Crisis Budgeting: How to Prioritize your Finances Fast
Many people across the globe are struggling to make ends meet as we move through the Coronavirus pandemic. In the midst of a crisis, we come to realize some things are simply out of our control.
However, there are actions you can take immediately to help align your finances with your current financial situation.
1. Create a list of expenses
It may be difficult to face numbers right now, but you cannot fully understand your financial situation until you create a detailed list of your monthly recurring expenses. As you compile your list, be sure to include the due date for each expense. We recommend you have your monthly bank and credit card statements handy to verify the list is accurate. Be sure to include gas, groceries, and any other recurring monthly expense.
2. Temporarily suspend or limit anything in your budget that is non-essential
Decide which recurring expenses are non-essential, such as subscriptions to products, or streaming services, monthly memberships, or monthly dues for lessons or hobbies. If you’re able to temporarily suspend or cancel the service, do so.
Remember, for streaming services, if you have a smart tv or streaming device, there are many free apps that provide quality, free streaming services to fill in the gaps.
3. Focus all available income to cover essential items first
Right now, the most important expenses should be your essential needs: food, utilities, shelter, and transportation. In a crisis, there is nothing more important than sustaining your life and health. Therefore, your focus should solely be on your essential needs and safety. Everything else is a luxury that can be restored at another time.
4. Contact providers for alternate payment options
At this point, non-essential services should be canceled or suspended, and your essential needs should be at the top of your list. However, you may find that you have other items, such as credit cards or loan payments that are non-essential but still require monthly payments.
Since the Coronavirus pandemic is a worldwide crisis, most providers are responding with overwhelming support and willingness to provide alternate payment options, such as deferrals, restructured payment arrangements, waiving late fees, and accepting alternate forms of payment without penalty.
Contact your providers to explore your options. If you’re experiencing a significant financial hardship making it difficult to maintain your mortgage, rent, utilities, or transportation expenses, contact your provider to discuss deferments for the next several months to carry you through this time.
5. Explore refinance options
The current health crisis has drastically reduced interest rates to offer better financing options. Now may be a good time to explore home and auto refinancing or loan consolidation if that option is available to you and if you are able to make the monthly payments.
Making smart financial decisions is still very important during this time. Stay away from payday loans or anything that trades quick cash at a high payback.
Lean on your financial institution to help you find the best solution for your financial situation. Credit unions, in particular, tend to offer the same products and services as banks and other lenders, but often at lower interest rates.
If you are a First Florida Credit Union member or would like to become a member, contact a representative at (800) 766-4328, ext. 1 to find out how we can help.