Sticking to a budget is hard enough
normally — and things are anything but normal right now. Unfortunately, this is
one more area of our lives that’s a lot more complicated since the pandemic
began. Just as many folks are rethinking how they work and grocery shop, it’s a
good idea to look at your household budget and consider whether some
adjustments are in order.
Budgeting is about planning ahead.
But before you do that, review changes in your spending habits since the
COVID-19 crisis began. While it may feel like you’re saving money by eating out
less or staying home, there may be other areas where you are, in fact, spending
more than you did before the pandemic. These might include groceries, utilities
and even household repairs, as appliances and other systems in your home deal
with increased demand.
Once you have a good sense of the increases
and decreases in your spending, adjust your budget accordingly. Then, consider
the following:
1. Bolster your emergency fund.
Whether or not you’ve had to tap your emergency fund, consider adding to your
safety cushion. With the future still uncertain, see if you can squirrel away
an extra $50 a month to put toward repairs or other unexpected expenses. Adding
to your Flexible Spending Account (FSA) or Health Savings Account (HSA) can
also help cover any unanticipated medical costs.
2. Review discretionary
spending. Some budget items are necessary expenses, such as food, housing
and utilities, while others are optional. Review your discretionary spending,
such as multiple streaming services and nonessential clothing. Consider cutting
back on these temporarily to liberate additional money for building your emergency
fund or paying down debt.
3. Seek out savings on essential
spending. Curb grocery bills by using paper or online coupons. Buy in bulk
and look for lower-cost meal options that include pasta, beans and in-season vegetables.
Cut back or eliminate alcohol purchases. Getting creative with leftovers can
also help. Look for new budget-friendly recipes to add to your meal-planning
repertoire. Many auto insurance carriers are offering discounted rates as well,
so check to see if yours is one of them. You can lower monthly insurance
payments by increasing your deductible, but only consider this strategy if you
can afford the higher out-of-pocket expense.
4. Negotiate with creditors and
service providers. If your budget is straining, speak to your lenders to
see if they can lower your monthly payment or interest rate. They may even
allow a forbearance of payments altogether. If you have a mortgage, investigate
whether refinancing that loan makes sense for you. Call credit card companies
and ask for a lower interest rate or consider a balance transfer to a card with
a more favorable fee structure.
5. Review your retirement plan.
Try to avoid dipping into your 401(k) as this could potentially set you back
years on your retirement timeline — as can lowering or stopping contributions.
It’s particularly important to contribute the minimum required to receive any
company-match funds if possible.
Many American families are feeling
the crunch right now. You’re not alone. Seek out guidance from those who can
help. Setting an appointment with your financial advisor is a great place to
start during this challenging time. If you’re under a great deal of financial
stress, talk to supportive friends and family. And, if necessary, obtain
professional help from your Employee Assistance Program (EAP) or a qualified
counselor through your health insurance plan.
