It’s possible to have confidence in your budget, even in these uncertain times. Here are five steps to help you get a better handle on your money—and save for a brighter future.
1. Know where your money goes
Every budget begins with two key figures: your monthly expenses and your monthly income. Make a budget that tracks both your income and spending. This will be even more important as you experience fluctuations.
2. Determine needs vs. wants—and cut where you can
With your budget in place, identify your needs and your wants. Essential items like household cleaning supplies, toiletries, groceries and utilities will likely need to take priority over “fun” purchases for the time being, depending on your budget. Look at how much you’re spending on wants, like new clothing, accessories, and other discretionary items, and consider what you can live without for the time being.
3. Make the most of “monthlies”
Recurring monthly costs can add up. Consider temporarily suspending your gym membership if the facility is closed, pausing public transportation accounts or opting for groceries over meal delivery services, which can be more expensive in the short term. Take a close look at what services you may be using even more now (is streaming video helping you pass the time?) and figure out what you can put on hold.
4. Cut out impulse buys
If online browsing usually turns into “Thanks for shopping,” find ways to cut down on unplanned purchases. Spontaneous purchases can derail your money goals. When the urge strikes, refer to your needs vs. wants list—and focus on the bigger picture.
5. Check with your financial institution for options
If you have a mortgage payment or a car loan, you know interest is a big part of your monthly payment. If money is tight, see if refinancing could help you lower your interest payments over time. Some financial institutions have introduced forbearance options like deferment of auto loans during this time. And if your income hasn't changed, consider making an additional principal payment or two while other expenses are on hold. This helps you build equity, reduces the life of the loan and minimizes interest paid.
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