Managing our money in uncertain times challenges us on two fronts: clarity and control.
When you’re unsure what the future will bring, it’s easy to feel confused about your best steps forward. And if your world is upended, regaining control might seem impossible, especially when it comes to money.
This isn’t a time to throw up your hands and let events determine your outcomes. Planning is essential to getting through to the other side of this health and economic crisis. If you’re evaluating your finances with a spouse or family, you’ll want to bring everyone in on the discussion.
A budget is a financial roadmap to get where you want to go. It helps you regain your sense of calm and well-being as you clarify money priorities and, to the extent it’s possible, reassert control.
Now more than ever, begin your budgeting process by revisiting your values.
Given today’s rapidly evolving situation, consider your priorities.
- What goals have changed?
- What key goals remain the same?
Reflect on needs that have emerged and wants that can be deferred for another time.
If identifying priorities feels overwhelming, streamline your deliberations. Decide the top three challenges or opportunities you must address in the days ahead.
At its most basic, a budget is about money in and money out.
- Where does your money come from?
- Where does it go?
Start by analyzing all your sources of income. Note drops in income you already face or might foresee in the coming weeks or months. Also note any opportunities to increase your income.
Then study your expenses. Start with your recurring obligations like a mortgage, car payment, and utilities. Then look at discretionary expenditures. You might see your expenses have decreased because you’ve cut back on things like entertainment or eating out. You might also notice panic buying, placing one more online order for things you won’t use when life returns to normal. Or “retail therapy,” shopping to feel better.
The key is to track ALL your expenses. Then look for places where you want to right-size and reorient your spending according to your values.
If you find yourself dealing with significantly diminished income, remember that cutting back doesn’t mean going without.
Take time for what matters. You can rediscover the joy of no-cost or low-cost activities like taking a walk or refocusing on loved ones, including finding new ways to communicate when you can’t be together face-to-face.
In the current circumstances, realigning your budget or establishing a budget for the first time is one of the most positive, proactive tasks you can undertake to regain the clarity and control we long for in times of uncertainty.
For more practical guidance on budgeting visit my.moneysanityu.com.