We got you! This isn’t the most fun activity we could recommend, but it certainly gives you that accomplished feel-good energy when you’re done, and who doesn’t need that right now? We can’t all be the social media personalities doing body weight workouts with their chiseled abs, or the homeschooling mavens doing Sistine Chapel artwork on their glass windows. So…here’s our own version of feel-good behavior that everyone, and I mean EVERYONE, can do – getting our money right. It doesn’t matter that I spend my life dedicated to personal finance, I too also need to do this exercise to clean up my spending habits and direct more to savings. Pull up those monthly statements – checking accounts, credit cards, etc, and a piece of paper, and let’s get to it.
On your plain piece of paper (written or typed, whichever you prefer)…
- Write down your monthly income, after tax. If your income fluctuates week-to-week or month-to-month, write down the minimum amount you’re consistently earning.
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- Look at your major and necessary expenses. List all expenses that are non-negotiables. Items like mortgage, rent, utilities, car, insurance, etc. Write the total amount these items add up to each month.
- Look at your cable and streaming bills. Unless you’re an essential employee in healthcare or grocery or food service, chances are, you are home on house arrest (you should be!). As such, your in-home entertainment bills may have increased. Despite a potential (temporary?) increase, write down how much you spend each month on in-home entertainment expenses. Are there channels or subscriptions you aren’t using that could be eliminated or consolidated (Disney Plus, Hulu and ESPN have united for $12.99 a month!)? If yes to something being eliminated or consolidated, add that saved amount to a list titled “Redirect.”
- Make a list of what you’re definitely not using right now. For most of us, that would be your gasoline and entertainment expenses. Estimate your monthly gas and entertainment expenses from last month’s statements and write down the total. Write this total in a separate list titled “Bonus!”
- Review your auto subscriptions. Start with the apps on your phone. With everything being shut down, a lot of companies are suspending memberships and subscriptions. This is a good time to figure out what you are actually using and what you’re just keeping in case you decide to use it one day. Someone recently told me that they subscribe to a food service of pre-packaged food but that they never end up making the food, and in turn, all the food spoils. That sounds way more expensive than the occasional bag of lettuce we all have going unused in the fridge…(cringe). Figure out which auto subscriptions you can eliminate and add those to your “Redirect” list.
- Health costs. With the rise in health care costs, a lot of Americans find more and more of their income going to copays and medication. Did you know there are some large chain companies that offer major medication discounts? Walmart offers a $4 prescription program for a variety of common prescriptions and there are free apps that offer major pharmaceutical discounts. Look at your recurring medication costs and google your medication name to see if there are discount programs available for your specific type. If you are able to save any money on prescriptions, send those additional funds to the “Redirect” list.
- How much are you spending on interest. We tend to pay a lot of attention to interest rates when we’re first jumping into them – car loans, mortgages, a new credit card, etc, but do you remember what your interest rates are if asked? Considering the current financial climate, you might be able to negotiate a lower interest rate in one area or another. Go through your accounts and write down your interest rates for each account, then get on the phone. Why not ask? The old adage “you don’t get what you don’t ask for” is applicable here. As of the writing of this, interest rates are low and it’s a great time to investigate refinancing.
- Luxuries on Hold. A lot of women out there are starting to look a lot more natural, lol. Nails, hair, and waxing appointments are on hold while we are quarantined. Check out what you spent on these luxuries before you hit quarantine mode, and put that amount into your “Bonus!” list. You might not save that money on a recurring basis, but you can certainly capture the savings while you’re in quarantine.
If you haven’t figured it out by now, the amounts listed in your Redirect list are funds that you can redirect from your spending into savings. Like, right now. The amounts listed in your Bonus list are savings you might only experience temporarily, but while you’re experiencing them, treat your future self and put those funds into your savings account too. Considering the gravity of our current global circumstances, your future self will never be disappointed with the proactive measures you enact today. We don’t have any control of what’s going on around us, but if you’re still fortunate enough to still be receiving your paycheck, you do have control of how you spend and more importantly, how you save. Knowing that you have safeguards in place can substantially minimize the stress and anxiety in such uncertain times as these.
Never before has there been a greater justification for the establishment and funding of a household emergency fund.