Because of the COVID-19 pandemic, millions of people all around the world struggle to make ends meet. The loss of job, pay cut, or additional expenses caused by a change of lifestyle can make managing finances particularly difficult. On top of that, even though the pandemic seems to be in a retreat, the economy won’t be back to the pre-COVID times for quite some time.
Although your financial situation might be rather pessimistic, it doesn’t mean that there are no ways to manage your finances more effectively. In this article, we will share our tips on how to make balancing your budget while staying at home a much easier task.
Make a List of All Your Expenses
The first thing you need to do is create a list of all your expenses, no matter how small they are. No matter how insignificant they may seem, you’ll have to include every expense to create an effective budget. The reason why we want you to write down all your expenses is because only then can you accurately calculate your spending habits.
Remember that you should create a list that includes not only big expenses, but also smaller ones, such as coffee from Starbucks or the sandwich you eat at your favorite restaurant.
Find Additional Income
Finally, even though it may seem impossible, there are several ways to earn more money while staying at home. For example, you could offer a house-sitting service to those who frequently travel. Another idea would be to start a blog and monetize it with Google AdSense. Additionally, don’t forget about working odd jobs like dog-walking or babysitting on weekends. On the other hand, if you are into cryptocurrencies, you might want to check out who accepts bitcoin.
Analyze Your Spending Habits
Now that you have created the list of all your expenses, it’s time to analyze it. What this means is that you should sit down and determine why exactly you spend money on certain things. For example, let’s say that you work in a café five days a week. In this case, it would be perfectly normal if the majority of your expenses were related to food and drinks.
However, if you don’t work in the café and there is still a large percentage of your budget dedicated to buying coffee, it means that there is something wrong with your financial planning. Perhaps you are wasting too much money on unnecessary expenses.
Cut On Discretionary Spending
What exactly is discretionary spending? In short, it’s an expense that you want to incur but isn’t really necessary. For example, let’s say that you buy a new TV set every year. You can safely assume that this purchase falls under the category of discretionary spending. What you want to do now is cut down on these unnecessary expenses. This way, you can divert some of the money you spend on things that aren’t necessary towards paying off some of your debts.
Make a Budget and Stick to It
Once you have decided where you should make cuts in your spending habits, it’s time to create a budget plan that will help you save more money. Keep in mind that you should make sure your budget plan is realistic and tailored to your current lifestyle. If you plan on living at home for at least a couple more years or even longer, don’t try to save more than 50% of your income. On top of that, don’t forget to include some emergency funds in your budget plan!
Adjust Your Budget
Once you know how much money you spend per month, adjust your budget accordingly. Make sure that you allocate more money for necessities (such as rent, gas, and food). However, don’t forget about saving up for rainy days. A good “emergency fund” should keep you from going into debt because of unexpected circumstances, such as a car repair.
Reduce Your Debt
If your budget doesn’t leave much room for reducing your debt, try some other options. For example, consider selling some of your stuff on Craigslist or eBay. No matter what it is – unused furniture or an old laptop – if you can sell it, this could be an additional way to obtain money. Plus, it might just help you get rid of the clutter, which makes staying at home even more difficult.
Not all of us were blessed with excellent budgeting skills, and as an effect, you might wonder whether there is a way to improve the current situation. Although managing finances isn’t always easy, especially in pandemic times, it doesn’t mean that it’s impossible. We hope that after reading this article, managing your finances is going to be a little bit easier, and at least somewhat less stressful.