As the Novel COVID-19 pandemic escalates, life seems to feel more out of control. Undoubtedly, the pandemic has created a rough situation for most people and as the virus sweeps across the globe, everyone has shifted their priorities to focus on one thing; staying healthy. But, staying physically fit and financially healthy at this age poses a challenge to most people. And one of the biggest challenges has been creating a sustainable budget.
Across the country, companies are shutting their doors resulting in high numbers of unemployment claims. Statistics show that almost half of all Americans survive paycheck to paycheck before the pandemic hit. This means that people who did not save before are feeling the financial pressures from the virus, especially the ones that got laid off from work. As the financial uncertainty and high unemployment rates continue to persist, more Americans will have to endure the hard economic times ahead.
With something, this unexpected, and overly overwhelming people are finding themselves having to tap into all kinds of savings accounts and stashes (if any), completely going off-budget they may have made before. Truly, what most people are learning is that in a crisis, it is not the time to stop budgeting, but rather, it is the time to get creative at it.
So how do you budget in times of a crisis?
The first question that you need to answer is, “how do I reduce my expenses during this crisis?” To help you with that, it is essential that you cut back your expenditure in these five categories. If you cannot cut all, at least learn moderation;
- Restaurants and bars.
These are the five categories where people tend to spend most of their money. Additionally, it is easy to cut back on these five categories because they are much easier to get control over.
In as much as pandemics and crises are concerned, there is usually a good side to them. They expose our weaknesses enabling us to be more vigilant. Take for instance the COVID-19 pandemic, it has opened our eyes and minds about the importance of getting our money right. A good number of people are stuck at home and the funds for food are getting low simply because there is no money coming in. COVID-19 has forced many people to rethink their approach to budgeting and spending money consciously.
Why is it important to have a budget?
Simply put, a budget is a plan on how to spend your money. And since budgeting allows you to create a plan on how best to spend your money it ensures that you have complete control over your money. This means that you get to decide where your money goes and why. In addition, a budget helps you to stay focused on your money goals by helping you organize your spending and savings. But the ultimate goal of budgeting is that following your spending plan diligently, will keep you out of debt or even get you out of debt.
A pandemic such as the COVID-19 pandemic has brought out the importance of budgeting quite well. If you have a good budget, then there must be a provision for emergencies. The pandemic was completely unexpected and many people were caught off guard. The people who had created good budgets are doing much better than those who had no budget or a reserve.
Think of a budget as a cushion against potential financial crises. Of importance to note, however, a budget will not rescue you from your bad spending habits. It will only give you a goal and a reference point to help you stay focused. But in the middle of a crisis, it is hard to focus and that is why most people go off their budgets, but, it is crucial that you understand where your money is going and how it is being spent.