Shifting Your Budget to Crisis Mode for the Next 90 Days

Shifting Your Budget to Crisis Mode for the Next 90 Days

How to Manage Your Household Budget Through the Coronavirus Pandemic


  • Take an honest and critical look at all sources of income and expenses.
  • Cut all non-essential expenses not directly related to housing, transportation and food.
  • Pause all long-term saving goals, such as weddings or college, and redirect those funds to increase cashflow.
  • Redirect all automated payments for non-essential items and send the money instead to your Emergency Fund.
  • Cancel all subscriptions and automated bank drafts for any non-essential item.
  • Pause all accelerated repayment plans and only make minimum payment on each bill. Go the extra step and contact each creditor to see if they have special programs in place to assist consumers struggling to make their bill payments.
  • Reduce food costs and other variable household expenses.
  • Eliminate all discretionary, non-essential expenses for the next 90 days to preserve cash flow.

The unfolding global pandemic known as the Coronavirus or COVID-19 has temporarily changed lives on a global scale. With over 1/3 of the world’s population under lockdown, 3.3 million Americans filed for unemployment in the week following the US Government’s orders to implement social distancing and the closing of certain types of businesses, leaving consumers wondering how to pay next month’s bills. It’s hard to determine if the crisis will last a few weeks, a few months, or a year or more, as some experts predict. However long it lasts, it has disrupted daily life in unprecedented ways.  In order to avoid financial disaster, the first step you need to take is to review your monthly household budget and adjust your spending for the reality of your current income.

Rethinking Your Budget

First, if you don’t have a budget, it’s time to create one. In uncertain times as these, every dollar matters.  As the saying goes, “If you can’t measure it, you can’t manage it”.

If you do have a budget, you need to throw that one away and start over from scratch.

Managing your household budget through a crisis, especially one like a global pandemic that comes on so quickly and unexpectedly, requires intense focus, an honest and critical analysis of your new financial realities and constant modifications and adjustments to account for cash flow from various sources of income like government assistance programs, unemployment insurance benefits, income from a second job or contract work and unbudgeted and unexpected expenses like healthcare payments or stocking up on essentials in preparation for an extended quarantine period.

The goal of any household budget is to help prioritize spending and direct cash flow toward essential expenses. At a time when income has likely fallen or may have disappeared entirely, taking the time to re-evaluate your expenses and historical spending habits can help to protect your financial security. Start by identifying your biggest financial priorities. Secondly, take an honest assessment of your anticipated income for the next 90 days, accounting for a reduction or total loss of income altogether.  Now that you have identified the two biggest categories in your budget, follow these recommendations to avoid a financial disaster six to 12 months from now?

Here are the seven things you need to do right away to adjust your household budget during the Coronavirus (COVID-19) Pandemic:

Pause long-term financial goals and take steps to preserve cash. It might be necessary to temporarily halt your retirement contributions, college savings, or other money earmarked for long-term financial needs. Knowing a date certain when an event like a global pandemic will be over is impossible to guess.  Short-term cash preservation is critical to managing your finances successfully through a crisis such as this.

Redirect automated savings to your emergency fund. Do you automatically contribute money each month to a vacation fund, Christmas account, or home repairs? If so, immediately stop these monthly or weekly automated drafts, and instead, redirect these drafts into your emergency fund. In most cases, you can delay home and auto repairs for a few months to preserve funds for more immediate needs.

Cancel or suspend monthly and annual subscriptions. Go back three months on each bank statement and credit card bill and evaluate all recurring monthly costs for ways to save money immediately. Subscriptions might include streaming services for movies, games, and music, cable or satellite TV subscriptions, premium movie channels, newspaper delivery, or a gym membership.

During unprecedented events such as this, many companies will allow you to suspend a subscription, rather than cancelling it altogether, allowing you to reinstate it later. You might trade your cable or satellite service for a bundled, streaming service or whittle down multiple streaming services to a single company to cut costs even further.

Pause debt reduction goals and move all bills to minimum payments. Are you making additional principal payments on your mortgage, doubling down to accelerate the payoff of student loans or credit cards? While these extra payments help reduce debt faster, it can lead to additional higher interest debt during a financial crisis. Review all your accounts to see where you can adjust your payments to a minimum payment amount, but above all, remain current with all payments.  If you find yourself struggling to make payments, contact your creditor(s) right away and be sure to clearly communicate your situation to see if you qualify for any type of reduction or abatement of interest, principal or fees.

Lower fixed expenses. Start with a line item audit of each bill to eliminate optional services that can lower the bill. Start with insurance policies, to see where you might be able to adjust your policy coverage without mobile, and internet bills.

In addition to trimming service bills, you can lower utilities by paying attention to usage habits. Turn lights off, delay the use of the air conditioner, or adjust the thermostat to reduce the power bill. Conserving water will lower both water and sewage costs.

Reduce food costs. Food is an area you can often effectively lower expenses. Resist the urge to order out and cook at home. Using existing pantry items, taking the time to plan your meals, and trying new recipes will save you money and give you something to do during your time at home.

Eliminate discretionary spending. During a mandatory quarantine, it is tempting to shop online, order takeout, or enroll in a course you might never finish. Remember that putting non-essential costs on a credit card, when income has dried up, could lead to financial hardship in the months ahead.

Final Thoughts

The current situation changes almost daily, requiring more vigilance with the budget process. Taking drastic measures to lower costs early will have a positive impact on your long-term financial wellbeing. If you find you cannot meet basic needs, even with a carefully planned budget, reach out to your creditors before you fall behind and keep up with legislative changes that may provide needed assistance.

About Titan Consulting Group

Titan Consulting Group helps consumers evaluate various debt relief options and choose the right program that best fits their short-term and long-term financial goals. We work with consumers seeking debt consolidation loans, or who may be considering options like debt negotiation or bankruptcy. Through our network of partners, we can help you find the right solution to reach your goals and get back to living a life free from high interest credit card debt.

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