How to Spend Money Wisely During the Coronavirus
The COVID-19 pandemic has turned the world upside down. Most people’s financial status has been thrown into chaos, and some have even lost their means of livelihood.
With most Americans feeling cash-strapped and the level of uncertainty increasing with each passing day, there is a need to find ways to spend money wisely.
With what we witnessed last year, it’s time to be cautious with the little that we have. Thus, we need to tighten our belts and exercise some restraint on the things that we spend on.
For most people, the biggest issue is where to start. Luckily, we’ve compiled strategies to help you manage your cash during this crisis.
Prioritize your money.
If you’re on a tight budget, you need to prioritize how you’re spending your money. Create a budget to help you spend your cash wisely.
A budget helps you prioritize what’s important and cut back on non-essential items. To start, budget for these three main areas:
- Monthly Bills: This is the category of the essentials, including non-negotiable high-priority expenses like utilities, mortgages, debt, child care, and insurance.
- Current Expenses: This includes the variable expenses incurred during a week. These include gas, groceries, internet and phone charges, and other miscellaneous expenses.
- Future Expenses: This is the cash you will budget for later use. This can include the money you set aside to sort out any unforeseen situations and your retirement savings. You’ll use the money left over after covering the current and monthly expenses to pay for this portion.
Don’t just have a budget; also, stick to it. Most people succeed in making a budget but struggle with living to it. Consider using a budgeting app to help you manage your money. You can easily learn how to use budgeting apps to make money management more simple for you.
The app’s main functionality is to help you develop a workable budget based on your typical income and spending and ensure it’s something that you can stick to. Budgeting apps help track spending, pay bills, track the bills due, and save towards financial goals. They offer convenience, financial awareness, and a comprehensive view of your finances.
Plan for the near future.
Coronavirus has taught us one vital lesson: that we need to plan for uncertainties. People who held lucrative jobs with regular income have now been left with nothing.
You need to make it a priority to save for emergencies. What would you do if you lost your job abruptly? Have you saved enough to support your needs for the next few months?
Assess how much you have at the moment and the income you expect to receive in the coming months and compare it with what you’re spending. It’s vital to have a handle on things around you so that you feel more in control.
If you plan, it’s easier to cope with worsening financial circumstances. Instead of waiting until the cash runs out, act now to moderate the unforeseen impact on your future finances.
If you’re worried about defaulting on your mortgage, have a clear plan for how to handle a worst-case scenario, whether it’s renting out a room, reaching out to family and friends, seeking financial assistance from your mortgage broker, or creating another source of income. Also, understand your tenant’s rights if you’re concerned about eviction.
If you’re struggling to pay your credit card bills, speak with your creditors to find out if you qualify for a reduced interest rate on your payments, deferment options, or any discounts. Many financial institutions are offering financial hardship assistance during this crisis, so it’s worth finding out about these offers.
You may also consider government assistance programs. State and city government websites have all the links you need to get local resources.
Also, look into how local organizations like churches and charities are helping with donations. Check your local food pantry programs before you get to the point of not affording groceries.
Cut down on essential spending.
If you have less income or your revenues are dwindling, you need to know where to cut costs. Figure out how you can reduce your expenditure on essential items.
You can actually cut down your spending on items like rent, food, and other utilities. Here are simple actions that you can take to reduce the money you spend on basic items:
Some of the actions you can do to reduce the utility bills include:
- Turn off lights when not in use.
- Unplug items that you aren’t using.
- Have quicker showers to use less water.
- Turn down your thermostat a bit and maybe wear more layers of clothing. Just 1°C can cut your heating costs by 10%
Rent or Mortgage
If you’re struggling with paying rent, let your landlord know and discuss possible options to reduce or extend the payment dates. Most landlords have come out to offer a few months for free, and you may only need to talk with yours to get these discounts.
If you have a mortgage, check with your provider. Some allow repayment holidays where you don’t have to pay or can pay a reduced amount for some time.
You can cut down on food costs if you shop well while on budget. Follow these simple tips:
- Buy groceries in bulk.
- Create a list before you go shopping to reduce impulse buying.
- Avoid eating out.
- Adopt tips for saving when you visit a local grocery store or supermarket.
- Divide your food into portions and freeze some to have later.
Reduce non-essential costs.
While it’s important to have fun, you can still cut costs on entertainment. For example, you don’t have to visit a theatre to watch a movie if you can stream it from home. Cancel subscriptions like sport channels and other entertainment services and use free services to access them instead.
With the social distancing rules, you’ll need to do some of these entertainment activities at home. Exercise at home and ensure that you’ve cancelled or postponed that gym membership subscription. Use free resources like YouTube to access regular workout videos.
If you love reading, you can access lots of free reading materials on the internet. Take advantage of the offers that digital libraries are offering.
While being at home for an extended period can be boring, you can read or listen and watch videos on YouTube to keep you entertained. Dig out those CDs, cassettes, or vinyls, or even dust off those DVDs if you have to instead of using expensive streaming services.
Save and Invest
Now, more than ever, is a time to think of saving rather than spending. Find ways to spare money in everything you do and save it. Then, deposit the money you save in a high-yield savings account with no minimum deposits and balances and no monthly fees to grow it.
Also, invest in T-bills and bonds. Use online brokerage firms like Robinhood, TD Ameritrade, or Fidelity to find the best investment to make with minimal risks.
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Amanda is a senior writer at AdvanceSOS. She has more than six years of journalism experience, mostly in the finance sector. She graduated with a Bachelor’s Degree from Drew University.