How to Thrive Even When Money’s Tight

a couple on a couch looking at documents

The pandemic has been extremely hard on the personal finances for nearly everyone. It’s been a challenge for many to make ends meet and take care of their basic bills.

Here are 8 steps to start taking control of your money — even if your income has decreased, according to experts.

1. Evaluate. Evaluate your current financial situation. How much money is coming in? How much are your necessary monthly bills?

2. Create a crisis budget. “A crisis budget will include expenses such as housing, food, basic utilities, and transportation and excluding optional subscription services and premiums. Once you know your essential expenses, you have two options: you can earn more or start spending less to cover the essentials – like buying generic or groceries in bulk,” offers Kaitlyn Ranze, community manager of personal finance and banking app nav.it.

3. Call creditors. “Call and alert them of the income change and ask if there is a way to reduce payments significantly over the next three to six months,” advises entrepreneur/coach Frederick Towles, the president of business/financial consulting firm The Towles Group Inc.

4. More income. “Look into other income-producing opportunities that may have been present, but you weren’t looking for — this could be a second job or a home business,” said Towles.

5. Set priorities. “Evaluate your values and priorities. Personal finance is personal and everyone’s priorities are different. If you can continue to keep the lights on and bills paid by cutting premium butter and bread, yet still want to get your roots done every month — you do you,” says Ranze. “If, on the other hand, you’re having trouble just working within the crisis budget, you may have to remind yourself that this is temporary and opt for a box dye.”

Write down your priorities, arrange them according to your personal preferences and priorities.

6. Cut costs. After listing your possible expenses in order of your preference, start adding up the costs from top to bottom. Once your expenses equal or exceed your income, draw a line across the page below the last expenses to fit within your income,” explains Ranze. “Everything below that line will either have to wait or you will have to adjust expenses above the line so you can afford more expenses from below the line.”

7. Saving is possible. Most would think that when you are cost-cutting you can not set aside money for savings. But you can, says Ranze. “Less income may not necessarily mean less saving if you can adjust both your mindset and your spending.”

And, it’s not the amount you save, just the fact that you save. Ranze adds, “Even when it’s tough (especially when it’s tough), worry less about how much to save and more about committing to saving even $1 a month. Savings is a commitment, not an amount.”

8. Create financial goals. “Take some time to reflect and write down your financial goals. Perhaps you want to save for a home, car, or retirement. See how much time you have to save for these goals and how much money you need to reach those goals. Being able to envision what your future lifestyle will be and the steps to achieve them will help you figure out how much to save,” suggests Sandy Yong, author of “The Money Master: Inside Secrets On How to Make Your Money Grow and Stay Safe.”