If you are one of the increasing percentages of Americans who have either been laid off or had their hours cut back, you probably have to make due on a much tighter budget. While COVID-19 is exacting a terrifying health cost on thousands, it’s also taking a toll on the finances of millions of U.S. workers who have been or will be faced with making ends meet through unemployment benefits—or no benefits at all.
If you are one of those who are now relying on emergency savings to get through these difficult times, you’ll need to be careful about how you spend those funds. Here are a few suggestions, most of them from financial advisors, on how to budget your money as you get through this crisis:
Eliminate all of the unnecessary expenses
If you’re on a limited budget, the first thing you’ll need to do is carefully examine how you’re spending your money. Get rid of any expense you can live without. Write down everything you are spending money on right now, and highlight or circle every item you don’t need.
Some of the things you are likely to cut out are subscriptions, new clothing, take-out meals, and the latest electronics. You may have a lot of extra time on your hands, so don’t be tempted to load up your online shopping cart with non-essential items if you get bored.
Once you have dealt with those expenses that you’ve designated as “wants” and not “needs,” you should have a bare-bones budget for the most part, but that doesn’t mean you couldn’t be a bit more ruthless. Look at your cable bill (do you need those four premium channels?), your unlimited phone plan, and the house cleaning service.
When you do away with an expense, remember that it’s not permanent. It’s a temporary response to an emergency that will eventually pass, and it will help you to make the most of your resources in the short-term.
Prioritize the expenses you can’t eliminate
If you don’t have any emergency savings, or you’re concerned that you’ll go through your funds quickly, you might have to start prioritizing.
Of course, food and housing will be at the top of your list. If you think you can’t make your mortgage or rent payment, contact your lender or landlord to talk about your options. They may be able to offer you reduced payments or suspend payments altogether temporarily.
As far as food options, it’s a good idea to buy only the essentials and don’t waste money on foods you might not eat.
If possible, make minimum payments on your debts
If you can make the minimum payments on your credit card balance, by all means, make it. You don’t want hefty fees or extra interest added to the bill. If you can’t make those payments, get in touch with the card issuer. While there are no universal relief programs yet, there are some card companies offering relief to cardholders. And it never hurts to ask!