Budgeting During a Pandemic
The year 2020 has taught us all that it is a good idea to be prepared for the unexpected. While we all hope that we will never have to face another pandemic in our lifetime, the truth is, we never know what will happen and it is best to have a plan should the economy and state of the world change in an instant. There are several ways to budget for a pandemic and any unexpected economic crisis, outlined below.
- Resist the urge to take on credit card debt: While it is tempting to apply for a credit card to handle expenses, taking on high interest debt is one of the worst mistakes you can make in the midst of an economic crisis. The amount you will pay in interest is far more detrimental in the long run than cutting expenses or holding off on unnecessary purchases.
- Start an emergency fund now and make regular contributions to it: Having an emergency fund set aside for unexpected costs is always a good idea, and in the face of a pandemic, it is now a necessity. Start with setting aside at least $1000 dollars in a savings account and add to it regularly so that you have funds available should you run into a financial issue.
- Wait to make large purchases: Even though you may be in the market for a new home, car, or appliances, it is best to avoid large purchases like these during a pandemic. Instead, continue to save money regularly and when the crisis calms down you may actually be able to afford to pay cash or a larger cash amount down for items like these.
- Take on a second job: Having additional income is an excellent way to weather a pandemic and set yourself up for financial security in the future. If your schedule allows, consider taking on a second, part-time job which gives you additional monthly income that can be used to fund your savings account or pay down high interest debt.
- Reduce monthly expenditures: There are several ways to reduce the amount of money you spend on a monthly basis, freeing up funds for emergencies and reducing the strain on your budget. To reduce your monthly spending, consider cancelling unused memberships or subscriptions, buying less junk food at the grocery store, eating out less, and reducing your energy usage around your home.
While budgeting during normal conditions is difficult enough, learning to operate on a budget during a pandemic takes effort and being vigilant of spending.