The coronavirus pandemic has created chaos around the world — and this isn’t merely due to how this health crisis overwhelms health care systems. Another consequence of this global problem is its devastating impact on people’s lives. Since mid-March 2020, approximately 57.4 million Americans have filed for unemployment benefits. What’s more, the pandemic has pushed the United States, as well as other first-world countries, into an economic recession.
If you have some funds stashed away in your bank account, you’re in a good position. This doesn’t mean, however, that you can use the money however you want. During these times of uncertainty and difficulty, you need to tap your contingency funds as wisely and as slowly as possible.
Here are a few strategies to make your money last longer:
1. Come up with a Crisis Budget
Retooling your budget during the pandemic-induced recession is important, especially when you’ve lost your job or experienced a reduction in your monthly income. This way, you can make every penny count.
When budgeting, determine how much funds you have in your financial accounts. This may include money in your checking, savings and money market accounts. You may also add other sources of funds. If you have a few hundred dollars tucked away for a winter holiday, you could throw that into your total to help you meet your needs.
Your new budget will eventually include unemployment benefits. Accessing funds to this source, however, will take some time. So, work with what you have right now and update your budget once you’ve received the money.
Next, categorize your budget expenses. Begin with your fixed expenses first. This consists of everything you need to spend every month to maintain a basic standard of living. Examples include insurance, food, housing and utilities.
After that, make another list of variable or discretionary expenses. This includes weekly dinners at restaurants, recreation, clothing and personal care.
The goal is to categorize every expense in your budget. Look at each expense either as a nice-to-have or as a must-have.
2. Cut Down Your Monthly Spending
The next step involves minimizing or eliminating certain expenses. Start with the non-essential expenses in your monthly budget.
A good example is to look for free entertainment. If you’ve been told by people to be grateful for what you have, now is the time to heed that important piece of advice. Don’t waste your precious emergency fund on stuff like movie rentals, golf trips, costly road trips and expensive lunches or dinners. Re-watch the movies you have in your basement, listen to free music on the public radio or spend quality time watching television with your family at home.
3. Use Your Credit Cards Wisely
Be careful when using these pieces of plastic, as you don’t want to accumulate debt that you’re unable to pay back quickly. If you, however, are in a situation where you’re confident that you can find another job quickly, save your dollars for required payments and use your credit card to buy your essentials. This helps you maintain a good credit standing. Otherwise, keep your credit cards in a location where you won’t be tempted to use them for non-essential stuff.
4. Take Advantage of Deals and Discounts and Go Generic
When you shop at your local grocery store, you’re in full control of the amount of money you’re going to spend. Search the newspaper or go online to find coupons that will have you save money. Keep your eyes peeled on buy one, take one deals, as well as discounts when purchasing items in bulk.
Also, don’t hesitate to visit generic store brands. Although generic products may not have colorful packaging, they still deliver decent quality to consumers. Switching to generic may lower your essential shopping expenses.
5. Look for New Sources of Income
Take note that your emergency funds aren’t unlimited, even if you did an excellent job of preparing for the worst. The hard-earned money you put away may not be enough to help you weather the pandemic-induced recession.
So, look for ways to replace the income you’ve lost. Apart from applying for unemployment benefits, you can look for part-time or remote jobs to augment your take-home pay and allow you to make ends meet in your household.
Alternatively, you can apply for jobs created in response to the ongoing pandemic. Make the important decision to turn a crisis into an opportunity by applying for highly in-demand positions, such as medical assistants and delivery workers.
Following these suggestions will help you stretch your emergency fund. One thing is for certain: when you have contingency savings, you’re in a better position to ride out the financial storms happening in your life.