The health crisis has put a lot of people over the edge and making budget mistakes will only make matters worst. It is already challenging enough for a lot of people who are trying to make ends meet. Some people are let go or on furlough which severely affects their ability to bring in any regular income int their budget.
As the pandemic continues to claim American lives with a vaccine still out of reach, the economy is taking a beating. BBC shares that the economy suffered a severe contraction in over a decade during the first quarter of this year. While some industries and companies are able to thrive in this type of environment, the majority are still trying to get a foothold on the situation. Some are doing their best to continue their operations by letting their employees work from home.
It is safe to say that no one alive at the moment has any experience in dealing with a pandemic. This is an unprecedented global event and even the most experienced finance professionals are continuously trying to find ways to adapt. This is why budget mistakes will happen. But this is not an excuse not to try and do better.
The crisis has affected many people in a lot of different ways. Some are emotionally going through a tough time dealing with the situation. Others are battling mental problems and for most, their finances are put into the ultimate stress test. Mistakes will be part of your financial journey but there are ways to either prevent them or recover from these mistakes.
Pay closer attention to your health
You may have realized it by now that your health is one of the best investments you can ever make especially with the virus going around. Although it is not an assurance that you will not get sick, it can increase your chances of being able to fight it off. Also, the healthier you are, the more energy you have to make improvements with your finances.
It could be a new experience for you to be working from home. As a result, you might begin to neglect the need to exercise. You sit all day for work and then sit some more to relax after long work hours. You might also be tempted to simply take your meals while in front of your computer for ease. And when you begin to eat out of convenience, you will not pay attention to what you are eating and your nutrition starts to suffer.
This can ripple out to your finances where you start to make budget mistakes. This can start with the types of food that you buy. You might think that you are saving money with cheap food but you are harming your overall health. Sooner or later, your health starts to suffer and you begin to spend more on over the counter medicine or even spending for check-ups.
Thinking you cannot save for emergencies is one of the biggest budget mistakes
One of the biggest mistakes people are realizing now with the health crisis was that they did not save for an emergency fund. This is true especially if their income is largely affected by businesses trying to cope with the negative effects of the pandemic. That emergency fund would be able to cover for your expenses as you try to get your income back to what it used to be.
If you do not have an emergency fund, you might begin to think that you cannot save up for one. With everything that is happening, it is challenging to save for an emergency. But it is not impossible and your future self with thank you for it. The idea of saving for emergencies is to start small. This is because you need to build the habit first.
As soon as you create a habit of saving automatically every time you get paid, you will notice that your emergency fund grows over time. The best time to start saving for it was yesterday. The next best time is today. Get started with an amount you are comfortable with and keep at it.
Going on a selling frenzy with your investments
One of the biggest budget mistakes is trying to sell all your investments just to raise quick cash. Though it will certainly give you what you need at present, it will put you in a very challenging position in the future. Remember that the health crisis will not be forever. Once everything settles down, you would have lost a lot in your investments.
But it does not mean that you cannot tap into your investments as well. The key is being able to balance what you can let go now and what you can hold on to for the future. As Warren Buffet once mentioned that in dealing with investments, you need to be cautious when others are greedy because you could lose a lot in your investment value.
Taking your eyes off of your expenses
Budget mistakes can also come from overlooking your expenses during this health crisis. Your focus could be all about increasing your income that you begin to lose your grasp on how you spend your money. This is the perfect time to go back to your household budget and make sure that your expenses are under control.
There are times when you overlook the simplest of things yet they can create a big hole in your budget. Buying food in bulk thinking you save money yet you throw excess food away after every meal is a waste of money. Cutting out unused streaming services at home but leaving the appliances plugged-in even when not in use will increase your electricity bill.
This is one of the reasons why you need to stay on top of your household budget especially when it comes to your expenses. When you make any changes in the way you manage your finances, it will always have an effect on your overall budget.
Lacking goal adjustments
By now, you should have financial goals you have set early in the year. These are targets you want to accomplish this year which can bring you closer to your long-term life goals. If you want to pay off the house in as little time as possible, you would be making extra payments to make that happen. Retiring at a certain age can also mean putting in a specific amount into your retirement account every year. With the health crisis on-going, you might need to make adjustments on your goals for the year.
It does not mean that you should abandon all your goals in life. The situation just calls for some adjustments to help you cope with the unforeseen crisis. You can and should continue to save but maybe at a lower amount. You can also put it off for a few months and redirect the money towards more immediate need or over to your emergency fund. The important thing is to make those adjustments to help you adjust to present circumstances.
Shying away from online transactions
With all the changes in the way people manage their finances, there is a lot of benefit in going cashless and transacting online. It might not be a big deal since a lot of people are already doing it long before the pandemic hit the world. But there are still a lot of people who still do not have their own bank accounts. CNBC shares that about 7% of US households are unbanked. This can make it a lot more challenging to transact online. If you choose to still use cash, you would need to make a lot of trips to and from the bank or ATM. Handling cash also is not as safe as before with the virus still out there.
As the health crisis still far from being under control, you need to stay away from budget mistakes to lessen the stress this pandemic brings to your finances. The more you are in control, the better your money management will be.