The coronavirus pandemic has wreaked havoc on millions of people’s lives due to its overarching impact-induced by extensive lockdowns. It has crippled the economy and caused an immense financial crisis for people, particularly those who may already find it difficult to manage their finances. However, there are opportunities hidden within this rampaging crisis that can give many people some much needed hope by providing means of effective financial planning and strategy. Jared Jeffrey Davis Sandusky, Ohio, discusses some of these strategies this article.
His advice is not only useful during the pandemic, and will provide a solid foundation for the new normal we will all be faced with in the future.
Choose the 50/30/20 budget model, says Jared J Davis Sandusky, Ohio
A important as it is to create a family budget every month, it is equally important to choose the appropriate budget model that allows judicious allocation of funds. Follow the 50/30/20 rule and allocate 50% of your earning towards family expenses like mortgage payments, education, EMIs, etc., 30% of things that you want like entertainment, dining, travel, shopping, etc. and 20% towards investment for the future and emergency fund. Use the opportunity to stay at home due to lockdown to review your needs and wants to cut down expenses.
Entertain at home while you save
The lockdown has forced us to seek entertainment at home by focusing on various modes of digital entertainment—it helps to get our dose of enjoyment and relief from the stressful environment. The new form of entertainment has substituted weekly family trips to multiplexes and resulted in saving money. What you spend on video streaming services like Netflix, Hulu, and Amazon Prime and OTT platforms that show the latest movies is just a fraction of what you would spend in movie theatres.
Practice austerity in spending
Carefully analyze your spending and identify what you need and what you want. The task is not easy because when our desires become overwhelming, all wants appear to be needs. It all begins by making choices about the basic things you need for survival or leading a decent life without indulging in luxury. Also, make a list of some items that could add a feel-good factor over and above what you have, which are the wants or your desire to give more polish to your lifestyle. Focus on spending mostly on what you need and restrict your spending on what you want so that it generates saving.
Focus on saving cost
Whatever surplus you can generate should come in handy during the COVID-19 crisis, leading to deep financial uncertainty. Develop a frugal mindset and adapt a spartan lifestyle to cut down costs and generate some savings. Reconsider your fashion needs and choose less expensive brands that offer similar value as bigger brands in terms of quality and appeal. Discover ways of reducing energy consumption by rationalizing domestic equipment and appliances and using energy-saving LED lights.
Remember that a penny saved is a penny earned, and never was it truer than in the COVID-19 times.
