Ask a CPA: How can I re-organize my finances during the pandemic?
Ask a CPA: How do I organize my finances during the pandemic?
Q: How do I organize my personal finances during uncertain times such as this current pandemic?
A: Uncertain times such as the COVID-19 pandemic currently going on bring about a host of financial issues and uncertainties. With millions of individuals losing their jobs, the stock market registering concerning changes, and the economy threatening to topple over, most of us have been reorganizing our finances, or at least considering to do so. Some have been forced to do so, as a result of job losses, layoffs and other unforeseen personal and family circumstances.
If you’ve been seriously thinking about managing your finances in a more effective way, here are a few tips you may consider:
- Set a contingency budget
If you’ve already got a budget, you’re in a good place. However, during uncertain and challenging times, you may need a contingency version of it. Consider this to be a slimmer, “emergency fund” version of your budget. This version cuts away the stuff you can live without, the luxuries you can do without, and trims your expenses down to the basics. This is not to say you should survive on bread and water, but rather that you would consciously re-evaluate your wants vs. your needs.
- Prioritize your emergency fund
As you trim your expenses down, you may also want to increase your emergency fund. This may mean re-allocating the funds usually dedicated to luxuries to your savings funds. The good news is that in less uncertain times, you can always use this extra cash to treat yourself!
- Let’s get back to basics
Getting back to basics is not just about trimming your budget. It’s also about adopting more of a DIY attitude. As you spend more time at home, consider acquiring more practical skills such as cleaning, recycling, cooking, etc… As a busy working mom, I would outsource many of the tasks I didn’t have time to do, such as ordering food out, hiring cleaning or landscaping help. However, I’ve found myself enjoying cooking more, and even learning to garden a bit, and saving money in the process.
Not being able to go to stores has also been a blessing in disguise. I’ve learnt to live more simply, not buying as much, and instead using what I have. The result? More savings, doing more with the family, and even better skin (hello, less makeup).
These are a few tips that can help with re-organizing your finances during uncertain times such as the COVID-19 pandemic we’re currently facing. You may even find, like I did, that this is an opportunity to learn new skills, save more money, and overall learn to live better.
What tips are you using to re-organize your finances during the pandemic?
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