How To Budget And Pay Bills During A Crisis
Last updated March 20, 2020
Having your hours cut at work or losing your job altogether is scary. You may be worried about how to make ends-meet and aren’t sure you have enough money to cover all of your necessities. Here are a few tips on trimming down your spending, prioritizing what’s most important, and resources to help you manage your budget during this time of uncertainty.
Know how much money you have: add up ALL the money you have. This includes the money in your bank account, Cash app, Venmo, PayPal, any upcoming paychecks, and all the cash and coins you have in your pockets, bags, or in a change jar. Add up EVERYTHING and write down the total. This number will be used to build your budget. Now it’s time to prioritize.
Identify your necessities - then cut and cancel everything else: Make a list of everything you spend money on. How much does it cost and how frequently do you buy it? Here is a sample list to get you started:
- Rent - $150 a month (I live at home but help my parents out whenever I can)
- Groceries - $200 a month (I spend $50 a week on groceries)
- Going out to eat -$100 a month (I like to go to starbucks on my way to work or school)
- Cell phone - $80 a month
- Spotify Premium - $10 a month
- Netflix - $12 a month
- Transportation - $60 a month (I have a free bus pass, but I occasionally take uber or lyft)
- Personal care - $50 a month (clothes, hygiene products, etc.)
- Credit card payment - $35 a month
- Student loan repayment - $300 a month
Once you finish your list, circle everything that is a necessity. Necessities are the things you need in order to keep you safe, fed, and able to get to work or school. Using our sample list as an example, rent, groceries, cell phone, transportation, and personal care are necessities - everything else is not (including the credit card and student loans, which we will discuss in the next section).
Now that you have prioritized what is most important, pay the minimum amount on those bills first, and cancel everything that is non-essential (e.g. Netflix, Spotify premium, and going out to eat.) If your essentials cost more than the money you have available (the number in step one), try your best to trim your budget even further. Take $20 off your grocery budget or or commit to using your bus pass instead of occasionally paying for an Uber of Lyft. Any change, however small is helpful. Now let's talk about debt.
Manage Your Debt: Student loans, credit cards, and car payments, can feel like essential items in your budget. However, during a crisis like COVID-19, many companies and loan service providers are offering flexible options for repayment that can save you money. Here’s what to do before paying your credit cards and student loans:
- Call your credit card company: tell them you are experiencing financial hardship. Ask if they will lower your monthly payment, lower the interest rate on your credit card, and defer your payment to a later time. Many creditors have financial hardship programs you may qualify for. If you don’t feel comfortable asking? Have a trusted family member or friend help you make the call.
- Contact your student loan servicer: Due to COVID-19, the government is waiving interest on federal student loans until further notice. This means your student loan balance will not increase due to the interest your provider typically adds to your balance each month. This change is automatic and you don’t have to do anything. However, if you are struggling to make student loan payments, call your provider and request a deferment or forbearance, so you can temporarily stop making payments until you are back on your feet.
Save Your Money: After you pay your essential bills, save as much money as possible. If you have experienced job loss or reduced hours because of COVID-19, there are resources available to help you get by. Check out a few of the resources we’ve compiled here.
Start a Side Hustle: Many retailers are hiring temporary workers to meet the demands for food and grocery delivery. Sign up! Or, think outside the box and get creative on ways to bring in money, maybe doing yard work for neighbors or offering online tutoring support to neighborhood elementary students.