During 2020, COVID-19 pandemic made the world turn the other way round; it changed routines, livelihoods, and the way of thinking for many people and nations. Consequently, we’ve learned how to live with social distancing, face masks, and hand sanitizers, how to work and earn remotely while living in quarantine, and how to spend wisely. What important money habits have we developed and are likely to save even after the pandemic? Here are three lessons that help us to survive during COVID-19 financial volatility.
Nest Egg is a Must
Due to the virus; most of us lost our jobs. It became harder and harder to survive, and the emergency fund became a must for each and every household. Sums kept aside for emergencies now help us to maintain everyday financial life.
So how to start saving? There is no better feeling when you find 10$ or coins in your old coat pocket or purse. Instead of keeping them in your pockets, you can start collecting your change. A shiny Piggy bank may help to collect coins and organize loose change.
Remember, a little becomes a lot pretty quickly. Saving a small percentage of each paycheck may help you handle financial problems without any debts or penalties. You can also use the Emergency Fund Calculator to determine your monthly expenses and savings.
Prioritize Cutting Expenses
Pressing pause on our spending habits became crucial during the pandemic. In the beginning, eliminating our costs was too hard, and we found ourselves reluctant to prioritize our bills. But focusing on priorities helped many people to overcome financial obstacles easier. For instance, eating at home can save a lot of money. Instead of going to cafes and restaurants or ordering food all the time, we tried to make it at home. Besides, shopping lists became very common among us. This simple hack can cut off our food expenses and help to plan our meals.
So, always ask yourself where you can cut your expenses off. We still should answer the following questions: Do I really need this? Can I live without this? These questions should not be rhetorical.
Kick the Habit of Budgeting
According to a study conducted by One Poll for the digital lending platform Laurel Road, about 70% of the 1,000 American millennials and 1,000 Gen Zers asked about the impact of Covid-19 on their finances, said they had budgeted their money as best they could. While 60% of the interviewers noted they would like to improve their budgeting but did not know what to start with.
So what does budgeting mean? Knowing exactly how much you earn and are going to spend is essential to make sure that your financial ship stays afloat during emergencies. Write down your upcoming expenses and make them equal to your income. Make sure your budget is enough to accomplish your primary goals.
Here a simple spreadsheet will work, but you can either download a budgeting app such as Mint, Pocketguard, or Wally or use an online money management tool like Budgettracker to make the process even more comfortable.
During the last 10-12 months, life taught us how to alleviate the threats of future crises or financial ups and downs. We all should take these challenging times as a chance to get prepared for a better financial life. We should act. We should not wait until it’s too late! Funds for emergencies, budgeting habits, and cutting your expenses off are ideal habits to be gained for coping with such unexpected changes. Start now; it’s high time we made changes around us!