The Coronavirus has lasted for more than a year and surely so much has changed in our lives. Working from home became a norm, you have to wear a mask every time you are out and you can’t go anywhere without using SafeEntry. Moreover, some people may be left unable to work due to closure of some facilities or have to be retrenched.
Most importantly, the pandemic has severely affected our economy. Singapore’s gross domestic product (GDP) is projected to gradually recover, with the GDP not likely to return to pre-COVID levels until at least the second half of 2021. This means changes to the way we manage our finances and it became even more paramount to save. It is definitely going to be harder, as some people might be jobless, have their salaries cut or have increased spendings on needs, such as buying masks.
During the recession, it remains crucial or it has become even more important to do budgeting and save during the pandemic. Personally, I have found it even harder to manage my money during the pandemic. Each month, I struggle to save the intended amount I set to save due to increased spending and a lower salary. However, after much research and experiment, I have shortlisted the best methods to save during tough times.
Here are some ways that I find effective to budget and save during the COVID-19 pandemic.
1. Track Your Expenses Through Budgeting
One expert financial advice that we can give you is to start crafting and following a budget. Budgeting is the process of creating a plan on how to spend your money. It allows you to balance your expenses with your income so that you can keep your spending in check and ensure that your savings are on track of time. A budget plan also helps to keep you out of debt and prevents you from getting into debts as all your money is being accounted for. Effective budgeting allows you to create a spending plan that when adhered to, ensures that there will always be enough money for the things you need and are important to you.
There are so many ways that you can track your expenses. Be it using a physical notebook, Google Sheets or using apps that can be downloaded from your phone. It is so easy, there is no excuse to not do it. Some great apps that you can download to track your finances are Spendee, Seedly and Monny. Some apps even allow you to sync your bank account to monitor your bank balance and spending! Find out what other tried and tested expense tracker apps are out there to manage your finances. Ultimately, it takes a lot of discipline to start budgeting and record your expenses diligently, so all the best and stay consistent!
2. Prioritise and Spend Smartly
Obviously, you need things like shelter and electricity, as well as food and water. These are essential things to your life that you should not skimp on. Of course, when it comes to food and water, you can definitely find greater bargains and save a little by buying cheaper options. It is important to learn how to put aside our wants and put forth our needs. Most importantly, you need to categorise where your money goes and know exactly how much you are spending on your needs and wants. That way, you will know what you have been overspending on and can take better control of your personal finances. Some categories that you can use to record your expenses include transportation, utilities, shopping and entertainment.
As explored briefly above, you can also seek cost-effective alternatives or eliminate some of your wants. For example, instead of getting that dream car that you want, why don’t you take public transport or take a cab to save some money? Instead of always heading to the cinema for movies, why not subscribe to Disney+, Netflix or VIU? These subscriptions are fairly affordable and you can watch TV shows or movies any time you want. While a trip to a cinema may cost you about S$10 each time minimally. Shopping during sales, or securing promotion codes on online purchases will save you some money. So be a smart shopper and never buy anything without discounts.
3. Adopt An Investor Mindset
Adopting an investor mindset does not mean you have to invest in the stock market or learn to do trading. Having an investor mindset allows you to use financial strategies to do the math and look for value. Value is everywhere if you know how to utilise it before making any financial decision, be it buying a new television, deciding which restaurant to eat at and making a choice on which running shoes to buy to replace your worn-out ones. Here, we learn about breakeven time, cost-per-use and cost versus benefits.
Breakeven time is how long it takes for an object’s total cost and total revenue to be equal. For example, if my new bicycle which I use to cycle to work costs me $500 and saves me $50 a month in transportation cost, it takes me 10 months to breakeven and fully utilise it. If this bicycle can last me beyond 10 months, it is a purchase that is worth my money.
Cost-per-use can be used to help you make better purchasing decisions. Cost-per-use analyses the value of an item directly to how much use you can squeeze out of your purchase. It helps determine if it is worth spending money or more money on something. For example, if a windbreaker costs you $50 and can last you 500 wears, the cost-per-use is $0.10. You can use this to analyse across different windbreakers and find the one that has the best value and is most worth-it.
Cost versus benefits, as the name suggests is to compare the cost of an item versus the benefits that it brings to determine its value. For example, when shopping for a new monitor, does the curved monitor feature really benefit you more than just a regular flat-screen monitor? Is it worth spending an extra $500 dollars to get a curved monitor? These are good questions that you can ask yourself to become an informed-shopper.
It is unlikely that the pandemic situation will be gone anytime soon, so be prepared for a long ride. With the above tips and tricks, you will and you can manage your money better and learn to save up. Other than personally managing your finances by becoming more financially educated, you can also consult a certified financial planner to get more personalised advice. All the best, and may the pandemic begone soon! As the saying goes, tough times don’t last but tough people do.