For most Adeladies budgeting is common-place, but for others right now, this might be the first time in your life you’ve had to actually worry about money. In all honestly, if shoes and handbags were currency, we could have bought four houses by now! All the uncertainty in the world at the moment is completely out of our control. But what we can control is how we spend our money and how we are going to get through this whole pandemic thing in one piece.
I mean, you have to ask yourself, can we REALLY afford a giant horse lamp right now?
These school holidays are going to be nothing like we’ve ever experienced before. No movie dates, no trips to Bounce or Latitude or your fave playgrounds, no massive easter egg hunts with your cousins, no street cricket games with your neighbours and no money to do anything remotely exciting. So what the HELL are we going to do? AHHHHH!
We need an expert — because budgeting to us is still a foreign language that we need to learn ASAP. So, our friends at MyBudget are helping sister out and have not only put together an amazing budget template for all of us (you can download it here), but they have also given us some tips on how to budget for all the ‘what ifs’ swirling around at the mo.
1. Don’t panic
A lot of people have lost jobs or income and, of course, it’s never a good feeling to be out of work. That being said, Australia’s welfare net just got stronger and there’s lots of financial assistance on offer. If you’ve lost your job or your pay packet has shrunk, follow this checklist. If your job is secure, nonetheless read on because everyone needs to prepare for ‘what ifs’ in the current environment.
2. Come up with a plan
The best way to dial down financial stress is to come up with a plan. And by plan we mean ‘budget.’ Budgeting sounds boring, but it’s actually a really powerful way to feel in control of your finances and be prepared for the curveballs we’re all dealing with.
3. Work out your essential living expenses
Print off or pull up your last three to six months of credit card and bank statements. On the first pass, highlight and add up all of your essential living expenses, plus your cost of housing and keeping your car on the road. In other words:
- Petrol or other transport
- Medicines and medical visits
- Power and utilities
- Rent or mortgage
- Insurance premiums
- Car rego
- Any other essentials (e.g. pet medications or vital equipment hire.)
Now average the total according to your pay cycle. In budgeting-speak, these are your non-discretionary expenses—the amount of money you need to live and keep a roof over your head and a car on the road. Here’s a handy budget template.
4. Work out your non-essential expenses
On the second pass of your credit card and bank statements, highlight and add up how much you’re spending on everything else. In budgeting-speak, these are your discretionary expenses—the amount of money you spend on things you don’t really need.
5. Cut costs out of your budget
Organise your discretionary expenses into two lists: 1) Stuff you don’t need and are happy to live without and 2) Stuff you don’t need and you’d really like to keep. For example, nobody needs Disney+, but it’s sure going to come in handy! You can also get creative with meal planning.
6. Rearrange your budget
Most people will be able to rearrange their spending to account for the fact we’re all social distancing. The money you would have spent on, say, petrol, or going out for dinner, or your gym membership, can be redirected to buying extra groceries, increasing your savings or perhaps buying some new toys and games.
7. Prioritise your bills
In the current environment, not all bills are equal and, when money is tight, your expenses need to be prioritised. Your top priority should be to have money in your pocket for essential living expenses. Rent or mortgage repayments, plus keeping the lights on, would normally be included in your essential living expenses, but there’s a current six-month freeze on rental evictions and power disconnections. This doesn’t mean that you can ignore those bills, but it does mean you’ll experience more leniency than usual.
8. Talk to your lenders and creditors
If you think you’re going to have trouble meeting your financial obligations, get in contact with your providers now and let them know about your situation. At MyBudget, we’re talking to our clients’ creditors for them and getting payment arrangements in place so they don’t pay late fees or unnecessary interest charges.
9. Get free help
Everybody—even the government and big corporations—are struggling to keep up with the constantly evolving situation. If you need helping navigating through this, you can reach out to a service like MyBudget. We’re providing free phone consultations.
10. Lastly, what NOT to do
- Avoid keeping up your usual spending habits if it means using your credit card.
- Likewise, don’t eat up your savings too quickly. It’s better to reduce your spending to live within your new means.
- Avoid ‘buy now pay later’ deals, like Afterpay, and other commitments that could expose you if you lose your job or income.
- Don’t put your head in the sand. Talk to your creditors sooner rather than later if paying your bills is going to be difficult.
- Don’t be afraid to ask for help. Talk to your employer, reach out to Centrelink, book a free budget appointment with MyBudget or whatever else is going to help.
- And to repeat step 1: Don’t panic—for every financial problem there’s a solution, including this one. We will get through this!