For many people, the Covid-19 pandemic is a supreme test of their willpower and fortitude. Some individuals are struggling with how isolated they are, while others are coping with the changes relatively well. The financial challenges are just as impactful as any psychological or emotional issues.
Businesses in sectors most affected by lockdowns and social distancing have found out the hard way that one day they’re doing well the next they’re not. Workers have lost their jobs, and the sudden loss of income has many families struggling to pay bills, and doing what they never thought would ever happen to them, i.e. lining up at Foodbank.
However if you’ve still got an income but realise you need to better money management there are ways that you can reduce your costs during the pandemic, so let’s look at some of the areas right now.
Ask For A Better Deal From Your Service Providers
For those who still have their jobs, the thought any way to potentially boost your financial health can be a ray of light in the dark. However, many individuals don’t have anything like that.
Regular expenditure on services you’re not using right now is a great place to look for savings. You might save some money by getting in contact with your power supplier, or cell phone service provider as well as your insurance providers.
If you’re stuck at home, then you’re probably not driving anywhere near as much. You can call and explain that to your car insurance provider and ask if you can get a discount.
A cheaper car insurance policy will save you money every month. You can also look into:
- life insurance
- homeowner’s insurances
If there was ever a time to find a better deal on any of them, now will probably be it.
The same is true for your cell phone service provider. If you have a top-of-the-line phone plan from Verizon, Sprint, or T-Mobile, you might want to downgrade your plan. You might find the idea of less data unpleasant, but these are desperate times, and you should do what’s necessary.
Assess Your Monthly Services Costs Regularly
While this may be the first time you’ve reassessed your service providers and the plans your on, this is a task that is worth doing every quarter or at least every six months. Everything is negotiable. If your current insurance provider or cell phone data provider gives you any monthly discount multiply it by twelve to work out your annual savings.
For example, ten dollars off your monthly insurance repayments multiplied by twelve months gives you an annual savings of $120. How long did it take you to get this deal? Five or ten minutes speaking to the service provider?
Imagine if every six months you managed to reduce your annual services expenditure by $360 that’s an annual savings of $720. Your hourly rate will be a lot less than $720 so it’s worth your time seeking out the savings.
Take a Hard Look at Your Various Subscriptions
Many people have lots of subscriptions, as the time of cable and broadcast TV are receding. Instead, you have options for streaming services like:
- HBO NOW
- AppleTV & Apple Music
- Netflix and many others
At the same time, some people have subscriptions to streaming music services like Spotify, Tidal, and Apple Music. It’s great if you enjoy your subscriptions, but do you need all of them, especially right now? You should probably ask yourself if there are any redundancies in what you pay for every month.
If there is anything that you feel like you can do without for a while, then cancel it. Remember that it doesn’t have to be permanent. You can always start the subscription back up again when you’re in better financial shape.
Avoid The Takeout Impulse
There are more delivery platforms than ever before, too, with GrubHub, Uber, and Door Dash, all fighting for your service. Something is comforting about getting pizza or tacos delivered right to your door.
The only problem is that this kind of spending taxes your wallet very quickly. Most of these services cost money, and then you’re expected to tip the delivery driver, in addition to the sky-high food costs.
It’s far more cost-effective to stock up on staples when you go to the grocery store. You can buy things like cereal, rice, and pasta in bulk, especially if you have a membership to somewhere like Costco. Even if you don’t, you can target items at your grocery store that won’t break the bank.
High-end purchases like sirloin filets should be a rare indulgence right now. You can also save some extra money at the grocery store by buying generic-brand cereal, pasta, etc.
Other Ways To Save
If you still have a job at the moment, and you put money away every month in a 401k, then now might be a time for you to stop doing that. You want to save for the future, but present concerns are pressing.
You need to feed your family and yourself and pay your utility bills. If that means putting the brakes on your 401k contributions, then that’s fine. You can inform your employer, and they can adjust your paycheck accordingly.
You might be able to get a refund on the money that you paid for things like season tickets to your local sports team or venue. Some venues or teams might not be willing to do it, but many of them should be understanding of the situation in which you find yourself.
Consider debt consolidation for a better repayment plan. Loan providers offer deals for debt consolidation and this action will enable you to pay off more expensive debt like credit cards that have much higher interest rates.
Home Loan Deferment
During these unprecedented times, lenders will consider repayment holidays where you can stop your monthly repayments for a while. The interest on your home loan will be added to your loan amount so if you put off repayments for six months then six months of interest will be added to your loan and you will pay interest on the added interest when your repayments recommence.
However, this is a far better outcome than losing your home for failure to make the regular payments. Another option is to continue to pay the interest repayments but halt the principal payments for a short time. If you’ve got a lot of equity in your home you could also consider equity release – but proceed with caution and always get financial advice from an expert like your accountant or a registered financial advisor.
If you go over your finances from the top down, you should be able to come up with many ways to cut costs. Get creative. If there was ever a time for belt-tightening, it is now. Plus all the hard work you do will install a better mindset and respect for your money going forward. You will question if you need that new car or the latest smartphone.