It’s Time to Revise Your Pandemic Budget

It’s Time to Revise Your Pandemic Budget
Contributor: Mike Winters

Budgeting is important in the best of times, but it’s crucial to keep an updated budget during this pandemic. COVID has likely changed your spending and saving habits, so you’ll want to track your budget more often than you did in the Before Times, perhaps even daily. Here are some things to consider and steps you should take to revamp your budget for the new normal.

Don’t be in denial

Stress and anxiety are normal, and no one wants to look at credit card statements in a financial crisis. But what you want to avoid is “financial denial,” the tendency to avoid or minimise your money troubles. This includes:

  • Not wanting to talk about money, even when it’s necessary.
  • Avoiding opening bank statements or credit card bills.
  • Not wanting to know how much debt you have.

The cycle of avoidance only piles on unnecessary debt and creates more stress. To break out of this trap, you’ll want to take control of your budget.

Limit expenses

List all your expenses and examine your bills carefully. This doesn’t have to be an elaborate spreadsheet, you can use a pen and paper.

If you weren’t on a tight budget before the pandemic, you might uncover expenses that you were previously unaware of — maybe the energy bill could be trimmed, or you could cut back on takeout meals. Be ruthless with the expenses you truly don’t need.

Prioritise debt

Understandably in a pandemic, you might not be able to pay all of your debt, but you’ll want to determine what should be paid first.

  • Figure out your high-priority debt, which is debt that comes with the greatest cost to your family or affects your earning power: car loans, child support, utilities, and rent.
  • Then create a medium-priority debt list which will be for important things like mortgages. These could become high-priority debts if you ignore them, but have less short-term impact if you don’t pay them right away.
  • Lastly, create a low-priority debt list which can include credit cards or shopping debt. Lower priority debts shouldn’t be paid if that prevents you from dealing with high-priority debt. However, priority debts become high-priority once you are sued in court on the debt.

Next, examine all of your COVID relief options, which include eviction moratoriums and loan payment deferrals, as well as any relief programs. For anything not covered by government programs, try contacting your lenders directly, as they might be able to waive late fees, defer payments, or offer a consolidated payment plan with lower interest. As part of your renegotiation, try to pick a day in the month that you can most afford to pay your debts.

Create a budget

In a normal world the 50/30/20 rule is ideal: 50% for needs, 30% for wants and 20% for debt and savings, which would include an emergency fund. But that’s a cookie-cutter formula, and your expenses are what really dictates your budget. You might temporarily eliminate the “wants” portion of the formula so that a more realistic 60/40 rule might apply, with building up a 3-month emergency fund as part of that goal.

Remember to take it one day at a time

As with the pandemic, take it one day at a time. Make it a habit to check in daily with your budget until you are back in control of your expenses.


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