Should You Budget Week-to-Week During COVID-19?

Most Americans are feeling the increased stress of the coronavirus pandemic on their finances. Budgeting is incredibly important for the nearly half of all Americans who were living paycheck to paycheck even before the COVID-19 crisis hit. Now, with the economy struggling and unemployment rising rapidly, budgeting for shorter periods of time is a reality for a huge segment of the population.

The basics of coronavirus budgeting are simple, and they can help you make the most of your money until the economy rebounds. Whether you can budget 30 days out or only a week at a time, here are a few ways to get ahead of your budget during the coronavirus crisis.

1. Take stock of what you have.

Your income and assets are the baseline of your coronavirus budgeting, helping you get an idea of the resources you can access for assistance. If you still have your job but have experienced a pay cut or reduced hours, you'll need to make sure your income expectations reflect that. For example, if you received a pay cut or you're working only half as much as you were before COVID-19, you should consider your income reduced by 50 percent.

If you have any savings accounts, consider those, too. Having the recommended three-to-six months of expenses saved is unrealistic for many families during normal times, but it's always a good idea to have money reserved for times like these. If you’re experiencing income loss, this might be the “rainy day” you’ve been saving for. Any amount helps because you can only create a budget once you have a definite figure of how much money you have to work with.

2. Make a weekly or monthly budget.

The CARES Act stimulus check was likely helpful in the short-term, but it wasn't a long-term solution to the ongoing economic struggles of American families. In better circumstances, it's best to budget for the longest amount of time possible – but creating or adjusting your budget is a necessary step to extend your finances during an economic crisis, even if it means budgeting one week at a time.

• Make a list of your fixed expenses. Those are your necessary expenses like food, housing, electricity, water, internet, trash, and insurance. Optimally, they don't change much month-to-month, so they’re easier to plan around when creating your budget. Additionally, put any debt payments on this list, like credit cards, student loans, auto loans, and your mortgage. (If money's too tight to make your usual credit and loan payments, at least make the minimum payment – you don't want to tank your credit score during a pandemic if you don't have to.)
• Make a list of variable expenses. Things like ordering food delivery, subscriptions to video and music streaming services, online shopping, and movie rentals can be elements of self-care in moderation, but for the purposes of budgeting, you should consider them nonessential.
• Decide on a weekly or monthly budget. Add up your essential/fixed expenses and subtract the total from your income. The resulting number is your budget – and the next step is figuring out how far you want to divide that to manage your expenditures. In this case, that means breaking your budget into weekly or monthly amounts. The longer you can plan for, the easier it'll be to stay within your budget. Can you predict all of your income and expenses at least 30 days out? Build a monthly budget for a top-level idea of your financial situation during COVID-19.

If things are a little more fluid – maybe you're not making the same amount of money every paycheck, or maybe your food expenses change according to what's available – consider a weekly budget built on those "fixed" essential costs. Weekly budgeting can be harder to plan for, because your budget will vary wildly as some fixed expenses (like rent) only happen once a month, but if your income is flexible right now, your budget will need to adapt.

Weekly Budgeting Tip: If you're budgeting week-to-week, try to space out your monthly expenses by rescheduling them for different weeks. Utility services, loan providers, and other institutions may allow you to pick a new monthly billing date. Are your monthly electricity, internet, and credit card bills due the same week as rent? Get in touch with your utility providers to space out your monthly expenses so you can plan a week-to-week budget.

3. Limit unnecessary expenses.

Variable expenses don't just include takeout, Netflix, video games, and other fun things. They include things like gym memberships, kids' clubs, and other activities that may not be available during COVID-19 due to stay-at-home orders and social distancing rules. Revisit some of the things you paid for before quarantine and see if they're still valuable in your daily life.

With all your fixed expenses identified, it should be easy to target the nonessential expenses in your budget. If your coronavirus budget is tight after accounting for your essential expenses, start trimming those unnecessary costs. Streaming services, subscriptions, preorders, and other 'nice-to-haves' should be some of the first on your list when trimming to fit a new weekly or monthly budget.

4. Look for ways to spend frugally.

It's good advice in general, but for some Americans, the coronavirus crisis hammers home the importance of paying close attention to the value of your money. Budgeting before you spend is part of that discipline, and making the most of the money you do spend is another.

Does your credit card offer cash back or other spending incentives? If you usually shop at the same grocery store, do they have an app or a loyalty program that could save you money? If you're a homeowner, could you take advantage of low mortgage rates to refinance? You shouldn't look for new ways to spend without the income to support it, but finding ways to stretch your dollars a little further (especially without a definite end in sight to the coronavirus crisis) could make all the difference for families struggling to maintain a budget.

We're here to help Twin Cities families navigate the crisis. Visit our COVID-19 Coronavirus Resource page for answers to your questions about employment, housing, food, budgeting, and more during COVID-19.