Earlier this year, we talked about a highly effective way to update or set your budget called the 50/20/30 budgeting system. As a quick reminder, this budgeting system allocates 50% of your income (after taxes are taken out) to your needs, 30% to your wants, and the remaining 20% to savings or investments. The biggest percentage goes to your needs, like your housing, bills, and food. That’s what we’ll focus on here.
Constant COVID news updates tend to set everyone on edge, but there’s one that’s bringing many people hope instead: the promise of an upcoming coronavirus economic stimulus check. The future is a bit uncertain right now with many people out of work or working fewer hours, so it’s important to use this money wisely. Rather than blowing through it by ordering takeout every night and online shopping, we can use it to get ahead in the “needs” category in a few different ways.
Having a roof over your head is an obvious and immediate necessity, so if you’re falling short and your landlord or mortgage holder won’t work with you, this should be one of the first considerations when you receive your COVID stimulus check. Use as much as you need to finish making that next rent or mortgage payment so that you know you’re not putting your living situation in jeopardy. With all of the chaos and anxiety circling us right now, the last thing we need is angry or threatening letters regarding the one place that’s safe right now: home.
Late fees and accruing interest make missing credit card payments an impossibility. Use some of your stimulus check to pay the minimums for the month and catch up on other bills like your car loan and insurance (health, vehicle, etc.). Most debt payoff plans suggest that minimum payments are the worst thing you can do for yourself, but for now, priorities might have to change. The exception: individuals who are working and caught up on rent, bills, and food can use the stimulus check to pay down bad debt and loan balances, and work toward financial stability.
However, 54% of Americans aren’t financially prepared to handle a viral outbreak that puts them out of work for several weeks. If you’re one of many individuals whose finances have been hit by COVID-19, staying afloat is the new priority. Make sure all of your bills are covered for now; get back to aggressive debt payoff later. While you’re making your payments, check with your lenders to see if they have any programs in place that offer financial assistance during the outbreak. Some will waive interest, lower it, or offer deferred payments.
Buy enough groceries for a few more weeks
This category comes with a caveat and that is that you should be going through what you already have first. Most of us grocery shop regularly, picking up an item or two at a time, gathering ingredients for one new recipe, or grabbing something quicker or easier than what we have at home. During the coronavirus outbreak, these habits might have to change, and the best way to prioritize our grocery shopping is to get creative and make use of what’s on hand (a new approach for most of us).
Before you make your list, go through all of the cabinets, pantry shelves, your refrigerator, and freezer, writing down ingredients that you have on hand as you go. Then, make a list of recipes you know you can make using the ingredients you have. Staple recipes like pasta, sandwiches, soup, and stir-fries may not be the most exciting options, but they’re easy and usually already available. If your list looks too random to work with right now, you can use apps like Supercook to enter your ingredients and receive an immediate list of recipes you can make with them. Now you can make your supplemental grocery list to get you through the next few weeks.
Supplement your emergency fund
Food, utilities, and our mortgage/rent are often our most immediate necessities, so these should be addressed first. If there’s money leftover or you can use coupons, discounts, deferred payments, and other financial hacks to stretch your coronavirus stimulus check a bit farther, your emergency fund should come next. Having enough to cover your necessities for a few months at a time can dramatically reduce the burden of financial anxiety that comes along with not knowing when your next paycheck is coming.
It seems like each COVID-19 news update brings us more questions than answers and it’s clear that no one knows yet exactly how long this will go on for. But with a bit of dedication, patience, and practical knowledge, we can make good choices and stay on top of our finances. Stay tuned to future Spotloan articles to read more about the economic stimulus check and the 20% and 30% portions of your budget breakdown.