How to Budget When You are In Crisis Mode😳
For a lot of people, budgeting income isn’t such a problem, it’s pretty easy once you get the hang of it…maybe even fun sometimes. However, there’s an ominous but. Whenever an unforeseen issue arises it saps a lot of money and may even dry up the source completely. Getting a demotion, losing one’s job or maybe even an accident can make budgeting way more difficult, emotionally draining and even depressing. This is where crisis budgeting comes in.
The first thing you need to do especially if you are responsible for others apart from yourself is to have a family budget meeting. Let everyone know the situation on ground so that no one makes unrealistic demands on money that’s not even available. So, read on and I will explain to you a few tips on how to budget effectively, boost your financial resilience and still keep your sanity while you’re at it.
1. Keep Calm and Evaluate: At this point, panicking won’t solve anything so you need to calm down and evaluate the situation. To know exactly where you stand, calculate what you have left, your expected income and expected expenses over the next few months. Do this with a pen/pencil and paper so that it will stick with you longer. Be mindful of including uncertain income such as, ‘I will make N15,000 if I get a freelancing job or N20,000 from selling my old washing machine online.’ Only include money you’re sure of.
2. Prioritize: After evaluating, you can then arrange your needs on a scale of preference and in order of their importance. Tick off necessities (shelter, food, utilities), identify the stuff that can be pushed back a little (car servicing, new hair) and completely cut out frivolities such as eating out and going to the movies. Why? In such a critical position, you need to save every naira you can. You can’t afford to spend what you don’t have or you’ll never get out of the crisis.
3. Get a Side Hustle: I strongly advice that you get a side hustle especially if your current job is not paying enough to help you through your crisis or if you’ve lost your job. Think of all the skills you have and go online to find ways to monetize them. Also, leverage on your network and relationships to get clients for your new hustle such as hairdressing, freelancing, event catering, housekeeping or whatever other legal thing you can do to make ends meet.
4. Consistently Check What’s Left: On a daily basis, make sure you check on your finances. Take note of everything you spend and what you have left per time. This way you can keep your spending in check and know when the situation is getting better or worse (hopefully not).
5. Avoid Payday Lenders: By all means, please do not borrow from people who will want to be paid back once you get your next paycheck. These lenders always target people in desperate situations and slam on ridiculous interest rates. No matter how bad you think things have become, chances are that things will get worse if you can’t meet up with payments.
6. Negotiate with Lenders: For bills and pending debts (e.g. student loans), it can be a good idea to speak to your lenders. You can speak to your landlord about paying your rent in installments for instance or you can even try to convince your lender(s) to extend your repayment plan or maybe even lower the interest rates. There is a possibility this might not work but there is also the possibility that it will work so just try. You have nothing to lose and a lot to gain.
7. Forget Pride and Seek Assistance: Even though it may be hard or even embarrassing, I suggest that instead of getting a loan with high interest, ask your family or friends for help. You can even call in a favor if you have to…as they say, one good turn deserves another. That way, you avoid making your situation worse by incurring more debt.
8. Emergency Fund: This is also known as Rainy Day savings. If you have an emergency fund or any investment, you can draw some resources from here. If you do not already have an emergency fund or investments, a good time to start this is immediately the crisis blows over. Make sure to tuck away at least 3 to 6 months of daily expenses just in case things get hard again.
9. Save as Much as You Can: This may seem like a stupid suggestion right now but it is really important. Even if it’s a thousand naira, more or less weekly, put something aside as savings. You can always upgrade to a higher amount once the crises blows over. It will make a world of difference to you in the future trust me.
10. Learn More About Managing Your Finances: Once this crisis blows over, do not hesitate to learn more about finance management. Do an analysis of how you got into the sticky situation and find out how to avoid a repetition in the future. You can also send an email to firstname.lastname@example.org or call 08066088876 to speak to a Pettysave staff for advice on how to start.
Summarily, your expenses should never be more than your income, if you can, get a side hustle and if you own a house, consider renting a room or the boys quarters out. Remember, a budget is only useful when it is followed and we are always here to help.
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Oyin from Pettysave