- I started using You Need A Budget, a budgeting software, in January to give me a better picture of my spending and help me streamline debt payoff.
- In mid-February, coronavirus and the response began impacting my income, which was down about 25% in March.
- Having a budget during these uncertain times has lessened my anxiety because I’m making informed choices about how my money is being spent.
- Read more personal finance coverage.
Right now, almost everyone is dealing with lots of financial uncertainty. If you’re not worried about your job security or frantically trying to figure out unemployment, you might be panicking over your investments.
I’m in the same boat. As a freelancer, my income is variable at the best of times. With the coronavirus pandemic affecting many of my corporate clients, I have no idea what the coming months will mean for my finances.
That’s why I’m more grateful than ever to be using a budgeting app. Right now, it’s helping me take my coronavirus anxiety down a level, by giving me a realistic way to manage my money during the crisis.
Why I started budgeting with You Need A Budget
I’m a type-A personality and love being in control, but for some reason I never fell in love with budgeting. Maybe I was doing it wrong. Maybe I was expecting too much. However, all that changed when I discovered You Need A Budget in January.
You Need A Budget (YNAB) allows you to budget only with the money that has already come in. That fixed a huge budgeting problem for me: the unpredictability of my freelance income.
Unlike employees who get paid weekly or biweekly, I never know when my next check is coming in. In previous budgeting attempts, I would get thrown off if a client paid late and derailed my plans. With YNAB I don’t worry about that, since I’m only budgeting money I already have. For the first time, I feel like I have a budgeting tool that works well for me as a freelancer.
The other important premise of YNAB is to give every dollar a job. You’re supposed to calculate all your annual expenses, including one-time expenses like holidays, birthdays, and car registration, and budget a little bit for them each month. This helps you plan for the future – kind of like an emergency fund.
By the end of my free 34-day trial of YNAB, I was hooked. I was very excited at the idea of seeing where every dollar was going, and prioritising my spending. I had big plans to use the software to help me pay off credit card debt once and for all in 2020, one of my financial goals for the year.
Triaging my finances
Unfortunately, by mid-February, I could see that the coronavirus pandemic was going to impact my business. Clients began pausing projects or paying late. It was scary, and I knew it was just the beginning. My income was down about 25% in March because of the virus and response.
At first that made me want to throw my hands in the air with budgeting. But after I got over my initial shock, I realised that YNAB is a tool that is more important than ever.
With each check that comes in, I log into my account and assign each dollar a job. Although I really hope to be able to pay all my bills in the coming months, having a budget lets me prioritise.
First, I make sure that I have enough to pay my mortgage for March and April. Then, health insurance; groceries (yikes, what a grocery bill in March!); internet.
After that, I assign money to less important categories, like piano lessons (via Zoom) or take-out. Knowing that I’ve already planned ahead to keep my family fed and housed helps me sleep better at night.
Adjusting my budget for a pandemic
I’ve only been budgeting for three months, but I’ve learned that a budget has to be a living document. Given the financial uncertainty right now, I’ve adjusted mine. I’m pausing payments on federal student loans and tax debt for the next few months, so I set my goal for those categories to zero.
My spending on dining out and extracurriculars is essentially nothing right now, so I’ve reallocated those funds. Instead, I’m redirecting that money to make sure I know my essentials are covered for next month (YNAB encourages users to build in a buffer month, so that you’re living off money that came in last month). After that, I’ll put extra toward credit card debt.
Right now, more than ever, it’s important to make smart financial decisions. I want to be intentional about what I’m spending on during this crisis, in hopes of making it through without much financial damage. Having a budget is allowing me to do that.
Knowing I’m in control of my money and have planned for my essential expenses is helping me achieve my goals and diminish my anxiety about the uncertain future in the coming months.
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