Simple Steps to Better Manage Your Money During the Pandemic
How do you manage your household finances during a pandemic? It’s a question that most families never dreamed they would need to ask. But as COVID-19 continues to influence every aspect of daily life, many people are facing cash flow and money management challenges they couldn’t have predicted.
Sudden and often seismic changes in job status, along with the uncertainty of tomorrow’s headlines, have forced families to adopt new strategies for navigating the choppy financial waters of 2020 and beyond.
Every family is experiencing the coronavirus differently. In some cases, both spouses have kept their jobs and maintained stable incomes. Others have been let go, furloughed, or had their hours reduced. Then there are those who are adjusting to working at home. One thing ties them together: They all worry about getting their families to the other side of the pandemic—healthy and financially sound.
Staying on top of your finances is crucial during normal times, but wise stewardship of your money becomes even more important when outside forces are added to the equation. But where do you begin? Here are a few reminders to help you grab the reins of your family’s financial situation.
Create (or Retool) Your BudgetIf you practiced budgeting prior to the pandemic, you’re one step ahead. You already understand the importance of balancing what you make with what you spend. If you don’t have a budget, now is a good time to sit down and put one together. A budget can empower you by taking the guesswork out of deciding how to spend your money. Tips for creating a simple budget can be found here.
But remember, budgets are ever-evolving documents. Changes in cash inflow and outflow demand that you step back and realistically look at your new financial picture. Do the hard work of reassessing income, savings, fixed expenses, and discretionary purchases that have been affected by the pandemic. Seeing expense figures laid out on a spreadsheet allows you to make informed moves regarding where to cut back when finances are tight.
Make Your Money Work for You
Whether you’re working from home or are recently unemployed, the money you save by not making morning commutes or going out for lunch can be applied to other costs, such as groceries and credit card debt. With less of the budget allotted to entertainment, dining out, and travel, priorities can be reshuffled to funnel resources where they’re needed most.
Look for savings opportunities brought on by changes in your family’s lifestyle. Set spending parameters, but don’t be afraid to modify the budget as circumstances warrant. You’ll feel more confident knowing that you’re getting the most out of what you’re making.Rather than dividing your expenses into narrow categories, one popular budgeting method suggests devoting 50% of your take-home pay to essential needs and fixed costs (e.g., housing, food, utility bills, loan payments); 30% to things you like but could do without (say, a cup of gourmet coffee every morning at the drive-thru); and 20% to achieving financial goals, including your retirement funds. If possible, it is advised to keep your nest egg untouched and your retirement plan on track. Consult your retirement planner before dipping into your post-work savings. Or contact a retirement specialist at Premier Bank.
Don’t Forget to Save
While the pandemic may have blown your current financial plans off course, don’t abandon prudent financial practices, such as setting aside money for unexpected short-term expenses. Having extra funds to take care of an urgent house or car repair can spare you from adding to credit card debt. If you’re bringing in less, even budgeting a small amount to keep in a designated emergency account is a smart move.
Watch Out for Scams
One expense that should never be part of your budget is making payments to a con artist. An increasing number of fraudsters are at work, devising schemes designed to trick you into handing over your money. Be on guard for fake pandemic-related charities asking for money, callers threatening to suspend your Social Security payments, scammers posing as a relative or friend in need of money, or anyone making offers that sounds too good to be true.
A Few Final Words
These are extraordinary times, so people need to be extraordinarily careful about making smart choices to protect their families and their finances. But you don’t need to do it alone. Premier Bank’s financial professionals can help you as you adapt to new economic realities. Having knowledgeable people who can steer you in the right direction can be invaluable.