The COVID-19 lockdown situation has been hard on the economy nationwide. But you can use this situation to your advantage. If you are like many Americans, you are spending less money. With the restrictions in place to curtail the spread of COVID-19, you are probably not eating out at restaurants, going to movies, or traveling. Working at home may mean you are eating lunches made from groceries you bought rather than going out for lunch and saving money on gasoline. You can take advantage of these savings to make extra payments on your debt or build up your emergency fund. Here are more tips on how to save money during COVID-19.
Your Budget
First, you want to start a budget. If you have already done this, you may need to amend it.You may have lost a job and need to adjust this budget for a lower income. Or, you may look at expenses you have that have been reduced such as restaurant meals, activities with admission fees or tickets, and travel. Salon and spa visits can be put off until later. Redistribute these funds where they best belong.
How to Save Money on Meals
You can save money on your food budget. You may already be saving because you are eating things you’re preparing from groceries rather than things other people prepare for you. But you can also trim your grocery budget by buying food that is versatile, lasts long, and is in season. This doesn’t mean you need to compromise on nutrition. Start doing more meal planning rather than getting to the grocery store and winging it. If you plan meals that include using leftovers, you can create a grocery list that fits nicely into your budget. Don’t forget to shop after you eat, not before. It’s easier to stick with that list if you’re not hungry! Another trick is to buy in bulk, if it makes sense. If the items are perishable and you can use them up or freeze them, you might save money per serving. If you have the storage space, this works for household items like paper, laundry, and cleaning supplies. Check your stores’ online sites. Many of them have digital coupons you can use without having to buy a newspaper.
Your Emergency Fund
Your emergency fund is important. The nature of emergencies is that you don’t expect them so you don’t want to put off building that fund. This might be a place to stash the money you are saving by not going to the movies or traveling. If you got refunds from travel you booked, move them into this fund right away. Also add stimulus money and tax refunds. You should have 3 to 6 months of income saved up. If that seems daunting, start with a smaller goal: maybe 1 month of income or $1000. When you reach that goal, strive to keep going. If you are paying back debt beyond the minimum amount, you can decrease your debt payment slightly and put this money into your account. You might have unused subscriptions or memberships you can stop paying for. You can switch to streaming with commercials to pay a lower subscription rate. If you are still working, set up a separate high-yield account for your emergency fund and have automatic deposits put into it from your checking account or wherever your paycheck is deposited. It’s best if this is at a different institution than your checking account so you can’t just transfer money back. Leave this money for emergencies. A new refrigerator to replace one that quits working is an emergency. A new TV is not. After setting up automatic transfers into this account, forget it exists. Don’t be tempted to use it for discretionary spending.
Subscriptions
Speaking of subscriptions, look at your bank and credit card statements and highlight anything that is a recurring charge. Can you do without it? Can you reduce it? Things like car insurance can’t be eliminated but you might be able to reduce your rate if you currently aren’t commuting to work. Gym memberships can be replaced with online fitness classes, many of them free. Clothing subscription services can be eliminated due to the beyond casual work from home dress code.
How to Save Money on Energy Costs
Being at home during COVID-19 may have you spending more on energy. This is a good time to look at how you can reduce your energy costs. Turning off lights when leaving a room is obvious but you can also use energy saving light bulbs in place of incandescents. Also, some of your clothing budget can be used for comfy warm sweatshirts and other things to keep you warmer so you can adjust your thermostat down.
Bringing in Extra Income
You can also look at finding a side gig to increase income. A lot of hiring is still happening, particularly in the delivery type of businesses as online shopping and ordering has increased.
Negotiate with utility providers. Some of them, like phone services, may have options that you can do without. You might need your high-speed internet connection if you are working at home. But you can probably survive without cable television. Especially with the online streaming services which are much less expensive.
How to Save Money on Shopping
It goes without saying, be careful of online shopping. You can easily succumb to buying things online for reasons other than that you need them. The COVID-19 lockdown is making a lot of people unhappy and lonely. Reach out to others through social media, Zoom, Facetime, or give them a call. Don’t shop to fill the void.
Use Credit Cards to Your Advantage
If you are disciplined with your credit cards and you have one with a zero balance that offers cash back rewards, use it to pay for everything. Then, when you get your statement, pay the balance in full. Resist the urge to carry any part of the balance forward. Any cash back benefits will be cancelled out by interest charged.
Your Retirement Fund
A retirement fund is still important. You probably don’t want to miss an entire year’s contributions to this fund. Continue working on paying down your debt, including the student loans now that forbearance has expired. Keep paying down your mortgage. With current rates being so low, you may even consider refinancing for a lower monthly payment. If you haven’t already, enroll in your employer’s 401(k) program or start an IRA. Having these payments taken right out of your paycheck, or out of your account on payday, allows you to get used to living on the rest of your check while saving for retirement.
How to Save Money For Future Purchases
If you have an emergency fund, are contributing to a retirement fund, and steadily paying your debt down, you might want to also put a little away each month in order to save for a house payment (if you are renting) or a large purchase you are planning. If you are hoping to buy a house, you might want to put off optional large expenses, like vacations, in order to get to that down payment amount sooner. Large purchases, like furniture, may become possible by setting up a separate savings account for them. You might be able to add $50 a month to this account as well as other small amounts (including the change in the couch or the bottom of your purse) until you get to the amount you need.
TGUC Financial is Here to Help
If you are still struggling to pay down debt, even with all the COVID-19 spending reductions, you can always try renegotiating your credit card debt. Credit card companies are working with people right now to help them get through this time. You can open a new credit card with a zero-interest introductory offer but only if you are not working to raise your credit score and if you can pay the transferred balance off in the introductory rate time frame. You can also get a debt consolidation loan. TGUC Financial offers debt consolidation and can help you with this.
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