Personal Financial Strategies in Covid Times

The Basics

(This will take a while if you have never done it before- clear your Saturday or Sunday)

• Use excel, google sheets, or old fashion pen, paper and calculator
• Gather all your bank statements for the past year (or few months will do).
• If you spend only with your debit or credit card then your life is easier
• If you spend much of your income by withdrawing cash and spending it that way then you must

 

1. Keep YOUR withdrawal slip and store receipts! (match amount withdrawn with total spend evidenced by receipts)
2. Some stores/vendors do not give receipts so when you spend cash without getting a receipt be sure to note that expense on your phone or on a notepad
3. One Strategy is to continuously update your budget on a weekly basis so you don’t forget
4. Another strategy is to leave yourself voice-notes or notes on your phone

 

The 50/30/20 Rule

The rule suggests using 50% of your income toward needs, 30% toward wants and 20% toward savings and debt.

Let’s say your income after tax is TTD8k. Does your mortgage/rent, groceries, electricity, phone & internet bill add up to TTD4k?

1) Trim spending on wants.

a) Consider downsizing your wants if they’re taking over your budget. Limit how many days you dine out, for example, or opt for more affordable lodging the next time you travel, eat 3 doubles instead of 5. Limit the number of times of the month you go out for entertainment. Do not try to overspend your neighbours.

2) Trim spending on needs.

a) The cost of your necessary spending isn’t always fixed. Shop around for a better rate on your phone plan, loan, and insurance.

b) Consider your internet bill- are you getting the speed you are paying for, or do you watch all the channels in your media package?

 

Once you have set a Budget, Use the Items above as a Checklist

Don’t forget the expenses that you think about only once or twice a year like Car or house insurance

• • Ensure that you are putting aside funds for those monthly.
  • For an overall picture of your income vs expenses, you would want to take the ‘once a year expense’ and divide it by 12. Some persons may be surprised that they are spending more than they earn once they take these into account
  • For persons with insurance, know your deductibles so you are not surprised that insurance does not cover the full cost of your accident.
  • If you own a vehicle, budget for regular maintenance, some extra for emergency breakdowns that are not covered by insurance.

 

Reviewing Your Family Budget

- Do it together. It’s tempting to monopolise the process as you’re a banker and finance is your field of expertise, but having everyone in the household contribute and be involved in the process helps with everyone sticking to the plan.

- Review weekly. (Just quickly glance at your spending categories to see how you’re doing and how much you have spent, not a redo of the entire budget.)

• • Stick to it. It’s easy to bend the rules you set for yourself, but “future you” will be grateful for all the saving you do now.
• As time goes by your spending changes – add as much spending categories as you need (everyone is different)
  • Use a miscellaneous category as a catch-all for remainder while noting any large expenses in that category – they this category becomes material you WILL need to break it into a separate category.
• It is natural for variances from planned spending so it is important to track where plans differ from reality and do NOT panic if things do not go as planned.

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