Budgeting during the coronavirus outbreak

The new Coronavirus pandemic is demanding a series of changes in attitude from all of us. In markets where it is possible, many companies have instituted remote work policies to prevent people from taking to the streets.

For those who are quarantined or at home, this can be an opportunity to review your budget and try to improve your financial health. Check out these 5 tips to organize your budget and start planning your future safely.

1- List your earnings and expenses

As a first step in organizing financial life, experts recommend writing down all expenditures for a month to see a complete picture. As many people are working from home, and with a different routine, the suggestion is to take a few hours to collect payslips, payment vouchers, bank statements, credit card bills, payment slips, collections, and booklets for the last three months. On a piece of paper, a table on your computer or cell phone, list your earnings, fixed and essential expenses for the month and also variable, lifestyle, and superfluous expenses. In the end, add up how much money is coming in monthly, how much you are spending on what is essential, what is variable, and even expendable.

2- List all your debts

Next, create a new column to list all debts that are standing still, waiting for you to take action - loans, monthly payments, card bills, overdrafts, etc. Making this list can be daunting, especially for those who cannot understand how they put themselves in a debt situation. However, it is the essential shock to plan the next steps.

3- Answer: Is there any money left or missing at the end of the month?

Comparing the columns of earnings, essential expenses, variable expenses, and debts, you answer: is there more or less money at the end of the month? If the difference between costs and earnings is more significant than you thought, take advantage of the scare to rethink attitudes and start cutting excesses. Show the table to the family and include everyone in the discussion of the next steps, in particular, in trying to be more conscious of consumption.

4- Renegotiate the most urgent debts and organize the others

Urgent debts are those that will destabilize the family's life. If you have delays in paying your rent or mortgage, contact the real estate agency or bank to show your commitment to resolving the issue. For delayed water, electricity, and gas bills, contact the companies and negotiate a payment plan to avoid cuts. If possible, offer to pay the first installment immediately. Do the same with your children's school fees.

Before talking to creditors, it is essential to prepare payment proposals that are within your budget. There is no point in entering into a debt renegotiation that you know you will not be able to meet. With banks, overdrafts, revolving cards, and credit for negative items have the highest interest rates on the market. Consider exchanging this type of debt for lower interest options, such as personal credit or payroll loans.

5- Cut the excesses in the accounts

Taking advantage of the list you just created, consider the subscriptions you pay. Reevaluate what you are really using: streaming music, series, and films, games, reading magazines, newspapers, delivering products, and shopping. Talk to the family to cancel those that have a free version or that you least access.

Call your mobile, internet, cable TV, and other service providers to negotiate a reduction in rates or plans. Assess with the customer service if there are cheaper options that meet your needs. If you are an old customer, use this argument. And if there is no negotiation, consider changing providers when possible. There are usually more advantages for new customers than for maintaining old ones.