How to Adjust Your Budget due to COVID
Though the unemployment rate has continued to drop for the third straight month—down to 10.2% in July—there are still millions of people in America that don’t have jobs.
If you’re one of them, you’re most likely struggling to make your bills and wondering where your next paycheck is going to come from.
However, there are steps you can do in the meantime that will help you save money, reduce your expenses, and plan for the future until you’re able to find work again.
See about COBRA
If you’re unemployed, that means your health insurance is no longer available to you. Or is it? The simple solution is to join your spouse’s insurance plan if that option is available. But if it’s not, there is another. If your company had more than 19 employees, you might qualify for COBRA. Otherwise known as the Consolidated Omnibus Budget Reconciliation Act, COBRA is a government program that allows you the option to extend your employer-sponsored health care coverage. If you’re eligible, your previous company most likely sent you information on it, like when the coverage starts, and any premiums you need to pay. You then have 60 days to elect coverage or waive it. If you choose to go this route, you’ll be covered for 18 months. The important thing is that in the long run, it’s less expensive to be covered under health insurance than running the risk of having to pay for an expensive hospital visit out of pocket.
Reduce your spending
Once you’ve taken care of your health insurance, take a long, hard look at your spending. Add up everything you spend money on monthly, from new clothes to streaming subscriptions to gym and other memberships. What are your weekly grocery bills like? You can find plenty of free workout routines on YouTube. Do you really need new clothes right now if you’re not going anywhere because of social distancing? If you’re not willing up to give up any of your streaming subscriptions, can you at least downgrade? Look for any and all ways to reduce your spending. It may hurt now but keep in mind it’s not forever.
Cut your insurance
Look at ways to reduce what you’re paying for home and auto insurance. These are budgetary items you typically don’t think about because you have to have them and most likely, you’re set up on auto-pay every month. Because they are mandatory, auto and home insurance policies have a tendency to overcharge because it’s so easy for policy owners to simply “go through the motions.”
There are, however, a couple of options you can use to see if you are paying too much for car and home insurance. PolicyGenius and Savvy are both free online services that present cheaper policies to you so you can switch over to a less-expensive option. All you have to do is answer a few questions via an online survey and they’ll do all of the research and deliver the results to you.
Learn from others
A great rule of life as well as finances is to learn from others. What have other financially successful people done to spend more wisely, get out of debt, and grow their money? And how do you find them? Searching online is a good start. There are tons of resources online such as blogs (like ours), YouTube videos, social media posts, and podcasts. Search Amazon or your local bookstore for books on financial success, whether they are biographies of famous millionaires or books offering practical tips and advice. Here are a few of our favorites:
- The Dave Ramsey Show – World-renowned finance author and speaker Dave Ramsey covers everything from debt to retirement to your mortgage and taxes. You can listen to this and his other shows on the radio, as a podcast, or find him on YouTube.
- The Richest Man in Babylon – George S. Clason’s classic bestseller is full of common sense advice in the form of parables.
- So Money – This podcast hosted by Farnoosh Torabi interviews well-known experts in finance, business, and self-improvement about the lessons they’ve learned over time so you can live a happier, wealthier life.
- NeedHelpWithMoney – Of course we’re going to promote our own blog! Yes, there are plenty of other blogs about money out there (Mr. Money Mustache is a good one) but our blog specifically caters to those who need tips and tricks on how to get out of debt or are financially in-need. We cover debt consolidation, taxes, investing and more.
Losing your job is hard. And during the middle of a pandemic, it’s even more difficult. Educating yourself about your financial options so you can re-adjust your budget is a great start to reclaiming power over your finances.