The First Budgeting Step is to Evaluate Your Income and Assets

BY MICHAEL HALL

There are two sides to budgeting: what you spend and what you earn. If your income has already taken a hit because of the coronavirus, you simply can’t continue to budget your money the same way.

The first step in budgeting amid coronavirus concerns is figuring out what your new baseline for income is if your hours have been cut or a job loss or layoff has affected your household. This can give you an idea of how deeply you’ll need to cut your budget.

For example, if you’ve experienced a 50% pay cut, then that may correspond to cutting 50% or more of your regular spending. This assumes that you’re spending the same amount you’re earning (or less) each month and not creating debt. If you were living above your means pre-COVID-19, then you may need to make even deeper cuts to get your budget to work.
On the income side of your budget equation, be sure to include the expanded unemployment benefits to which you may be entitled under the federal stimulus package which includes self-employed and freelance individuals who work as independent contractors.

Next, look at what you have in savings that you might be able to tap into. Ideally, you have an emergency fund that can cover three to six months’ worth of expenses in place. But if you don’t, don’t panic.

Add up what you do have to see how you could use that to supplement your income. No amount of money is too big or too small. Even if you only have $500 or $1,000 in savings, that’s money you could use to help you cover your expenses until your income picks back up.

In the next issue of the Spring Creek Sun, Hall will divulge the second step of revising your budget: Categorize Your Budget Expenses.

Michael Hall is a financial counselor with Bedford Stuyvesant Restoration Corporation. As a financial counselor he helps individuals allocate their funds better, deal with debt, weigh in on legal options, and even save for a rainy day. If you’re in debt or have no credit and need help, a reputable credit counseling organization, like the Office of Financial Empowerment through NYC Office of Consumer Affairs might be able to help. To schedule a financial counseling appointment, go to: www.nyc.gov/talkmoney or call 718-636-6900 and ask for Michael Hall.