Written by Megan Cunningham
Thursday, May 28th, 2020
As many can relate, COVID-19 caused a lot of anxiety around my finances. As a young professional who didn't have much of an emergency fund for rainy days, the reality of my current situation was daunting. Was I going to lose my job? How was I going to afford rent? How would I pay for my groceries?
To ease my financial anxieties, I developed a new budget to better match my current reality.
Here Are the Aspects of My Budget I Looked At:
Fixed Costs vs. Variable Costs
Pre-COVID, my budget separated fixed costs from variable costs.
My fixed costs included all of the non-negotiable things I had to pay for each month: rent, bills, transportation costs, renters insurance and groceries.
My variable costs included things like going out to eat, shopping, movies and concerts.
The first thing I noticed when I started to create my new budget was that some of my fixed costs became variable costs.
- I was no longer commuting twice a day to my job–something that I used to budget $120 for each month.
- I noticed that when I went grocery shopping, I was spending more money in one trip than I used to, so that I could stock up on supplies and stay home.
Spending more money on groceries would have been a struggle if I wasn't saving money on transportation costs. These variables actually balanced each other out.
Some of the things that I used to consider variable costs became, well, no cost. I was no longer going to see movies or attending concerts with my friends or going out to eat and drink. This put me at a crossroads–do I save that money, or do I spend it?
Saving What I Normally Spent
With this little extra wiggle room, I decided to start my emergency fund by putting that money into a TFSA. Okay, I also allowed myself to order food once a week to support some fantastic local spots. Only you can decide how to best maximize any extra money you may have.
Since I didn't have much of an emergency fund, deciding that any extra money should go towards my TFSA helped give me some much needed peace of mind.
Maybe you already have an emergency fund set aside and you're also saving up for a trip around the world. With so much uncertainty in our day to day lives right now, it's a great time to work towards a savings goal that excites you. This will keep your mindset looking forward to better days.
If you've lost income as a result of COVID-19–whether as a freelancer or a full-time employee–you might be taking a different approach to managing these uncertain times.
Navigating uncertainty can be really intimidating when it comes to your financial situation, but by looking at your budget and seeing what might have changed in your life, you can work towards finding a new strategy that works for you.