionary spending and evaluate places to cut back. Food delivery service charges add up and might represent a large portion of your monthly expenses. Do you need a mochachino every morning?
- Resist the temptation to shop the latest online clothing sale. In fact, unsubscribe to those emails to remove the temptation.
- Start saving. You’re not too young to start an emergency fund or invest in your employer’s 401(k).
If you have questions about budgeting or need advice on other financial matters at any stage of life, contact us today. We’re here to help!