How to handle Personal Finances during a Pandemic
It is no secret that we are living in a crazy time right now. Schools are closed, businesses are shut down and the economy has basically come to a stop.
With all these events, it can be confusing to know how to move forward, and how to manage your money during the crisis.
But we have some money tips to help you during this pandemic, and to help you get through this unprecedented time.
The first thing is to not panic. Panicking can only lead to poor decisions and regret. Panicking is why the stock market fell so much so quickly.
The people who pulled their money out of the stock market did in fact lose money. But those who keep their money in will recoup their losses. As Dave Ramsey likes to say, the stock market is having a sale right now
Panicking is also what has caused the lack of toilet paper in the grocery stores–seriously, how long will it take to use all that toilet paper?? Panicking leads to decisions to spend money you may not have, to “stock up now” but resulting in money problems later.
Trust me, I get it. When you go to the grocery store and see empty shelves, the fear and panic starts to set in and you get more than you need–or things you didn’t even plan on buying in the first place.
Here is the thing. Money decisions should never be made based on pure emotion. And making money decisions when you are scared or panicked are decisions based on emotion.
Take a step back, take a deep breath and give yourself a minute to evaluate before making a purchasing decision. And stick to your budget!
So, again, don’t panic!
This is a great time to go through your fridge, freezer, pantry, and household supplies and see what you have. Take the time to take inventory everything.
Why would I recommend this? Well for two big reasons
1) It gives you something to do during quarantine 😉
2) It allows you to know what you actually have on hand.
If you know what you have, then you know what you NEED to get at the stores. If you know what you NEED, you will be less tempted to go and just buy stuff and stock up on things you don’t actually need, just because other people are doing that.
This will help you to spend less money and save money overall during this process.
When it comes to your family finances during this crisis, it is best to limit the amount of money you have going out. Do what you can to cut costs from your budget.
What things could be considered extra or non-essential. What can you do without for a few months? Monthly or annual subscriptions? Gym Memberships (After all, they are closed right now..), Amazon Prime, Hulu? What is strictly non-essential? Cut it for a few months until we get through this.
One way we have have cut costs is we have taken our daughter out of preschool for the time being. That will save us $140 a month. Not a lot, but every little bit helps.
Bare Bones Budget
Similar to cutting costs it to create a bare bones budget. What is a bare bones budget–basically what it sounds like. You start with a basic family budget, and then cut it down as much as possible.
A bare bones budget is the minimum you need to survive. So a bare bones budget would include the following:
- Gas for the Car
Things that are not necessary for living are cut out. This will allow you to live on less, when less money is coming in. (This is important because so many people are out of work, including us.)
I know it doesn’t sound like fun, because there is very little fun to be had with a bare bones budget. But the point is to survive through this, and not end up in financial difficulty.
I will tell you, we are currently living on our emergency fund–we honestly don’t expect to take a paycheck again until July.
There are a lot of reasons for this, but the main reason is to keep the money in our business so it doesn’t go under. As such, we are living on the bare essentials.
This allows us to use as little of our emergency fund as possible, and keep us afloat during this whole process.
It isn’t fun, but then so many of the “fun” things are closed right now. We are making due for this short amount of time, so we can thrive in the future. You can do it too.
Minimum Debt Payments
If you are working on getting out of debt, this can be a hard one to swallow. When we were paying off debt, we were throwing as much money as possible at those loans. Any money we could find and/or spare was sent off towards the debts.
But in this crisis, the best thing you can do is revert back to paying the minimum on your debt payments, and not throwing extra at them–if you are able to make the minimum payments right now.
If you are out of work, getting minimum unemployment, etc, revert back to the bare bones budget. Just keep in communication with your lenders to make sure they know of the situation. Lots of lenders are being lenient at this time.
Save as much as possible
Another tip for this time of crisis is to stockpile cash as much as possible.
This money tip goes hand in hand with cutting costs and the bare bones budget. Whatever you aren’t spending on “extras” sock away as much as possible.
We will come out of this. And when we do, payments are going to have to be made again. You will find yourself in a much better financial situation to start making payments, and getting back to normal life, if you have saved as much money as possible during this time.
Final Thoughts on Money Tips during a Crisis
This time is crazy. I get it. But you do not have to join the crazy. You can make good money decisions during this time of crisis and come out financially on top.
I hope these money tips have given you some things to think about and will help you during this time.
Let me know what other tips you have for this time of pandemic.