How to budget during COVID-19 uncertainty
Regardless of where you are in your financial life, the current COVID-19 crisis is likely to affect your finances. Here are a few things you can do to minimize any damage and set yourself up for financial success.
- Get in the driver’s seat. As we go through this crisis there is a lot we can’t control, so focus on what you can control. Start by assessing your situation: make sure you know how much money is coming in, how much is going out and how much you have in savings. With a full picture of what you have available, you can prioritize spending more effectively.
- Reevaluate/create a budget. Even if you currently have a budget, chances are things have changed. Look over past budgets and map out the coming month; this will allow you to make needed adjustments. If you are new to budgets, the process doesn’t need to be complicated. Start by confirming how much money you have coming in and listing your monthly expenses, then allot a specific money amount to each item. Technology can help. Oregon State Credit Union offers Money Management, a program that can show trends over time and help make the budgeting process easier to keep up with so you can stay on track. You can find the Money Management tab in online banking. You can also do this using spreadsheets or pen and paper. Check out the budget template and bill calendar on our Debt and Credit toolkit. Finally, as the government begins to roll out their stimulus package, make sure you’re allocating that extra money in the most impactful areas.
- Avoid unnecessary expenses. Once you’ve created specific budgets that help you understand where your money is going, it’s time to cut unnecessary expenses and reallocate that money into savings. Take some time to reevaluate your needs and wants. A great place to start is recurring expenses. Maybe this is in the form of an indulgence that you can suspend for now, like your daily coffee run, or a subscription that you haven’t used in a while. With subscription tracking software, you can easily identify your subscriptions so you know exactly what you’re paying – and more importantly – where you can save month-over-month. Keep in mind that what might have been a want in the past might now become more of a need; i.e., with kids and parents all trying to work from home, maybe you need more internet bandwidth. At the same time, be aware that these recurring expenses add up fast.
- Build and preserve your savings. With social distancing in effect, you may see some weekly and monthly expenses dropping. For example, you may find you now use less gas, or that your daycare bill has dropped to zero. Save as much of that extra money as you can. You may need it to pay for essential services if you lose some income.
- Minimize the cost of debt. Now’s a good time to get out of debt if you can. Interest rates are at a historic low — use that to your advantage. Call us about debt consolidation options and, if possible, roll everything into a single, low-interest loan.
- If possible, help your community. This is a hard time for everyone, so if you have the opportunity and the funds, help local businesses that may be struggling by ordering food to go or buying gift certificates to local shops. You can help your community stay strong by giving blood or supporting regional food banks. If we stick together, we can come out of this bruised, but not broken.