Although it may be some time before we see the true end of the Coronavirus pandemic, many lockdown orders are being eased and people are getting back to more normal habits, which includes spending money. Many people miss going to restaurants, bars, and other public attractions, which makes it tempting to go out and take part in every social and entertainment activity possible. However, like any other time, it is important to practice good budgeting.
COVID-19 has caused a lot of economic strain and for many people, their financial futures are a bit more uncertain. While it is okay to spend money on enjoying life, good spending and saving habits can help to ensure your continued financial health. The following tips can help you achieve just that.
Create a Budget
It should come as no surprise that budgeting is essential to controlling your spending. This is as true in the post-pandemic world as at any other time. If you don’t already have one, establish a budget for yourself. This should include all of your necessary monthly expenses, your saving goals, and planned spending for optional items such as dining out and entertainment.
In addition to creating your budget, you should also make it a habit to reconcile your spending against your planned expenses. This will help you to better control how you spend money both as the coronavirus pandemic continues and into the future.
As you create your budget and track how you spend money, you may notice some expenses that are unnecessary. The cliché example of this is buying a cup of coffee every day instead of making it yourself. However, excess spending can look different for everyone. It may be dining out, convenience expenses, single-use item purchases, or any other unnecessary reasons for spending.
You don’t necessarily need to live a spartan lifestyle to be in control of your money (unless you are in a very difficult position). However, if you want to save more and reduce financial stress, cutting out some unneeded expenses is a great way to go. The two biggest ways you can make room in your budget are housing and car payments. These may not be easy to change. However, if you can save even a small percentage on either, it can mean a lot of money.
Consider Suspending Payments
As you may already know, the CARES Act has offered people relief during the Coronavirus pandemic. This has provided direct relief to many families and loans to small businesses. It also provides provisions for suspending payments on expenses such as student loans. Additionally, you may be able to negotiate with credit card companies and other providers for suspended or reduced payments. In some cases, you can defer payments without accruing any interest. If you have the option, consider doing this to build your savings during the pandemic.
Plan an Emergency Fund
One of the most common reasons for people getting into financial difficulty in the first place is a lack of liquid savings as an emergency fund. Typically, this should be enough to cover a few months of expenses. However, if you can scrape together even one or two thousand dollars, you will have a cushion that protects you against surprise expenses.
This money will be there if you have an illness or accident that requires an expensive medical procedure or an unplanned expense, such as an unavoidable car repair. In short, it is cash for emergencies. Unfortunately, a large number of Americans cannot afford an unexpected $400 expense. Being ready for the unexpected is especially important during the Coronavirus pandemic.
Focus on Debt Reduction
Finally, once you have a budget and some emergency savings to protect yourself, start paying off debt. Interest on debts can add a significant amount of expense to your monthly budget. Even paying off a little more than the minimum required amount can help you to cut down your debt quickly. As we transition into the post-coronavirus world, limiting debt and building a strong financial foundation can help to protect your assets in the event of another crisis.
Get Help with Your Financial Situation After the Pandemic
Do you need help handling your financial situation? Have you experienced hardships due to COVID-19? Financial Rescue, LLC can help you with debt and tax relief solutions. Contact us today to learn more about how we help people get on top of their finances.