COVID-19 has truly changed the course in which we see the world and our finances. Initially when the pandemic started in March of 2020, many of us were in a frenzy. Some of us were unaware of how we would cover living expenses if laid off and many became worried because of the slow turnaround for unemployment benefits. Others felt secure because of personal savings, but became doubtful as the pandemic continued to lengthen while funds began to dwindle. Now more than ever, we are aware of the unexpected circumstances that can arise at any given time. We have become more mindful of the way we spend, our saving habits, and also in the way we budget. To truly put our corrective habits to the test, we want to provide three tips to remain financially fit in the short and long-term future.
Pay yourself first
When we receive our paychecks for the month or passive income deposits into our account, many of us apply these funds to upcoming bills, purchase an item from our want list or set aside funds for a trip we are planning in the next few months. This reaction is common, but we must not forget to pay ourselves first. Before bills, wants, and vacations are covered, it is important to pay yourself for your hard work and dedication. Determine the best amount that fits comfortably in your budget; no amount is too small. For example, if you are paying yourself $20, $75, or $150 – adding this to your cash savings will provide more wiggle room when you want to do something for you. Remember your worth and pay yourself to accumulate your worth!
Create a budget
Writing down your living expenses, grocery limits, and membership fees is just the start of understanding where your funds are allocated each month. Taking the necessary steps to become more detailed in what you are allowed to spend per day, week, and per month is the ultimate goal when we discuss the true essence of budgeting. Budgeting requires dedicated time to think, calculate, and prioritize.
Start an emergency fund
As we all know, COVID-19 brought unforeseen circumstances to many of us. Being forced out of our financial comfort zone and normal, everyday routine caused some of us to realize the importance of saving. It’s far more than having a personal saving account for medical bills, vacations or big purchases. Starting (or re-establishing) an emergency fund is equivalent to saving for surprise expenses; those of which we can’t always control. Emergency funds should cover expenses such as household repairs, car malfunctions or job loss due to budget cuts. It is best to make a list of possible emergencies that could arise and create an amount to save for these possible setbacks.