How to Save Money During Quarantine

It all starts with a budget. I know you’re probably sick of me saying this, but I’m going to repeat it till it sinks in! I’m also going to talk about refinancing, side hustles, and other ways to save, but IT ALL STARTS WITH A BUDGET.  

If you’re new here, go download my free SMART Steps Budget Guide right now. That guide is going to help you learn to live on 70% of your net income, and use the remaining 10-30% available to invest and/or have for a rainy day. And guess what? It doesn’t get much rainier than this… 

Rainy Day Funds

So what is a rainy day fund? It’s a savings account that holds enough cash to cover your living expenses for a certain amount of time. Some people like to have 3 months saved up, some 6, and then for the SUPER worriers (like me), 12 months. My recommendation in our current situation is actually to try and get that fund up to 6 moths. We really don’t know how long we will be in this quarantine situation, and I personally believe it’s best to be over-prepared and plan for worst case scenario. 

Obviously this takes time to accrue, but the sooner you get started, the sooner you reach that goal! Especially if you are still gainfully employed right now. Start putting away those savings into a rainy day fund until you have a comfortable cushion to see you through any financial emergency.

How do you do this? You start by minimizing your budget to the BARE ESSENTIALS. Cut all the extra curriculars, cancel all the subscriptions. Right now, many people are paying for things like gym memberships, nail clubs, massage memberships, etc., but because of “Shelter in Place” orders, you can’t make use of them. Now, if you are in the financial position to keep up those memberships and support those businesses, then great. I think that’s wonderful and I hope that the people who can afford that, maintain their memberships for use when this clears up. BUT, if you don’t have any savings and/or are concerned that you will be losing your income in the future, you need to make adjustments now to prepare. Canceling those subscriptions and services is a start.

Student Loan Payments

Let’s take a moment to talk about student loan debt. I’ve said it before and I’ll say it again- compound interest is a weapon of mass destruction. Guess what student loan interest is? You got it- compound interest. 

In our current financial situation, there has been a lot of talk about student loan companies suspending payments, and if you DO make payments, the full amount of the payment will go towards principal. You can read more on that here. 

If you are able to make your payments right now, you have an incredible opportunity to pay down your loan amount by applying those funds just to principle. If you lost your job and need to forgo making payments in order to continue paying for essential bills like food and housing, please do that. BUT, if you are still employed and still able to make payments, this can help you reduce your overall debt in the long term.  

Refinancing

I’ve talked about this a lot in recent months, even before the COVID Crisis hit us. My advice on refinancing is actually the same now as it was then- I think you should only refinance if it makes financial sense in the long term. 

 

That means that you should be seeing a significant savings on your monthly mortgage payment (200$ or more), saving at least a percentage point, and planning on being in the home for a long period of time. Be sure to check out my other video on refinancing for more detailed analysis on this topic. 

Side Hustles

If you find yourself with nothing but time on your hands, now is the time to explore alternative ways of making money so you can build up that rainy day fund! Have you ever considered learning another language? Stick with me here- I know that sounds odd, but using this time to learn a second or even third language will make you more marketable to companies looking for customer service help when it comes to foreign languages. Maybe you have skills with graphic design, video conferencing, digital marketing, etc… there are companies that need help navigating this new socially distanced work from home life, and you can help them do it. If you don’t have a special skill, that’s ok. Use this time to develop one! Or use the time to do deliveries, or some other very necessary essential labor.

Learn about the Market

If you have the time, and you are unsure about what to do to plan for your financial future, I HIGHLY recommend learning about the market, do your own research on what is best for you, and pay attention to the news as it relates to finance. This way you can figure out where you can capitalize and make investments. Whatever you do, don’t be reactionary when it comes to investing. Following the masses is rarely a good idea when it comes to investing. This is why doing your own research and educating yourself is important. 

SMART STEPS

I’ve been mentioning this for a couple weeks now, and we’re close to launching! SMART Steps is a facebook group where you can go to get practical money advice, ask questions and be part of a community that is focused on reaching financial goals with realistic principals. If you’re interested in joining, click here! We’d love to see you there 🙂