HomePlanning Your LifeFinancial CrisisRevisiting Your Budget During a Crisis Revisiting Your Budget During a Crisis Many Americans found themselves in the throes of the COVID-19 crisis before they fully understood what was going on. For many, news of the virus was distant and remote, something that was happening in China and Europe. Until it wasn’t. Once COVID-19 reached our shores, actions had to be swift and immediate. Our world changed in a matter of weeks. We quickly went from working in crowded office spaces, dining out frequently and enjoying abundant entertainment options, to sheltering in place, exhausting every streaming service, and becoming intimately familiar with food delivery services we had only vaguely heard of before. And our budgets took the most substantial hit of all as 30 million people (and counting) lost their jobs during the COVID-19 crisis. A prolonged absence of income means that it is time to revisit your budget and make substantial changes to your spending to deal with the possibility of renewed COVID-19 shutdowns across the country. Assess Your Income If you are still employed, that is terrific news. Many of your friends, family, and neighbors may not be so fortunate. Even if your income has not taken a hit due to pandemic-related cutbacks, almost everyone needs to make some adjustments related to income. Of course, you cannot begin to make the right changes until you have adequately assessed your income situation. Make a list of all your after-tax income. Account for every dime you bring home each month. This is the household budget you have to work with. The goal is to make sure you do not spend a penny more each month than you bring in. Some people need to make additional adjustments as the expanded unemployment benefits expire in March. This means many U.S. unemployed are set to lose an additional $300 per week in income at the end of March 2021. The current administration plans on passing a new COVID-19 relief stimulus which would prolong unemployment benefits until September and also increase the benefits to $400. Categorize Your Expenses In the world of expenses, there are fixed expenses that are considered necessary for you and your family to survive. This includes things like: Housing Food Utilities Household supplies Insurance These are things that are essential for most households. You cannot survive without them. Then, you have the expenses that are important to you. For most people, transportation tops the list. While most U.S. households believe a vehicle is an essential expense, it is possible to survive without one. At the very least, many two or three vehicle families could make the sacrifice and operate with only one vehicle – especially with so many people working from home during the crisis. Other important expenses that people must consider during pandemic (and any other crisis that comes along) include things like: Clothing Entertainment Recreation Gourmet coffee Dining out Shopping In this crisis, many of these things have been taken off the table, which can only help your budget. Concerts, sporting events, vacations, shopping trips, and even (in many states) the ability to enjoy dinner at a restaurant have been removed from the equation. What is Essential Spending? Essential spending is spending you cannot function without. It is the spending that keeps the lights on, places a roof over your head, and gives you nourishment. These are the things that must be included in your budget regardless of anything else that gets left out. Cutting Back Many households have already cut back on entertainment and other optional expenses, without really even trying. That does not mean there are no other options to consider. These are a few areas where you can cut the budget, even more, to give you a financial cushion during your moments of crisis. With shipping delays, it’s not such a big sacrifice anyway and could save you tons of money each month. You can always go back when times are better and there are many free options available to tide you over. Plus, many libraries, universities, museums, and other organizations are offering free streaming options that are educational as well. This may be difficult with everyone working and schooling at home, but it is possible to reduce water, usage, light usage, etc. The benefit of this is that you are ordering fewer meals in. Takeaway Your world has changed, and the financial ramifications of those changes may just now be sinking in. However, staying on top of the situation by assessing your income, categorizing, and prioritizing your expenses can help you whether this and any future crisis with your budget intact. © Fintactix, LLC 2021 Related Content Article Preparing Financially for a Climate Changing World Dealing with a Home Foreclosure Preparing for an Economic Downturn In Case of Medical Emergency When Your Home is a Money Pit If You're Facing Bankruptcy Avoiding Costly Car Repair Mistakes Making a Comeback from a Financial Setback Mortgage Relief Scams Selling a Home That is Financially Underwater A Death in the Family Are You Prepared Financially for a Natural Disaster? Suddenly Unemployed Helping Your Parents with their Finances The End of a Marriage Revisiting Your Budget During a Crisis Rebuilding Credit After Bankruptcy Additional Links Online Banking Find a Location Home Purchase Basics FFL University How can we help? We're here to help with all your banking needs. CONTACT US Find a Location Stay Connected Download our App! iPhone Android Personal Personal Banking Services Personal Loans Mortgage Lending Planning for Your Future Debit Card Online & Mobile Banking Business Business Banking Services Business Loans Retirement and Investing Cash Management Business Online Banking About Us Why Us Community Development Group Careers News Management Team Board of Directors Security Contact | Careers | Disclosures | FFL Univeristy | COVID-19 Updates First Federal Lakewood Routing Number: 241071212 © First Federeal Lakewood NMLS# 697346, a First Mutual Holding Co. affiliate