“Every financial decision should be driven by what you value.” ~David Bach
Truth be told, the coronavirus pandemic has put the world at a standstill. As a result, people are forced to stay at home—some reluctantly transformed their place into a remote office, while others just stayed at home without a job.
Some of us have been diligently saving for the unexpected. But, unfortunately, those emergency funds have already dried up several months into the lockdown without a steady source of income.
A survey conducted by the National Endowment for Financial Education (NEFE) showed that up to 75% of households have adjusted their finances to accommodate the impact of the pandemic. Some of these are:
- 7% borrowed from their retirement fund or policy,
- 11% deferred their bill or debt payment,
- 11% incurred more credit card debt, and
- 18% used their emergency savings.
While the future still looks bleak at this point, the financial strain the pandemic caused also brought new realizations. The same surveys revealed the people’s financial learnings such as the need to save or invest (23%), cut back on non-essential expenses (14%), and prepare or start saving for an emergency (11%).
These are good news—a critical path towards solving the looming financial troubles the pandemic created. Nonetheless, these are just three of the ways to minimize the issues you face with your finances.
More tips on how to take control of your finances
Here are more tips for you. I tried to make this list as a no-nonsense, practical guide as possible. But let me tell you this.
Remember that you’ll do all these for savings and debt relief. If you want to save, you pay yourself first. You know how this works: save before you spend, not spend and save what’s left.
Some would say that it is rather difficult to save while paying off some debts. This is also true. So, if it makes sense to your circumstance, pay your debts first.
I know some people who fear the debt collectors, and rightfully so. But they shouldn’t—you shouldn’t. Instead, you should talk to them and work out a reasonable payment plan. Learn more about your rights as a consumer and how to deal with collectors properly because, well, you need to.
Moving forward, take heed of my advice.
1) Cut down on food deliveries
Usage of food delivery apps skyrocketed in 2020 to 111 million from 95 and 88 million in 2019 and 2018, respectively (yes, it must be because of the pandemic). So that’s 16 million additional users. This is understandable because an average American family only cooks nine meals per week. The rest of the meals are to-go food.
According to a study, eating out or ordering food online is 5x more expensive than cooking meals at home. So preparing at least two more meals at home can save up to $936 per year. That much money you can use to settle your bills.
2) Ditch the cable or downgrade the plan
Cable TV packages in the United States start from $50 per month, which means an additional $50 savings if you decide to cut the cord. If this is not possible, you can always choose a cheaper plan than what you have right now.
Another plausible option is to subscribe to a streaming service instead. It’s cheaper even with a downgraded cable plan.
3) Find a side hustle to generate additional income
Moonlighting is commonplace, and people do this all the time to fill the earnings gap. If you suddenly become a single-income (or a zero-income) household, this is all the more important.
Online is a plethora of side hustles or gigs that you may want to consider. If your current skills set does not match and upskilling is not an option for you, then tap on what you already know or have. For example, sell stuff online, create marketing collaterals for fashion brands, or do freelance writing. These are just some of the jobs that trended upward when the pandemic hit.
4) Don’t shop around online and impulse buy
This is by far the biggest budget breaker. We stay at home and scroll our feed and visit websites all the time and usually encounter things we think we need, but we don’t. So what to do?
Practice the personal cooling-off period. A cooling-off period is a consumer right wherein you, as the consumer, may cancel and return the purchased item and obtain a refund. Making it personal means giving yourself time to think if you really need the item or not. Give it three days, and if you forget about it, you probably don’t need it.
5) Don’t charge anything on future income
Don’t burn money that you have yet to earn. This can be very dangerous because that income has yet to materialize. What would happen if it didn’t materialize at all?
If you cannot pay for an important item in cash, don’t buy it. Instead, save up some more before making a purchase. Also, the interest rates could wipe out all the money you’ve saved so far when you choose to swipe your card instead of paying for it in cash.