Here are some ways you can keep your finances organized and in working order while the COVID-19 crisis isn’t over yet.
The far-reaching effects of the coronavirus pandemic on the stock market and the global economy continue. There are financial concerns even if you haven’t invested in foreign and domestic markets.
Money may actually be beyond tight with no income coming in many households and millions of people waiting for unemployment benefits. Below are some ways you can keep your finances organized and in working order while the COVID-19 crisis isn’t over yet.
1. Follow The 50/30/20 Rule When Budgeting
One great model that you can follow when budgeting your monthly expenses is the 50/30/20 rule. Half of the salary that you get each month should go towards things you need, such as education, rent, and food. The things that you want, such as travel, non-food shopping, and restaurant dining, will be covered by 30% of your income. The remaining 20% you’ll be allocating to safe investments, like mutual funds, that you can use for large expenses, such as weddings, college fees, and health emergencies, when you can’t find another source of funds.
People’s ability to go out and spend money on things have been greatly limited by the lockdowns, quarantine restrictions, and curfew. You’d want to utilize all the time you have due to the extended homestay to analyze what you and your family really want versus what you need.
2. Look For An In-Between Job Or Source Of Income
The pandemic may have made it hard to be excited about getting a part-time job for bridging the gap, but it can be of great help during these difficult times.
There are gig economy apps wherein you can earn money by offering your skills to other people as a service. One very good example is Uber. The app can give you up to USD$25 per hour just by taking other people to their desired locations through giving them rides using your car. You can learn more about these apps at SavingJunkie.
3. Don’t Take A New Credit Card Debt
It’s a risky proposition to take on new credit card debt in the current unstable economy. You don’t want your bills to be way higher than usual and end up eating more of your budget up. If you need $100 now, for example, you can take online surveys or rent out your car instead of adding to your existing credit card debt. Remember that to pad your savings, freeing up as much flow of cash as possible is important.
Carefully review your budget to see if you can find any expenses you can afford to either cut back or totally cut from your budget. Try to do it according to the 50/30/20 rule already discussed above as much as possible. It will help in reducing your budget’s total expenses, leaving more income to pay off debt and save. Avoiding the need for you to make new charges on your credit card also becomes possible.
4. Avoid Panic Buying
Stores may be starting to run out of stocks, depending on where you live. That could primarily be because of the travel restrictions that disrupt the supply chain. You know how tempting it can be to think that you need to purchase everything you can before they’re no longer available. However, taking such a step is actually counterproductive. Here’s why:
- Individuals who panic-buy are likely to rack credit card debt up by purchasing tons of items that they may not even need.
- Panic buying only leads to shortages, which means that items that people actually need will be completely unavailable in the long run. Only take what you require and let others get their share.
5. Focus On Paying Your Existing Debt Off
Using a snowball or avalanche strategy for debt reduction is the best way for you to reduce existing debt. How does this strategy work? In the case of credit card debt, you need to prioritize paying off credit card balances from either lowest to highest balance, or highest to lowest annual percentage rate.
Note that a more aggressive strategy for getting out of debt, like debt consolidation, may be needed if you owe money more than USD$10,000.
6. Call Your Lenders And Creditors If You’re Unable To Make Debt Repayments On Time
While it’s true that focusing on paying off your debt is important, it can be very difficult to do in these difficult times. Did the pandemic severely affect your income? It’s best to call your lenders and creditors to let them know about it. In fact, most lenders and credit card companies are encouraging their customers to reach out if ever they’ll have trouble dealing with their repayment responsibilities.
Many creditors are allowing their customers to defer payments without getting any penalty. Note, however, that deferrals aren’t automatic, so ask for it directly.
At some point, this difficult period will go away. The best thing you can do is to make the most of this short time by managing your finances better so that you’ll come out financially stronger once this pandemic is finally over.
Fernando Rice is a professional blogger who is making a name in the industry because of his ability to create high-quality content on business, finance, and investments. Fernando also works with other websites to submit guest posts.