You've been on your own now for several years. You pay your bills on time and do your best to keep your credit in good shape. But, you've yet to build up the six-month emergency savings fund recommended by financial experts. While you have cash in the bank after paying all of your bills, you still might be like 39% of Americans who would have a hard time covering an emergency expense as little as $400.
If you find yourself in a situation that puts an unexpected strain on your finances, use these checklists to help manage your money.
Budget Refresh Checklist
Creating a budget lays the groundwork for successful money management regardless of the state of the economy. Use this checklist to help create or improve your current budgeting process and achieve your financial goals now and in the future.
- Select a system to track income and expenses. This can be a mobile app, an online spreadsheet, or a pencil and paper. At a minimum, the system must include a place to input income along with fixed and variable expenses.
- Calculate your take-home pay from all available sources. This includes income from a traditional employer and side gigs.
- Gather last month's billing statements for easy reference. Input the required payment and due dates for all of your fixed expenses, e.g., mortgage or rent, cell phone, student loan, etc., into your chosen budget tracking system.
- Refer to the last three months of bank statements and receipts to average and record how much is spent in each variable expense category, e.g., groceries, car gas, entertainment, etc.
- Your budgeting tool may be able to tell you with one click whether you're overspending or have surplus income.
- If you're committed to a manual process, simply calculate where you stand by adding your variable and fixed expenses together and subtracting the total from your income.
Are you spending less than you earn? Congratulations! You have surplus income. Deposit the excess money in a dedicated savings account you only touch in an emergency. Money in this account can help you pay your bills if you experience a job loss or have a necessary expense that would otherwise wreck your budget.
Is the amount you're spending equal to or more than your income? Apply the suggestions in the Expense Reduction Checklist below to create surplus income.
If you lose your income...
Contact your state and local government offices for assistance. This may include filing for unemployment and securing alternative health benefits.
Expense Reduction Checklist
If your budget leaves you with little to no surplus income each month, it's time to trim expenses.
- Review your fixed costs. Housing costs will probably be your largest fixed expense and bring the biggest relief to your budget. Are you able to make alternate living arrangements, such as moving back home with family? Can you move to a smaller apartment or share expenses with a roommate?
- Review your variable expenses. Eliminate entertainment expenses and choose free entertainment. Check out free entertainment venues in your area. Obtain a community library card and borrow eBooks, eAudiobooks, and music at no cost. Libraries across the country offer these and other resources, including movies and television shows via Libby by Overdrive, Hoopla Digital, and Cloud Library by Bibliotheca.
- Explore your options. Contact creditors and lenders to determine if you can secure a reduced interest rate on loans, transfer balances to a lower-interest rate account, or qualify for student loan forbearance or deferment. They may also be willing to temporarily waive fees or allow you to skip debt payments, without penalty, if you explain your financial situation.
If you're a homeowner still earning an income, you may be able to refinance your mortgage. A low-interest rate refinance can mean lower monthly mortgage payments. Contact the Credit Union of Colorado at 800-444-4816 to see if you qualify.
- Plan your meals. Use websites and mobile apps like Supercook, which allow you to plan meals based on what's already in your pantry.
- Shop around for lower cost services. You might find less expensive cell service or car insurance with just a phone call.
- Cash in on unused gift cards. A recent study found that 50% of U.S. adults have unredeemed gift cards or store credits on hand. Use these funds to pay for essentials, such as groceries and gasoline.
- Schedule automatic payments for fixed expenses using your financial institution's online banking or mobile app. This will help ensure bills are paid on time and can help you avoid late fees.
If you're a homeowner still earning an income, you may qualify for a home equity line of credit. This loan allows you to use checks and a VISA credit card tied to your account to access cash, as you need it. Contact the Credit Union of Colorado at 800-444-4816 to see if you qualify.
- Contact creditors to adjust due dates if it becomes difficult to pay bills on time.
Work-at-Home Best Practices Checklist
If your employer allows you to transition to a remote workplace, i.e., your home, use these tips to make the most of the situation.
- Assign a specific area of your home as "office space".
- Keep regular office hours.
- Continue to get dressed for work every day.
- While this is undoubtedly a stressful time for all, take frequent breaks, and get outdoors!
Article by: Tracy Scott