As the world is thrown into a new normal due to a pandemic, it’s easy for many aspects of our lives to fall out of whack. For the most part, many citizens have lost their jobs and are struggling to obtain unemployment benefits. In these times of health and financial uncertainty, it’s important to know how to budget during a pandemic.
Create a Long-Term Financial Plan
Creating a long-term financial plan is a great first step to tackling budgeting during a pandemic. In times of uncertainty, it’s important to put some sort of plan of action into place, especially when it comes to your finances. This can be done with the help of a financial advisor, but it’s also possible to do yourself.
When creating a long-term financial plan, consider your must-have expenses such as rent, groceries, utilities, and a savings fund for emergencies. Also keep in mind your short-term and long-term financial goals such as paying off debt, saving for retirement, or sending your child to college. This will help you form a budgeting system to keep you on track.
Put More Focus on Savings
When budgeting in a pandemic, the most important financial area to focus on is your emergency savings. It’s imperative to have a failsafe to fall back on. Avoid paying off debt for now and focus more on making savings. The best goal to aim for is three to six months’ worth of expenses put away into savings. Not only will this help you create a more sustainable budget, but if things were, in fact, to get worse, you have savings to rely on.
While paying off debt is important, during times like this it needs to take a backseat to savings. Don’t completely blow it off, but remember to always be prepared for the worst. Having savings could help prevent even more debt in the long-run.
Keep an Eye on Your Spending Habits
Being stuck at home in quarantine can bring out habits that not many people knew they had or would have. Some find they are saving money from not going out as much and are no longer paying for transportation. However, some are finding their bank accounts lower than ever before. Although this can be widely due to unemployment, many times it is also because they are not monitoring their spending habits.
For example, while they are spending less on transportation, they could be spending much more now on electricity usage, groceries, renting movies, online shopping, and much more. To combat this, it’s important to keep a very watchful eye on your spending habits by meal prepping with your family, limiting expenses for online shopping, and always sticking to your budget.