It’s probably safe to assume that the steps being taken to control the coronavirus outbreak is affecting personal finances. On the one hand, you might be saving on your commute. On the other, you might be spending more, stocking up on food and cleaning supplies or books and games and activity sets for the kids. And a lot of people are making less money or seeing income dry up completely because so many workplaces have shut down.
That got us wondering about what we should be doing with our money during this time, so we’ve called Kimberly Palmer. She is a writer at NerdWallet. That’s a site dedicated to giving financial advice. And she’s going to give us some money management tips:
It can be a good idea to buy groceries to help you last through any time period you have to spend in your house, which for a lot of people is a week or more. So we are buying more than we’re used to, and there’s nothing wrong with that. But it does put a strain on a lot of people’s budgets in the short term. And so this is what really underscores why it’s so important to have an emergency savings funds – so we can cover situations like that when we see our expenses suddenly shoot up.
But there’s no need to go to the extent that we’ve seen with people over-buying things like toilet paper, paper products, canned goods that could last for months. And so you definitely want to apply a sense of reason. So you really don’t need all the food you could imagine for the next six months.
In a lot of cases, people have to very quickly prioritize which bills they’re going to pay this month. In some cases, it’s just not possible to pay all of them. And so if you can’t make your credit card payment, for example, call your credit card issuer and see if they can give you more time, if they can waive interest because of the situation right now. Some companies are proactively making those kinds of offers to consumers. So you have to call and ask. So that can be a first step. It can give you a little bit more time to get you that help.
And then also, in some cases, some people, if you have good credit, you can use your credit card to make purchases. You still want to be sure to make your minimum payments every month so you can protect your credit score. But that can give you a little leeway if you have that option, if you have a credit card that you can use.
We have three kids, and so we are naturally cutting back in areas like kids’ activities. So we’re cutting back because we have to. Those spending on sports for springtime and dance classes for my daughter have been canceled. So all of that spending that we used to do we are now putting into savings because it just helps give us a little bit more buffer since there’s so much uncertainty right now.
Keeping track of saving
We use the 50-30-20 budgeting to keep track of our saving. So basically, 50 per cent we dedicate to need. So that’s, like, our mortgage and groceries. Thirty percent is wants, and that’s the restaurant spending or ordering takeout. And then 20 per cent is debt payments and savings. But it’s that 30 per cent that’s changing right now. And so where we used to have that restaurant spending, personal care spending, getting haircuts and activities for my kids, that’s what we can now transfer into savings. Because there’s so much uncertainty, we want to build up our emergency savings like so many people.