Budgeting during Covid-19 in 5 steps

November 1, 2020

As the Coronavirus (Covid-19) spreads globally, it is a top priority to remain physically healthy. At the same time, it's a situation where you are most likely to juggle with your finances and keep everything on a budget.

While this is not an ideal situation, financial planning in this crisis means reducing or cutting some costs to keep afloat. Particularly, an analysis of your family budget should be an essential part of your Coronavirus response strategy.

If you find yourself cash-strapped during these periods, here are five steps you can take right now to handle your budget wisely.

Smart spending

There are two aspects of budgeting: what you spend and earn. You simply can not keep budgeting your funds the same way if the Coronavirus has hit your income. If this is the case, the most effective way can be figuring out alternative sources of income.

Budget planning
Focus more on decreasing spending, Source: Pixel

However, getting a new job or finding an alternative source of income can be difficult. The best way is to figure out what your new baseline for income is? If you have lost the job or suffered from hours cut-off, it is better to focus more on decreasing spending.

Categorize your expenses

Reducing expenses will make it less difficult to get through the current situation. However, you need to understand where and how you invest before you are planning for this. When making your budget, start with the essential things you don't have much control over.

Budget planning
Categorize your expenses, Source: quoteinspector

Categorize for expenses like rent, utilities and groceries, car payment, health and car insurance, student loan payments, and your cell phone bill. Categorization makes it easy to find out where you should and shouldn't spend so that your budget planning will finally be successful.

Track and share your expenses

Getting to know where you spent most, and vice versa is always helpful in managing finances. Furthermore, tracking expenses gives you an impression of whether or not your budget is on board. Expense tracking also can help you reduce undesirable costs.

Track and share you expenses to remain on budget, Source: Pixel

On the other, sharing expenses can also help you to cope with the financial crisis due to COVID-19. Either you live in a Joint family or share a room with your friends or spouse, breaking up bills and sharing expenses will alleviate the financial pressure.

Use budgeting software

There is always a financial risk when you have to carry out budget planning manually. So to overcome the financial risk, considering buying budgeting software will never be a bad idea.

Budgeting
Considering buying budgeting software to avoid financial risk, Source: quoteinspector

This software can guide you through the budget planning process, or you can simply regard it as your financial assistant. It also helps you understand spending categories and allows you to develop effective budgeting strategies.

Get your family on board

Everybody in your family needs to know and understand the budget for effective budget planning, especially in the COVID-19 crisis. If your husband or wife is unaware and keeps wasting money in ways for which you haven't planned, they would do no good to build a budget.

Budgeting
Get the family on board and make them understand the budget, Source: Pixel

Apart from that, your kids can learn the skill for life. Particularly, it's never too early for children to learn money management skills. The faster you team them, the better they will handle finance in the future.

Conclusion

A few months ago, you may have thought about long-term financial planning. Prior to this pandemic, it's obvious most of us had been overspending, and adjusting to this habit can be stressful.

Although it's a tough time, planning for budgeting and sticking to it will help you to achieve your financial goals. In the meantime, if your current budget is drastically modified, it makes sense because it is what the situation demands.

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