Do you have a personal survival budget all prepared and ready to go in case your financial situation changes? In my last post, I mentioned that I am expecting a period of financial stress over the next few months. It happens to everyone. You might lose your job, have your hours cuts or be facing rent hikes.
In my case, my husband and I are resettling in New Zealand with an emaciated savings account and no employment lined up. For that reason this month I am focussing on dealing with tough financial situations, and making sure you come out OK.
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You’ve heard that saying ‘make hay while the sun shines’. It’s a cliché, sure, but it can be applied to so many financial situations that it’s almost become my mantra.
Making hay can mean many things – saving for your house deposit while you are earning a strong income, putting bonuses towards long-term goals rather than short-term wants. Paying more off your mortgage than is necessary or just building a healthy savings fund.
It can also mean preparing for the time when the ‘sun’ has well and truly set. By this I mean creating a safety fund and looking at your budget with the highly critical eye of someone who has just lost their job.
This is my regular budget. There are very few luxuries because I choose to spend money on travel, not stuff. But there is always room for cuts to be made. For example, as I sit here and write this I am sipping on a cafe con leche (I’m in Spain) that cost €2.70. I bought the coffee because I like working in cafes and being amongst people while I write but I don’t need to buy coffee. I could make my own and carry it in a thermos cup to the library where I could work for free. If I was living on my survival budget there would be no fun money (which I tend to spend on coffee).
Implementing a survival budget
When pulling together your survival budget you need to be ruthless. Remember this is only short-term. It might hurt a little but there is light at the end of the tunnel. Keep your survival budget visible at all times. That way you always know where savings can be made and may be motivated to make extra cuts to reduce the pressure when you need it. Here’s what I’m doing to create my survival budget:
Cut any non-essential spending
I couldn’t live without internet, as I run an online business, but cable TV, fun money and clothing could be cut for a few months without feeling too much pain. I could reduce my petrol spend by walking or cycling short journeys.
Tip: If you have an essential purchase to make, check the Ebates site to see if you are entitled to cash back for the purchase. You can join Ebates for free. Use this link and you’ll get a $10 voucher towards your first $25 purchase.
Reduce your food spend
You could slash your food budget by eating less meat and cooking at home for all meals. A great way to save on your grocery bill is to use Ibotta. You can unlock rebates and discounts on regular grocery store purchases with Ibotta, so it’s a great way to save money. Click here to learn more about Ibotta (only available in North America).
Negotiate with your mortgage provider
The mortgage could be switched to an interest-only payment for the short-term. We have always made extra payments towards our already affordable mortgage and so switching to interest-only payments for a short period wouldn’t send us too far backwards in paying the mortgage down.
Shop around for insurance
I could reduce insurance premiums by calling other providers or reducing my cover.
Think creatively to reduce your housing cost
If things were really bad I could rent my house out and move to a cheaper and smaller unit or in with family (not a strategy I’d recommend but a possibility for some).
Earn extra money from home
If you’re looking to make extra income there are numerous ways to do so from home. You can watch videos to earn gift cards. Swagbucks lets you earn free gift cards for taking surveys, watching videos, shopping online and more! Join for free with this link and you’ll receive a $5 sign-up bonus: Join Swagbucks Today
You can also take part in market research from your home. Three research companies I recommend are Opinion Outpost, Harris Poll and Digital Voice. Each company has different requirements, so make sure you check them all out to find the best fit for you. Some pay you in reward points, and others by entering you into a high-stakes draw.
How my survival budget will work
With $1820 per month essential expenses and income of $398 per month child tax credits (which are called Working for Families in NZ) we have to fund a shortfall of $1422 per month. The balance of our savings account will be just over $10,000 so $10,000/$1422 = 7.034 months.
We have just over 7 months to find employment. I’m 100% confident we can pull it off and revert to our regular, frugal yet comfortable existence within a couple of months of landing in the Land of the Long White Cloud. But having a survival budget in place, just in case life doesn’t go as planned, helps me to sleep a little better at night.