Written By: Kaitlyn Duchien
It’s day #423 (or something like that) in self-quarantine. Chances are, you’ve already watched an ungodly amount of Netflix, forgotten to shower more than once, finished a book you started 5 years ago, picked up knitting, and even tackled spring cleaning! Congrats! But, with the President’s recent decision to extend social distancing guidelines through the end of April, you’re probably wondering what on earth you’re going to do to pass the time now. While watching The Office for the 15th time is definitely a valid option, let’s consider using this as an opportunity to check your financial pulse and discover ways to cut costs, save a little extra, and even increase your generosity!
Perusing through your bank statements might not sound like the most exciting way to spend your Friday night. We get it. But, we believe it will pay off – big time! That’s why we’ve also included a few ideas to reward yourself after you’ve checked each of these 5 money management tasks off your to-do list. (You’re welcome).
- Budget: Make It. Modify It. Live it.
If you’ve never created a budget before, there’s no better time than the present! But, where do you start? For some do-it-yourself-ers, you may want to pull up your credit card and bank statements and create your own Excel spreadsheet detailing your income, spending habits, outstanding debts, and savings goals. For others (like myself), creating an Excel spreadsheet sounds about as fun as watching paint dry. If you can relate, check out these budgeting apps and templates to help you get started:
Ultimately, how you create your budget is much less important than simply having one in the first place. The goal is to understand where your money is going every month, allowing YOU to have control over your finances. If you’re not sure what happened to your paycheck, then your money has control over you (and that ain’t cool). No matter how you decide to budget, make sure it is a repeatable process that you can frequently revisit and revise as needed.
As you grow and evolve as a person, your budget should, too. That’s why – if you already have a budget – now is the time to review it and see how well you’re staying on track. Are there any specific categories where your spending is a little too high? Any small expenses that are adding up over time? Are you saving as much as you’d like? If not, can you automate your savings from your paycheck to your savings or your investment account to make it easier?
REWARD: Once you’ve created or reviewed your budget, reward yourself by breaking out your favorite board game or card game (or ordering a new one online) and having a game night! You can even plan a virtual game night by video conferencing with friends or family who share a common game.
- Subscriptions: Automatic Payments Are Great, Except For When They Aren’t
While reviewing your budget, you may have discovered that you’ve been paying for subscriptions or memberships that you haven’t been using (or getting your money’s worth out of). Spend 30 minutes identifying which subscriptions you don’t use and cancelling your membership. Or, instead of canceling the subscription all together, you may have the option of freezing the subscription or skipping a month if you just won’t use it right now, but might in the future. Here are a few ideas of automatic payments to look out for:
- Streaming Services (Maybe you started that 7-day free trial on Hulu to watch one specific movie and forgot to cancel it afterwards.)
- Transportation Services (Think: bus, train, or toll-road pass that you aren’t using right now due to working from home.)
- Gym Memberships (While many gyms automatically froze their member’s accounts, you might want to double check that you aren’t being charged while the gym is closed.)
- App Subscriptions (Trying to figure out why the $3.99 charge from Apple or Google Play is showing up on your bank statement? Click here to find out what app subscriptions you are paying for and how to cancel them.)
While email subscriptions aren’t necessarily costing you money, now might also be a great time to go through your 10,528 emails and unsubscribe from unwanted messages. It’ll unclutter your inbox, clear your mind, and even reduce your spending by eliminating marketing campaigns for items you don’t need (but apparently MUST have). Unroll.me is a great tool that will identify email subscriptions you are currently receiving and unsubscribe you in a couple easy clicks.
REWARD: Once you’ve canceled those memberships and deleted at least 9,627 emails, reward yourself by watching a movie or documentary about someone who inspires you.
- Bump Up Your Saving and Investing
For many people, the Stay At Home orders have resulted in reduced spending as many daily activities such as travel, eating at restaurants, going to the movies, working out at the gym, or even getting a haircut have been temporarily eliminated. Instead of wallowing in self-pity about how much you miss your favorite Starbucks drink or how badly you need to get your hair done, take advantage of the money you aren’t spending by intentionally putting it in a savings or investment account.
Also, due to the recent stimulus plan announced by the Treasury Department and IRS, many Americans will be receiving a payment of $1,200 (for single persons) or $2,400 (for married couples) if certain qualifications are met. If you are fortunate enough to not depend on the check to meet basic living expenses, consider using the funds to pay down high interest debt, transferring the money to your savings or investment account, or even donating to a charity you support. Leaving the funds in your checking account could lead to making unnecessary online purchases, just because you know the money is there to spend.
Lastly, if you are financially able, now may be a good time to increase your percentage of automated payments into your savings or retirement accounts. Even bumping up your contributions by 1-2% could make a big difference to your long-term savings goals without feeling much of a difference to your take-home pay. If you’re not sure how to automate or increase payments from your paycheck, reach out to your company’s HR department or directly to your bank.
REWARD: Boom – you’re slaying your savings goals! Reward yourself by building an epic fort out of bed sheets and blankets. You can even “camp” by making s’mores in the oven and having an indoor bonfire.
- Insurance – Are You Covered?
The topic of insurance might make you want to pour yourself a big glass of your favorite beverage. (Go ahead – we’re not judging). The reality is that most of us have some form of insurance (auto, health, life, etc.), but we don’t know much about how it actually works. Since you’ve got a little free time on your hands, do some research on the insurance that you own. Make sure you understand the basics – like how much the insurance costs vs. what benefits it provides. Along those lines, evaluate whether you are overinsured or underinsured in any area and make adjustments accordingly. Here are a few places to start:
- Health Insurance: If you have health insurance through an employer, ask your HR department for a copy of your health insurance plan documents. Make sure you’re aware of your deductible, or how much you owe out of pocket before your insurance kicks in to cover the rest. If you have access to a High Deductible Health Plan (HDHP) and a High Yield Savings Account (HSA), it might be a good idea to keep at least your annual deductible amount in your HSA. Your contributions to your HSA will be tax deductible, the interest earned in the account is tax-deferred, and if you end up needing to use the funds to pay for a qualified health care expense, the money will come out tax-free.
- Auto Insurance: Chances are, you’ve got it (or at least you should). But how do you know if you’ve got enough insurance and what exactly it covers in the case of an accident? NerdWallet provides an excellent resource of key car insurance terms. Use this as a reference while reviewing your benefits summary, which you can usually find on your car insurance website or by calling your local agent. Also, Insurance.com provides a great calculator for determining how much coverage you realistically need.
- Life Insurance: Or should we say, Love Insurance. Really – this is the only insurance you’ll buy that won’t benefit you in any way. But, it could mean the world to your loved ones if you pass away unexpectedly. Some employers provide basic life insurance coverage for employees (something like 2x annual salary). Check with your HR department to see if this is the case (and to make sure your beneficiaries are up-to-date). However, the reality is that coverage through your employer may not be sufficient to take care of your loved ones if they suddenly lose your income. Remember: if you own a house, a car, student loan debt, credit card bills, etc., your loved ones will be responsible to continue paying these obligations even without you around. Use these tools to figure out if you are properly insured:
- Disability Insurance: Same concept as life insurance applies here. Some employers provide basic disability insurance coverage for employees, but you’ll want to check with your HR department to see if this is the case. However, often the coverage provided may be extremely minimal and won’t come close to meeting all of your basic needs if you are unable to work. Here are a few resources to determine if you need additional coverage:
REWARD: By the time you’ve brushed up on your insurance coverage, you may have already finished your first drink of choice. Why don’t you pour yourself another and host a Virtual Cocktail Party with friends and family? You deserve it.
- Charity – When The Best Way You Can Help Is Staying At Home
As we are bombarded with media headlines about the pandemic and, at the same time, urged by our political leaders to stay at home, it can leave us feeling helpless. We know the world is hurting, but the best way to help prevent the spread and flatten the curve is to keep to ourselves. But, this doesn’t mean we can’t still make a huge positive impact right from our own living room.
If you are fortunate enough to have money leftover after taking care of your basic needs, consider donating to a charity that is actively meeting the needs of those most affected by COVID-19. Even $5 could provide several meals to a child who normally receives their nourishment through school breakfast and lunches. Find an organization that you believe in and make a donation, big or small. Not only will it provide resources to those who need them most, but it will also allow you to be actively involved in fighting the COVID-19 battle. CharityNavigator.org lists multiple organizations responding to COVID-19, along with a description of the nonprofit and detailed information about the needs it is meeting. Leave a comment below sharing the charity that you are supporting and why it means something to you!
REWARD: Giving to charity provides the best reward of all: joy in knowing that you have made a positive impact on the world.