Now that we are in a crisis that affects not only our health but also our source of income, almost every one of us is having a difficult time looking where to find financial means to survive.
The COVID-19 pandemic has forced many people to give up their jobs and stay at their homes. There are also strict quarantine guidelines imposed by governments around the world to check the spread of the disease. Intercity movements were limited, and businesses were closed down to prevent mass gatherings.
Although the unseen enemy which is the COVID-19 disease is still in our midst, a silver lining can now be seen in the horizon thanks to recent improvements. Small, medium and large businesses are now gradually re-opening their doors to customers.
If you’re one of those businesses that were greatly affected by this crisis, chances are you’re looking for funds to restart. There are amelioration programs that you can avail from the government, and you can also go to other sources of business financing, like banks and credit unions.
For instance, you can apply for a personal loan to finance the re-opening of your business. Check out bad credit personal loans guaranteed approval direct lenders if you want to obtain personal installment loans online for business financing.
But after taking out this type of loan, you should make sure to budget your money so that you don’t miss payments. Here are some tips for budgeting your money while paying for installment loans.
Calculate Your Monthly Income
The first step to budgeting your finances is to compute your income every month after all the necessary deductions. You should figure out how much money you earn per month through paychecks, business profits, or other financial sources.
Since we are talking about net income here, deduct the payments for life insurance, taxes, and expenses from your income. When you know your monthly net income, you can easily figure out how much money to spend on your day-to-day expenses. In this way, it will also be easier to set aside money for your installment loan payment.
Determine Your Daily or Monthly Expenses
After figuring out your monthly earnings, the next step is to determine your monthly spending. You won’t have a hard time budgeting your money if you identify all your potential expenses. Make sure to enumerate the costs of rent, water, electricity, internet, gym membership, credit card bill, and other necessary stuff you should pay for every month.
Besides the monthly expenses, it’s also crucial to list down the things you buy every day. You can include in this list the food, groceries, gas, and personal items.
Of course, there are also various things that you have to pay for, such as clothing, entertainment, home maintenance, car repair, etc. Don’t forget to include these things in your list of daily expenditures.
Plan the Budget
It’s now time to make a budget plan. The importance of listing your day-to-day and monthly expenses will matter a lot in planning a budget. That’s why I reiterate to include everything in your list.
In making a budget plan, you’ll figure out how much money you have to spend on every item in your list of expenditures. Make sure to write down the price next to the item so that it will be no hassle to add them up and juxtapose them against your net income.
Put on top of your budget plan the basic necessities of life, such as clothing, food, rent or mortgage, electricity, transportation, among others. It’s also a must to get rid of the things that are not that necessary and the ones that eat up a significant part of your budget. Saving money is crucial to have a backup in times of a financial crisis.
Follow the 50-30-20 Budget Rule
There are many excellent tips on how to budget your money, and one of them is the 50-30-20 rule. This rule allows you to set your finances in the right order. Basically, it requires you to allocate 50% of your net income on needs, 30% on wants, and 20% to savings and debt payments.
If you want to be smart on budgeting, it’s time that you follow the 50-30-20 budget rule. It’s one of the ways to limit your spending, save money, and avoid financial stress.
Avoid Taking Out Additional Debt
If you’re still paying a loan, it’s wise to avoid getting additional debt. Having too many debts at the same time will surely mess up your finances and your life in general. You should make sure to pay off your initial loan first before you ever take out another loan.
Budgeting your finances is super necessary, especially before and in times of a crisis like this COVID-19 pandemic. You should watch out how you spend your money to ensure that you buy only the things that matter. It’s also a must to save for the future and pay off your debts.