How to Adjust Your Budget During Economic Hardship

2020 seems to be taking forever, especially for those among us who are significantly impacted by the financial crisis all of us are facing. If you’re financially minded, you may have to rethink your strategy throughout this economic hardship. If not, you have more hurdles to face as you try to adjust your budget for these uncertain times. Here are some important pointers to follow as you deal with this change.

Make Use of Online Banking Features

Online banking makes handling your finances much easier. It not only grants more accessibility it empowers you to seize control of your bank accounts. Your bank probably lets you do mobile deposits, transfers, and payments all through an app on your phone.

Frequent usage of your banking app is good for keeping your finances top of mind. However, don’t be anxious about your financial situation. It’s important to know the reality of your finances, so you can take a practical approach to get through crisis mode.

To help you do this, most banks offer additional tools to address your finances and manage money effectively. If you need to adjust your budget due to a financial crisis, these tools provide insights and tips to give you better financial footing.

Be Very Careful With Credit and Potential Fraud

Crisis can lead people to panic. Panic is rarely good and generally produces a negative outcome. One reaction to seeing your financial situation more clearly could be to panic. It’s important to fight this urge and remain level headed. If you reach for a solution too hastily, you may put yourself in a worse situation. When you feel like you are getting offered a lifeline, look at the offer more closely.

There are scammers who take advantage of times of crisis, and even legitimate lenders who benefit from poor or hasty decisions made by people in financial crisis. Before taking a bad deal, look thoroughly over your spending records and emergency funds however small to see how you can adjust your budget on your own.

Get on the Phone With Lenders

Speaking of lenders, this is the time to look at what you owe in terms of debt and see how it fits in with your current financial situation. If you have been concentrating on paying off your debt, now may not be the time for that.

It all depends on if you can afford to continue paying extra each month on your credit cards, or if you need to use that money elsewhere.

If you are nowhere near paying down your credit card debt and struggle just with the minimum payments, you must call your lenders to see what your options are. They may have a COVID-19 related hardship program to suspend payments and help you get through.

Trim the Fat

Part of looking over your finances, beans you can see all of your spending habits and take stock of where your money has been going. A lot of people have no idea where their money goes or how much they are actually spending.

Your true expenses may reveal a lot about how you can adjust your budget by cutting unnecessary costs. It’s also important to talk to your children about spending so that they develop a healthy relationship with money.

You don’t have to talk to them about the ins and outs of your finances, but you could involve them in smaller aspects of the family budget, like entertainment or eating out. You could put the allotted amount in an envelope and have your children decide how they want the money to be spent.

Would they rather order a movie online, or spend the money eating out? Giving them a choice in how they’d like to spend the family money teaches them how to be responsible with what they have. Trimming unnecessary expenses requires discipline to accomplish, but this is where staying focused on your finances produces results as long as you take control.

Pick Up a Side Hustle

Does working from home give you more time? Could you use that time by picking up a side hustle to bring in extra income? Now is the time to update your resume and search the web for opportunities in online forums or LinkedIn.

Those gifts and talents that have been tucked away can come in handy when you could use the extra cash.

Evaluate Your Options

Only you know the balance of your financial crisis. To adjust your budget, you’ll need to factor in your checking account balance, your income, your savings, your emergency savings, your investments, and of course each debt you owe along with interest rates, minimum balances, etc. Your approach to the crisis will vary depending on these pieces to your financial puzzle.

You may be able to leave your emergency funds alone, or you may not. You may wonder if you should invest in the market, or pay off more debt.

The best way to answer these questions is to look at your numbers and do the math. Don’t jump to conclusions because you don’t want to do the math. If it really is too difficult, find somebody you trust (who loves math) to help you find a solution. Once you remove your own agenda and look purely at the numbers in front of you, you’d be surprised how clear the path to adjust your budget becomes, even in a financial crisis.

Reevaluating your budget isn’t always an easy thing to do, but you can save you much heartache if you take a proactive approach during financial hardship. 

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here