The COVID-19 pandemic has been hard on many people financially. For others, it has created an opportunity to pay off debt and save money. Regardless of your situation, now is a good time to reconsider your budget. These steps will help:
- Determine your current status. Take stock of what you have in savings, checking, and other accounts. Make a list of where you have been spending your money. Break down expenses by category (food, housing, car, entertainment, savings, etc.).
- Add variables. What expenses do you anticipate will increase in the coming months? For instance, will you be driving more because of a return to the office? Will you have more disposable income because you paid off a car or credit card over the last year? Plug these new numbers into your budget to see how they impact your monthly bottom line.
- Reshuffle priorities. Adding something new into your budget usually means less money for something else. Determine what you will have to sacrifice in order to hit your target budget. This is a good time to review your priorities and make some choices about what matters most.
- Reduce unnecessary spending. Pandemic life made little conveniences like food and grocery delivery or extra streaming services more of a necessity. Consider cutting back on some of these items if you are spending more time away from home.
- Rebuild savings. If you tapped into your emergency fund during the pandemic, it’s important to rebuild it. Make savings a priority until you’re back to pre-pandemic levels.
- Be mindful of inflation. Food, gasoline, rental cars, and building materials are all more expensive. Factor these costs into any plans you may make.
- Start slowly. While it may be tempting to make up for a year or more’s worth of missed events and activities quickly, your budget may not be able to handle it. Prioritize the activities you missed the most or that are in season now. Schedule more for later, as your budget allows.