Budgeting is key during tough times

For many, times are tough.

People across the country who were receiving $600 extra a week in unemployment benefits because of job loss related to Covid-19 are no longer receiving them. That’s $2,400 less a month to pay bills.

Some other folks were between jobs, have their own businesses or were not eligible for unemployment benefits to begin with and have been feeling the economic effects of the coronavirus for a while now.

Either way, finances are tight for many, and uncertain for many more.

Here at NeighborWorks of Grays Harbor, one of the free services we offer is help with budgeting. (We are also housing experts and may be able to help you sort through your housing options. We know of various programs that are available depending on an individual’s or family’s circumstances.)

Today we will offer some basics on successful budgeting and how to make your dollar stretch. In addition, we’d like you to know that Julie Galligan, our housing counselor, is also an expert in helping individuals and families determine a household budget.

Julie’s the one we talked with to gather some budgeting tips for this column. In addition, feel free to call her at (360) 533-7828 extension 102 to make a phone appointment to discuss your budgeting questions and concerns.

Budgeting basics

There are two columns to address in budgeting – what money is coming in (income) and what money is going out (expenses).

When something like a sudden job loss occurs – both sides of the ledger need a good look.

Getting a handle on expenses

While financial hardship comes with many emotions, when it comes to determining what you are currently spending, it’s important to be as factual and accurate as possible.

Start by determining what your actual fixed monthly expenses are. In this list would be things like rent or mortgage, student loans, other loans, car payments, credit card payments, child support payments, and some utility bills such as garbage, cell phone, cable TV, etc.

In a separate list, include bills that are fixed but not monthly. Things like car and life insurance premiums, and property taxes would often go into this category.

In addition to the fixed expenses (those that stay the same amount), you also have key expenses that must be taken into account. Groceries come to mind first. Other utilities usually are part of this list. Your electrical bill is monthly, but it isn’t the same every month, for instance.

Try to determine your best educated guess (look at bank statements or credit card bills to help) on what you typically spend a month for things like eating out, charitable giving, entertainment, gifts, clothing, house maintenance and car maintenance, personal care like haircuts.

At this point you are not trying to present the ideal you spend, but what you and your family are actually spending. It may be helpful to take about three months of spending patterns to truly develop a picture of current spending.

Determine your income

Determining a household’s income is typically a lot simpler. List your and your spouse’s net income (the amount received after taxes are taken out.)

Are there any other sources of income that you can rely on? Perhaps you have a rental property or receive child support payments or social security checks. Maybe you get a dividend from an investment or a little cash from a side job.

Put the actual numbers together

When you can see your actual income next to your actual expenses it will become clearer what you will need to do.

One thing we haven’t mentioned yet, is that if at all possible, make it a priority to put something in a savings account for an emergency fund. Things like car repairs, broken washing machines and doctor’s bills come up and shouldn’t ruin your budget if you’ve set something aside for such “emergencies.”

If you don’t have anything in an emergency fund, may we suggest considering putting any stimulus money you have left into savings.

In fact, most budget experts recommend you have put aside enough money to sustain you through three to six months of household expenses. That may seem a lot when you are just starting, but make it your goal.

The numbers tell the pictures

From years of experience helping people with budgets, NeighborWorks of Grays Harbor housing counselor, Julie Galligan, says that often people are shocked at where their money actually goes.

“What I often find is that the client spends a lot more on miscellaneous and entertainment expenses than they realize. When I go over their statements with them I usually find $300 to $400 of eating out and coffees that tells the story.”

Julie is the first to say that realistically something needs to be set aside for entertainment or eating out; however it should be planned out.

“It’s unrealistic not to spend any money for something fun. But perhaps go on a picnic in a park or pick up a meal curbside once a month and enjoy a meal with your family or friends.

“Right now we really can’t go anywhere, but do put a little money aside. The key is to plan treats and outings. Look in the newspaper for restaurant coupons to stretch your money.”

Speaking of stretching, we have many more tips from Julie on how to save money as well as ways to earn money. However, they are going to have to wait until next week.

In the meantime, consider saving your receipts, examining your bank account and credit account expenses and getting a handle on just what it is that you are spending.

Even if the loss of the $600 additional unemployment payments won’t affect you, it’s clear that we are in unprecedented times with whole industries affected. It’s a good time to pay off credit, increase your savings and at least be clear where you are spending your money.

Dave Murnen and Pat Beaty are construction specialists at NeighborWorks of Grays Harbor County, where Murnen is executive director. This is a nonprofit organization committed to creating safe and affordable housing opportunities for all residents of Grays Harbor County. For questions about the ductless heat pump program or home repair, housing counseling for renters and landlords, homebuyer education and buying, call 360-533-7828, listen to the extension picks that will best help you and leave a callback name and number. Due to Covid-19, the office is not currently open for a visit, but staff will return your call.