We’re halfway through 2020 and, already, this year may have been the most challenging yet in terms of budgeting and handling finances. In just a few short months, the coronavirus put more than 16 million Americans out of work, forced thousands of businesses to close forever and plunged the U.S. into another recession. Needless to say, money is tight right now. Yet, that’s all the more reason to reassess your finances and get them in order.
Even if you can’t save much much right now, assessing your current situation and creating a budget will help you cut costs and pay for essentials like bills and groceries. Plus, prioritizing your finances right now will help you stick to a budget both now and in the future when you can begin to save money again.
1. Build an Emergency Fund
Back in March, nearly 10 million Americans filed for unemployment. The following month, 31% of renters were unable to pay their rent. Had these people built an emergency fund, they may have been able to afford rent and other essentials, too. The problem is, they didn’t expect a pandemic, so they didn’t save.
Learn from their — and your own — mistakes and start building an emergency fund now. Ideally, you want to have at least three to six months’ worth of expenses in your account. Start small and set aside a few dollars each week to begin building your fund.
2. Check Your Spending
If at the end of the month you don’t have a single dollar left to spare, you may want to examine your spending habits. You might be buying more lattes and ordering carry out more often than you realize. Assess last month’s credit card bill for a breakdown of costs and determine areas in which you could cut your spending, putting the money you would have spent into savings instead.
To gain a more long-term perspective on your spending, list all significant purchases you’ve made throughout the last decade. Do you notice any trends or patterns? Becoming more self-aware will help you resist the temptation to buy that new TV or sectional.
3. Save for Vacation
COVID-19 has ruled out travel plans and canceled many people’s summer vacations. Instead of buying drinks, eating out, visiting the spa or purchasing beach toys, they’ve bought toilet paper, cleaning supplies, food and other essentials.
No one said you couldn’t take a winter vacation, though. Assuming the pandemic has dissipated by then and life has regained some semblance of normalcy, you may be able to take a trip then. If you already have an emergency fund, checking your spending habits may allow you to save enough to escape to the beach when cold weather arrives.
4. Time to Invest
Summer is usually a good time to invest in the stock market as they’re often calmer this time of year. Of course, the coronavirus and subsequent market crash have shaken things up this year. However, that doesn’t mean it’s not a good time to begin investing. Rather, now may be a perfect time.
Share prices took a nosedive earlier this year and are only just beginning to creep back up. Investing in a few now may return a profit in the coming years. For instance, value stocks are selling for half of what they’re worth and will likely double in value in the coming months and years.
5. Pay Off Student Loans
Now may also be a great time to finally pay off your student loans. While doing so may not be your top priority right now, scrounging up enough money to pay them by Sep. 30 may be beneficial.
Under the CARES Act, the U.S. federal government has agreed to a 0% interest rate on federal student loans for the next two months. Moreover, your employer may now pay up to $5,250 worth of you loan tax-free. Thus, while the government has suspended debt collection, it may be smart to continue paying your loan off, anyway.
Budgeting for a Brighter Future
Unfortunately, you never know when or if another pandemic will strike. Therefore, it’s best to save now in preparation. Even in the middle of a global crisis, there are still ways to cut costs and save for a brighter future. Hopefully, the above tips will help you reassess your habits and get your finances in order so you’re certain you’ll make it through any more uncertain times that come your way.