We are living in unexpected times due to COVID-19. And this means many people are hurting financially. Though stimulus checks have gone out to roughly half of its intended recipients, many people are still facing financial strain and looking to create new budgets for their household.
VIP Title Loans is something of an expert in budget creation and implementation, so we wanted to do our part and help our readers and customers create a budget that will work for them.
Now, unlike some of our previous budget aids, this one is getting as skinny as you can and taking out everything you do not absolutely need – think of it like Whole30 for your wallet. You will start with the bare minimum and then add in categories as you are able.
Step 1: Write Out Only Your Most Necessary Bills
This means rent, mortgage, groceries, and necessary utilities (heat, electricity), as well as car payments, gasoline, and other things. But remember, everyone’s ‘necessities’ are different.
For example, if you have children, you will have different necessities than if you are a single college student. For most, a car payment is necessary, but some can cut back on their car usage and therefore their gas bill will go down. For others, they cannot stop any of their driving habits.
Only you know your necessities, however, go over your bills with a wary eye and only place the absolute ‘needs’ in this first pile. Oftentimes, this will be less than half of your normal spending.
Here is a list of some of the most common necessary bills to help:
- Mortgage or rent
- Auto (payment, insurance, gas)
- Utilities (Electricity, heat, internet, etc.)
- Loans (Student, payday, title, credit card)
- Health insurance
Step 2: List Out Your Current Income
Start seeing what money you have coming in and make sure you account for any changes due to COVID-19. Are you making less? Are you making the same? Will you be gaining more income from unemployment or stimulus checks?
Try using a money management app like Mint or even your bank’s app if they have one. The tools many of these apps have can help you to stay on top of your spending, savings, income, and trends.
After you have your total income, and the absolute skeleton of your necessities, subtract and see what you are left with.
As a nice round example, let’s say you make $1,000 a month take home from all income sources, and you have $700 necessity bills – that means you have $300 left.
This brings us to our next point: saving.
Step 3: Saving (Even a Little Bit) for Emergencies
If COVID-19 has taught us anything, it’s that American people, businesses, even large companies, do not have enough in safety net savings to catch them in case of an emergency.
This is where we can start fixing this, at least at the household level.
Following the same example as Step 2 where you had $300 extra after your most needed bills, now you can split that into a couple of categories.
- First, put at least some of that $300 every week into a designated emergency savings account. Doing this weekly will seem less daunting, instead of putting it all in at once. Even just $25 dollars a week, $100 a month, is better than nothing.
- Next, divvy up the rest of that $300 ($200 now, if you put $25 away a week) into less necessary bills or categories.
- Put $25 dollars a week into a fun fund for things like restaurants, personal care, shopping, or other areas you normally spend money on. This can help your budget be more realistic by giving you a little to spend on ‘fun’, so you don’t feel too deprived.
- Finally, take that last $25 a week and keep this in your checking account as a buffer – if it makes it up to $100 by the end of the month, then transfer all of half of it to savings. This way you have all of your bases covered and a little cash in all your accounts to avoid fees or over-drafting.
Step 4: Now, Rinse & Repeat
Reevaluate each month to see what bills are becoming lower, higher, or what is changing. Did you spend less on groceries by buying more sale items? Did you spend less on gas by using the bus or staying home due to Safer At Home orders? Keep track of this, either on your own or with an app, and implement it in your next month’s budget.
However, if this budget air is coming a little late, or if you need a little extra to get a jump start on your safety planning, then call or visit one of our six locations today for a Texas car title loan from VIP Title Loans.