Many economies have been struggling to stabilize itself during the coronavirus crisis. Numerous people have lost their source of income and many are suffering from the pay cuts.
During this tough time, we have to be wise and take intense steps to protect your finance and emerge out stronger in your money management practice.
We have come up with few spending goals for this pandemic period to manage your finance.
1. Stick to the Budget
Remember yourself to never drift from the actual budget, stick to your budget by all means. It might be hard in the beginning but as time flies by, you will get used to it.
This is the best time to make cost-cutting measures; cut down unnecessary expenses and prioritize your spending in the budget.
On prior expenses are House rent, Bill payments, EMI charges, Insurance, and Emergency Funds.
2. Cut-out Unnecessary Expense
Lockdown paved a way towards eliminating unnecessary expenses in your daily life. Like Shopping for clothes, Dining out, Movie in a multiplex, etc.,
Find out an alternative for these expenses. Instead of Dining out; cook with your family and eat together. You will get a different experience altogether.
When you go for a movie in multiplex, their overpriced snacks will surely burn a hole in your wallet. Other digital platforms such as Netflix, Hotstar, Amazon Prime also has new movies available. Plan a movie night and turn your home into a private theatre.
3. Never Stop Your Investment or Saving
Investment is a form of saving for the future, even though it is tough to handle the financial situation now; do not stop your investment or your saving funds.
4. Build Emergency Fund
Have an emergency fund ready to meet your emergency expenses. If you do not have one, create one immediately. When your income is at risk or else or an unexpected medical expense you can use this emergency fund.
Ensure that you have at least your 6 month worth of expense saved in your emergency fund. While planning for the emergency fund, make sure it is deposited in a high interest yielding account.
5. Tweak to 50/30/20 Rule
As the name suggests, break your salary in this way to meet your budget.
Spend 50% of your salary for essential expenditures like Rent, Food, EMI, Education, Bills etc.,
30% goes towards the entertainment expenses you would like to have E.g., Movie, Shopping, Travel, Restaurants, etc.,
This final 20% of your salary is for safe investment or savings. Allocate 20% of your salary investing in mutual funds with high interest or deposit in a separate savings account which can be used for future expenses.
This coronavirus lockdown has limited our ability to go out and spend money on whatever we want. Consider this a great time to create a planned spending structure every month. Come back stronger than before with these spending goals.