This is a good time to overhaul your budget if you are looking to get through the rest of the year. To say that this has been a tough year is an understatement. The world has been seeing some of the most challenging times in the history of mankind. Some of them might have happened in the past, but 2020 has not been a good year so far.
From record-breaking bushfires in Australia to drone strikes in the Army and even impeachment proceedings, the country and the world have seen a lot happening in the past few months. But one of the most hard-hitting challenges that affected a lot of people this year is the novel coronavirus health pandemic.
Though it is a health crisis, it has affected and rippled out to several areas of society including the financial sector. This is the reason why you might find the need to overhaul your budget because money management has been a tough job for the past few months. The biggest reason for this is that a lot of businesses had to close down with the stay at home orders coming down on several states.
This was done to curb the spread of the virus and to decongest the healthcare facilities in the country. As a result, businesses had to cut costs and that meant letting people go. For some, they were able to give their employees reduced hours but for some, they were let go. PewResearch shares that unemployment could be as high as 16% in May of this year.
Adjust your goals for the year
An important first step if you are planning to overhaul your budget for the rest of the year is to look at your initial goals for the year. A good place to start would the targets you set your sights on in the early part of the year. This could be your new year’s resolution which you want to see through and accomplish this year.
One thing to remember though is that your new year’s resolution should bring your closer to your long term goals. This year is tough but it does not mean that you have to abandon all your goals for the future. You just need to make adjustments but they should still bring you closer to your long-term life targets.
You need to make adjustments to your short-term targets in consideration of your current financial situation. If you are still employed, you might want to prioritize your emergency fund in the meantime. If you are on furlough, you can look for a side gig as you wait for your employer to call you back to the office. A big part of this is having a clear understanding of where you are with your finances.
Commit to balancing your budget
When you want to overhaul your budget, you have to keep in mind that you still have to end up with a balanced budget. The idea with a comprehensive budget is to make sure that you are on top of every single income and expense item. As you balance the two, the end goal is to have your income cover all your expenses and be able to save for future needs.
Overhauling your budget can refer to moving your payments around to focus on the areas you need to prioritize at the moment. It can include cutting down your expenses to the bare minimum so you can free up funds for necessities. You can regularly check on your budget as well to make sure that you can stick to it. Remember that creating a budget and following it are two completely different tasks.
Spend time working on new sources of income
One of the biggest reasons why you find yourself trying to overhaul your budget is the change in your income. You could be working on reduced shift hours or that the company has taken out overtime work. Then there is the possibility of being on furloughed not knowing when you will go back to work. The worts of it is being let go at work.
Whatever your current employment situation is, this health crisis has shown the benefit of diversifying your sources of income. A side gig before now becomes the reason why some people are able to make ends meet. The unemployment benefit is getting a second wind as USA Today shares that the administration signed an executive order providing an additional $400 in unemployment benefits per week.
This is a huge help for people who have already scraped their budget to its barest minimum. But as this is signed, execution is another matter. It is not wise to pin your hopes on unemployment benefits. You need to focus on finding a job or a side hustle that can help you bring your income back up. Once you do that, you get a little more independent and move forward with your long-term goals.
Set up automatic transfers
Once you overhaul your budget and moved your savings around, one way to help you stick to your new plan is using automatic transfers. This is one way to help you address that impulsive buying behavior. The idea is that you transfer the money into separate accounts you have set up before you get the chance to spend it.
If you do not see the money in your account, the urge to spend on items you do not need goes down. You might have heard the saying where if you keep buying items you do not need, the time might come where you have to sell items you need. If you do not see the funds in your account, your desire to buy your wants go down.
Re-evaluate your spending pattern
When you commit to balancing your budget, you need to spend a lot of time going through your expenses. When you do, you need to look at your spending pattern. Identify the expenses you can do away in the meantime. This is a little challenging since these could be habits that you have been used to over a long period of time.
This could be a seemingly harmless recurring subscription for a streaming service you rarely even use. You might even be hooked on an online game where you spend real money to advance through the game. There are also instances that you try your luck with a small amount in gambling sites until you are hooked and bet bigger amounts of money. At a time like this, you need to be smarter with the way you use your money and overhaul your budget.
Focus on what is important
When you choose to re-organize your budget, you have to set your sights on what is essential. Make sure to have your priorities in order so your expenses can follow. If you need to list them down, write them down on a piece of paper. You can also put them on your smartphone so it will always be within reach. When managing your budget at this time, use your priority as a guide in spending money.
It is a good idea to overhaul your budget at this time to help you get through the health crisis with your finances intact. This is a difficult time for a lot of people especially those that lost their jobs or suffered a steep pay cut. It is challenging but not impossible and going through and organizing your budget will be a big help.