Best Ways to Budget in ‘The New Normal’
Lockdowns have been lifted, and more and more businesses have been re-opening. More people are moving up and about again. We have been hearing this phrase over and over again, ‘The New Normal’.
What is the New Normal? In the New Normal, the flow of money and our activities changed and will continue to change. For example, our spending on travel and outdoor adventure changed, and we stop traveling and started seeking entertainment at home or splurging on new hobbies.
Because the flow of money changed, it affected our income plan. So, many of us never thought of our income plan. That is why the economic effect of this pandemic has been so devastating because both employees and small businesses didn’t take an extra step in being more intentional about their income. For example, the employee mindset has always been “I go to work, I get paid.”
Now more than ever, the pandemic is changing the way people think about money. We have all seen the change in our friends and families, with some saying it feels like “a rug was pulled out from beneath them.” Depending on where you are in your financial journey, you might feel the same way.
Despite the uncertainty of how the pandemic will affect your financial planning in the long term, there are steps you can take to build a financial plan, gain financial freedom, security, and independence for yourself and your family.
We suggest you take a moment to relax, and then focus on applying the following four strategies as you navigate the financial impact of the pandemic.
Adjust or Add to Your Emergency Fund
Right now is the perfect time to revise or tap into your emergency funds. Your emergency fund is there to help carry you through, if you need to change your career, need to relocate or meet unexpected expenses.
We always insist that people have sufficient emergency savings. It is a fact that most people don’t. We generally recommend saving three to six months’ worth of expenses in an emergency fund. Because of the uncertainty caused by the pandemic, we now suggest keeping a year’s worth of expenses saved in the fund.
Refinance Your Debts
If your income has taken a major hit, you may need to adjust your expectations for what you can handle. For example, if you have loans or credit card payments it may be time to refinance at a lower rate. Even a 0.5% drop in your rate can save you hundreds on your loans.
Also, if you were making extra payments towards some debts. We highly recommend halting those payments for now. Many companies and institutions suspended most payments through the end of the year to provide some temporary debt relief.
Re-evaluate Your Budget
This is the time to pivot and prioritize. Ensuring you are able to cover essential expenses should be your top financial priority right now. Reevaluate your budget to find new ways to conserve cash. If you’re feeling some financial stress, look at what you can cut from your budget for the time being.
We have been spending less money on gas or dining out. For example, commuting every day can cost about $30 per day on gas. That’s $150 per week or close to $600 per month. If you are in a similar situation, we strongly recommend using the extra money to create a financial cushion you can rely on in the coming weeks and months as needed.
Create Multiple Sources of Income
The main cause of all financial problems always boils down to Income. Now more than ever, you need to have an income growth strategy. That is your ability to find and increase your income.
Most people in the airline, travel, and recreation industry are out of a job right now. What are you going to do? Your strategy has nothing to do with the economy, regardless of your income level, you can take steps to improve your financial position by creating multiple streams of income. Multiple streams of income will ensure that another economic downturn will not have a significant impact on your personal financial planning.
Here’s a list of quite a few passive income ideas, If you would like to know more on a personal basis, you can also contact me. But, it’s likely that you’ll be able to find at least two or three that will work in your situation.
- Make YouTube videos
- Try affiliate marketing and make sales
- Get cash-back rewards on credit cards
- Sell your own products on the internet
- Invest in real estate
- Set up a website selling a product
- Create an online course
- Make money for tasks you’d do
We will provide more detailed information about each income stream in another article.
The best way to handle any situation is to prepare as best you can beforehand, and then deal with circumstances as they arise. This pandemic started as a temporary situation, but now it is permanent. Your goal right now should be doing what you need to do to best support your family and you can get back on track.
It’s not too late to prepare your finances for what’s to come. Financial coaches are here to help you create or strengthen a financial plan and take control of your finances.
Check out these financial planners. Each monthly budgeting section consists of a budget page, two expense tracker pages, and a dot-grid page for additional note-taking. At the end is the Summary of the Year section, that allows you to assess how well you’ve stuck to your budget over the year.
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Did you find the strategies listed in this article helpful? What are some of your ideas? How have they worked for you? Let us know in the comments.
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