What We Learned About Budgeting During a Pandemic

2020 was a real anomaly, and we have definitely felt it in our financial lives.

Many people lost their jobs and had to learn to function with less. Some had excess cash from stimulus checks and reduced expenses due to downtime. Others used online shopping as a coping mechanism, watching their debts rise along with the number of Amazon boxes stacked in their garage.

As we all got into new financial situations together, we have learned lessons about money management that we will take with us in the years to come. Here are 11 notable things we learned about budgeting during a pandemic.

1. Adjust to lean times with a bare bones budget

After a loss of income (layoff, vacation or reduced working hours), you will have to adjust your expenses significantly. Enter: the Bare bones budget.

An absolute budget only prioritizes your absolute necessities such as rent or mortgage, utilities, and groceries. It is designed to keep your spending down to the lowest possible amount.

This budgeting method is also helpful when trying to pile up cash quickly to build an emergency fund, pay off debts, or save for large upcoming expenses.

2. How to go from two incomes to one

Living on one income when you are used to working in a two-income household can be challenging. These tips on how to deal with less income can help you deal with your changing circumstances.

While some income losses are involuntary – like when you are laid off – it is sometimes difficult to make a decision. This year, many parents quit their jobs to take on childcare when daycare was closed or to teach their children while schools switched to virtual education.

As the pandemic spreads, here are some Considerations Parents Should Make Before Taking A Career Break.

3. How to Hug Frugality

2020 has forced many people to spend less money and become more economical. But it’s not an easy move for everyone.

We turned to four experienced penny pinchers Advice on how to be frugal as a lifestyle.

4. Incorporate mindfulness into your budget with Kakeibo

Kakeibo is a Japanese budgeting method that has been around for a century, but it has taken a while for the western world to catch up. This budgeting method translates as “budget book” and involves physically writing down your expenses, grouping them into four broad categories, and thinking about the financial decisions you have made.

Kakeibo will help you take better account of your spending habits and improve your finances month after month.

The Cash envelope method makes your budget more tangible because after you have spent all the dollars in your envelopes, you need to freeze your purchases until the next month is over. However, it doesn’t seem all that handy if you want to shop online or avoid having to swap bills and coins with every cashier you come across.

Fortunately, you can Hack the cash envelope system to ensure a cashless lifestyle Use gift cards, budgeting apps, multiple bank accounts, or expense tracking. You get the benefits of this popular budgeting method without having to carry around cash.

6. Know when it is okay to access your emergency fund

What good is an emergency fund if you think it is taboo to ever use that money? If the situation warrants it – like a global pandemic – you want to be comfortable withdrawing from this account.

If you are unsure whether you are taking the right financial move, ask yourself these questions Four questions when considering spending your emergency savings.

7. Know how to negotiate with your landlord

Housing costs are often our largest household cost. Mass unemployment from the pandemic has placed millions in a precarious position – they don’t have enough money to pay rent.

While eviction moratoriums have kept tenants in their homes, they are not a permanent solution to the problem. Also, don’t avoid the letters and phone calls in hopes that they will go away.

This advice on Negotiate with your landlord if you can’t pay rent could help you find a solution that will satisfy both parties.

8. Being responsible with an unexpected windfall is key

To get a state business cycle test, a tax refund or some other major financial slump can be exciting, but it is good to be smart how you spend it.

Think about what you want instead of blowing it into what you want right away need. Are you behind on any bills? Is your emergency fund not available? What big issues are on the horizon?

It’s no fun being responsible and budgeting for your unexpected money, but your future you will be grateful.

9. Download an app to keep track of your expenses

Track your expenses is one of the first steps in creating a budget that’s right for you. You need to know what you spend on a regular basis so that you don’t give yourself a $ 200 limit on groceries when you typically spend close to $ 400.

If you’re a pen and paper or spreadsheet budgeter, that’s fine. But if you want to take something out of work, Download an expense tracking app This will sync with your bank account and automatically record and categorize what you are spending.

Then you have no reason not to know where your money is going.

10. Contact a financial advisor for personalized money advice

We turn to psychological counselors when we feel anxious or depressed. We go to marriage counseling to improve our relationships with our spouses. But too often we see our money problems as problems that we have to solve ourselves.

Talk to a financial advisorHowever, you can get the support you need to improve your unique financial situation. The Association for Financial Advice and Planning Education can connect you with an accredited financial advisor to assist you in solving your money problems.

11. The importance of having multiple versions of your budget

If this year has taught us anything, it’s how to roll the punches and unexpected curveballs that life throws at us.

Prepare yourself financially for the ups and downs of life Create multiple versions of your household budget. In addition to the daily budget you use during normal times, create a slim budget to turn to during times of financial trouble and a fat budget to work with when your salary goes up or you find your Sideline is consistently profitable.

Having these budget alternatives available will allow you to adapt seamlessly to different financial situations.

Nicole Dow is a senior writer at The Penny Hoarder.

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