Income down due to coronavirus? Set up an essentials budget

First things first: Know where your money is going.

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By Emily Pandise

The coronavirus pandemic has hit the American economy hard with more than 30 million people are out of work. Uncertainty can be scary, especially when it comes to money. But making a plan you can stick to can go a long way.

Here’s how to make a budget that will work with your income and meet essential needs.

Determine where your money is going.

Making a budget you can easily follow is next to impossible without following your money. It can be easy to swipe a credit card and not think about it, especially when anxiety is at an all-time high. Look at all your receipts and credit card statements; note where you spend your cash, and then write it all down.

Think about what you can realistically cut back on and make sure you aren’t paying for items or services that you are not using. For example, if your city is under a stay-at-home order, make sure that your gym isn’t charging you a monthly fee. If you are using subscription services, think about consolidating or canceling any that aren’t necessary.

Figure out your essential costs.

Identify your truly necessary expenses, like rent or mortgage, groceries, utilities and loan payments that you can’t defer. Add those numbers up and you have your essential costs. Now, work to make sure those expenses are covered, and reduced, if necessary.

Negotiate some of your expenses.

If you are dealing with a loss in income, try to negotiate down some of your fixed expenses. If you can’t get rid of them entirely, it’s worth trying to lower the numbers. If you are still working but are making less than usual, you can put your retirement account contributions on pause.

You can also request a deferment on your mortgage or other loans if you need to. If you need an extra break, try calling your credit card company to negotiate your interest rate. That won’t make those expenses go away entirely, but you’ll be able to build in some time to get the money to cover them.

If you’ve incurred any late fees on credit cards, call up the companies and ask that they be waived. Many credit card companies will honor one-off requests like these even in normal times.

Come up with a plan and stick to it.

When it comes to things like groceries, which are essential but not fixed, make sure you are making a plan and budgeting for it. Go to the store with a list of exactly what you need as well as backup items in case things are unavailable. Stick to your list as it can be tempting to make an impulse buy or two. Lowering nonfixed expenses is the fastest way to minimize your spending overall.

For any good budget to work long term, the power is in the planning. Keep tracking your money, in and out. You can track every day, every time you make a purchase, or once a week. The rules are yours to make, and you can adjust them for your own needs.

Try to make budgeting a little fun.

Adding some gratification to the process doesn’t have to cost money. Make a cup of tea you enjoy or take a walk around the block once you’re done tracking all of your expenses and have stayed within your numbers. Sticking to the plan will help make it a little easier, even if it feels like everything else is out of control.