These are anxious times. Lockdown may help curb the spread of the Covid-19 pandemic, but it certainly isn’t doing the global economy any favours. With businesses of all shapes and sizes being forced to shut down, unable to generate any income, millions of people across the world have found their own incomes suddenly interrupted, or entirely lost, and are faced with no choice but to weather this storm as best as possible.
Now is as good a time as any to take a good, hard look at our budgets, to see where we can cut costs quickly, intelligently, and tighten the belt without jeopardizing our future.
We know, cutting all costs doesn’t do the economy any favours either. Restaurants, gyms, and providers of entertainment need your money to survive, to employ other people, to keep the ball rolling, and so on.
The purpose of this article is to look at which expenses to prioritize and which we could cut in times of absolute dire straits, such as right now, as well as how to carry these healthy spending habits with us into the future.
Have you prioritized the essentials? Have you overlooked any non-essentials you may still be paying for? When faced with months of uncertain income, every bit helps.
Keeping a bare-bones budget involves prioritizing your needs over your wants, such as being able to pay your rent/mortgage, utilities, food and other important expenses over things like entertainment and social activities.
In a roundabout way, lockdown makes that easy. But, what about life after lockdown?
A bare-bones budget is a dire straits budget with little room for treats or luxuries, and it will show you exactly how much money you’ll require to survive every month, in the event of something terrible happening, like unemployment.
It isn’t about the doom and gloom of the situation. Think about it more constructively, proactively, and use this time to develop strategies and re-evaluate your goals.
Pull out all the financial statements from the last three months, go through them with a fine-tooth comb and take note of all expenses that are essential and all that are frivolous. Be ruthless in your budgeting. If something doesn’t contribute to your survival or to your future, cut it. If anything can be downscaled, do it.
Make plans for life beyond these hard times.
When you return to the office, once all of this has passed, carry these habits with you. Create a spending plan with your spouse. Build an emergency fund. Share rides, where possible, or cycle to work if you’re close enough. Cut out the takeaway coffees or the takeaway meals or the pricey drinks. Pack your own lunch to work. Save electricity. Make your own gifts. Be savvy in your spending, look for good deals. Stop smoking.
Take good care of yourself. Appreciate what you have.
You’ll need to give this very careful thought. Each individual person will have their own set of needs or requirements. Perhaps you live in a city like Cape Town, where you need to rent a parking spot for work, and perhaps you won’t need that anymore. A higher-priced, faster internet connection, for example, may be necessary for some, but not for others. If you can downscale on any services without cancelling, and still do what you need to do, and save enough money, then always do so.
Be aware of the difference, and keep the future in mind. Certain expenses, such as car insurance, may not seem very useful right now. You may have found little to no use for a car under lockdown, but rest assured; this too shall pass. Insurance, along with medical aid, is one of the very last things you’ll want to cancel right now, and it’s far better to speak to your broker about possible payment solutions.
The expenses we’re talking about are more in line with gym memberships, twenty different types of entertainment subscriptions (including DStv), and the sort. If you’re not using it, stop paying for it.
There’s no need for professional hair or nail care under lockdown, of course, and even less for make-up. Save the money. When faced with unemployment, certain things take far greater priority. Your pet’s health and wellbeing is certainly one of those priorities, but pet luxuries are not. If you’re not getting a professional grooming every month, neither should your pet.
Working from home, or just staying at home, has many great perks. There are expenses that you need to be aware of, though, and chief among these is your utility bill. More time spent at home means more electricity being used, more time in the kitchen, etc.
Even at the best of times, and even in the coldest of winters, a heater should be avoided at all costs. Bundle up with cosy blankets. Light a fire, if you have a fireplace.
Cut back on the laundry where you can. Replace the tumble-dryer with the good old-fashioned washing line. These things will hike your electricity and water bill up to astronomical numbers.
It’s also a good time to empty your pantry, use everything, and create your dishes around expiry dates to avoid being wasteful. Plan your menu by the week, or even by the month, if possible, and meal prep everything you can so that you can avoid any unnecessary or compulsive spending.
With the right recipes, good home-cooking can be healthier, cheaper and far tastier than any takeaway. You may be jonesing for that delicious Oreo McFlurry now, but it will pass.
This too, shall pass.
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