In such uncertain times, thinking about money is likely the last thing you want to do right now. We totally get it — the spread of COVID-19 is affecting all of us, especially those of us who may not have the privilege of good health or employment.
As the coronavirus continues to spread around the world, it’s likely that you may be juggling new challenges where your finances are concerned.
Whether you haven’t yet adjusted your budget, or you’re struggling with where to start, we’re here to help. Here are some questions to ask yourself if you need to rethink your budget, temporarily or otherwise, while awaiting a return to something like normalcy.
What do I currently have coming in?
First, you’ll want to figure out exactly how much money you have coming in. While the tax deadlines have been extended, you’ll still want to know the amount you’ll end up with after taxes and other reductions. If you share expenses with a partner, include their income when determining your shared current situation.
When figuring out your current income, ensure to include all sources of income, including any government support you may be receiving like CERB or EI. To better understand the options available to you if you’ve been recently laid off or financially impacted by COVID-19, please check out the Canadian Government Website.
If you’re in a position where your income may change weekly or monthly, you can put together a “low” option where you don’t have as much money and an “average” number that represents your usual expected amount, to work off for your budget.
What is the bare minimum I need to get by each month?
Now, come up with a budget for a typical month that will cover your necessary spending. That list of necessary expenses may look something like this:
- Rent or mortgage
- Transportation costs (including public transport, gas, car insurance, and payments)
- Debt payments
- Child’s Daycare/Tuition
Side note: If you have any debt – like private student loans, credit card bills, a mortgage, auto, or personal loans – that’s weighing heavy right now, contact your lender to see what your options are at this time.
Do I have enough in my bank account or savings to cover my expenses for a few months if I lose my income?
Now that you know how much you need on a monthly basis to cover your necessary expenses, evaluate whether you can cover those costs with your current financial situation. If you still have a steady income coming in, you may be fine covering your monthly costs, however, if your financial situation has been impacted, you’ll need to look at what is in your bank account right now. Is it enough to cover a month worth of expenses? How long will you be able to cover your basic needs?
Next, evaluate your savings account(s). If at some point you find yourself out of work, or with a significantly reduced income, you might need to dip into your savings. Depending on how much you have set aside, ask yourself how much you would be comfortable taking out in the event of an emergency. While you may not be happy about having to dip into your savings, we encourage you to focus on making your budget work for now and get back on track with your saving goals when you can.
If you find that you have more than you need right now, one of the best things you can do it to leave enough money in your savings account to cover a few month’s worth of expenses to give yourself future financial security. While many financial experts recommend you save 3-6 months worth of expenses, any amount is better than none.
Are there non-essential recurring expenses I can cancel?
If you find you need to cut down your expenses, check your debit and credit card for any recurring expenses that can be canceled or paused. Here are some examples of what those might be:
- Gym membership
- Subscription delivery services
- Streaming services
- Newspaper & magazine subscriptions
- Memberships or entertainment subscriptions
Once you’ve identified your unnecessary recurring expenses, you can cut down your spending by either canceling them or temporarily suspending service. It may take some awkward phone calls or online support chats, but your budget will thank you, trust us! If you’re not ready to completely end a subscription, see if there’s an option to downgrade.
Take the time to really evaluate your spending to find where you can eliminate some expenses. New clothes and expensive exercise classes likely aren’t a high priority in your budget right now. (Check out this article that will point you towards tons of free virtual workouts!) However, consider the value of the subscription too. If canceling Netflix will have your kids going crazy and take away your guilty pleasure of rewatching Grey’s Anatomy during this pandemic, keep it and look to cut down expenses elsewhere.
Is there a way I can reduce any of my monthly household expenses?
With most of us spending more time at home, it’s likely you may not realize some of the financial implications of this. From utility bills to phone bills to internet expenses – there are key things to consider to keep your household bills low while you’re in quarantine. For 6 ways to reduce your household bills check out this article.
The bottom line
A month ago, we may have been more on track with our finances, but the recent pandemic has brought financial challenges to many. If your existing budget is fundamentally changed, it makes sense to take a deep breath, consider what options are available to you, and revise as needed. Consider using a budget tracking app or DIY excel spreadsheet to keep yourself on track – you’ve got this!
Let’s be real, losing your income in the middle of a pandemic, sucks. And while doing research and taking action to rethink your budget won’t necessarily take away that pain or stress, knowing where you stand financially and making a plan can help you stretch your money.
When sticking to a budget, you’ll also want to ensure to avoid any late fees when it comes to your bill payments. With our app, you can manage all your bills as well as schedule your bill payments in advance. With flexible payment options, you can pay your bills using a credit and debit card, your bank account or Paytm Cash! Plus, when you use your bank account or Paytm Cash, there are no convenience fees involved. No matter how you pay, you’ll redeem points that you can use towards purchasing discounted e-gift cards to help you save and stick to your budget.
Take care and stay safe, Paytm’ers!