If Covid-19 could be compared to an earthquake it would easily be considered a 10 on the Richter scale. The changes it has caused are evident in so many areas of people’s lives. This is especially true when it comes to the impact the lockdown has had on finances. Due to many small businesses closing down, salaries being cut and entrepreneurs unable to provide jobs, priorities have had to adjust and the calculator dusted off.
According to Jordan Page, a frugal living and budgeting guru, one should “live like no one wants” in the short run, in order to “live like no one can” in the long run. What an interesting motto! Jordon and Hubby –Babba- have grown their internet empire through teaching others what they themselves have learned the hard way. While going through their own financial trouble and living in debt on only one income. They gladly share these financial gold nuggets with other struggling ‘budgeteers’.
So, if you find yourself at the financial short end of the stick, here are some guidelines guaranteed to help your wallet adjust to the new normal.
The 70% Rule
This might seem like a complete foreign concept, especially if you are living paycheck-to-paycheck. Let me clarify, she believes (and as I have now discovered – many other financial experts also) that household expenses and living costs, should not exceed 70% of the monthly take-home pay. The other 30% should be divided into 20% for savings or debt repayment and the last 10% for tithing or charity, depending on your religious standing. Easier said than done, right? Taking small steps is key.
Monthly vs weekly
Although most salaries are paid monthly, Jordan suggests setting up weekly budgets. Smaller goals are easier to achieve and help to make a big task manageable. Breaking down monthly spending into weekly limits, means you start out every week with money available. And yes, this means not ‘borrowing’ from next week’s budget to buy that ever so necessary something on the weekend shopping trip. If it is not planned, it is not spent.
Lastly, track your cash
It is rather easy to remember the large important numbers of your budget ie. mortgage payments and utility bills. But the problem lies with the small cash purchases. It can easily be disregarded and before long the available balance causes a knot
in your stomach. In order to combat this sneaky culprit, Jordan and hubby use a self-developed envelope system. A printed sheet that fits in your wallet and gets filled out with every purchase. This ensures you know exactly what you are spending your money on, as well as the available balance in order to stay on track with your planned weekly budget. Here is a link to her free printable to help you implement this habit.
So, before your next urge to splurge, think about the wise words of Warren Buffet, who is considered one of the world’s most successful investors: “do not save what is left after spending, but spend what is left after saving” and perhaps the Covid-quake won’t leave your world shaking.