Now that you are spending more time at home, your financial situation has likely changed. Your income may have decreased due to the pandemic and you cannot spend money on shopping and entertainment like you once did. As a result, your bank account has been acting different this spring than it did in winter. Now is a great time to spring clean your bank account. Gather your last six months of bank statements, either hard copy or electronic, and let’s get to it!
Start at the first transaction of each statement and scroll your eyes down the page. Stay alert to anything that jumps out at you such as large purchases or checks or vendor names you do not recognize. For each item that catches your eye, ensure that you can recall the transaction. If you do not recognize it, contact your bank to determine if this is a fraudulent charge. This is a good habit to practice regularly to protect yourself from financial fraud.
Analyze Discretionary and Variable Expense Categories
First take the statement from April since this is the first full month of spring and also a month where you were likely under stay at home orders. In whatever format you prefer, paper or electronic, create four categories of costs:
- Food Shopping,
- Dining Out (take-out),
- Online miscellaneous purchases, and
- In-store miscellaneous purchases.
Once you have the totals, perform the same exercise for February 2020 since this was past holiday spending but also the last month before coronavirus panic changed our spending. Line these numbers up next to each other to see the variances. Using the example below, consider what questions to ask as you evaluate the changes:
|Dining Out (Take-Out)||$300||$120||($180)|
|Online Misc. Purchases||$150||$300||$150|
|In-Store Misc. Purchases||$250||$50||($200)|
Here are some questions to ask that will help you decide how to spend your money in the coming months:
- Because of the stay at home orders, you are eating more at home than in restaurants which saved you $105 ($75-$180). When you can, will you go back to normal activity or continue the trend of eating at home to save money? Could you further cut back on take-out to save even more?
- Since being stuck at home, your on-line purchases dramatically increased. However, your overall miscellaneous expenses have decreased by $50 ($150-$200) so you appeared to survive on less in April than you did in February. Were the increased on-line purchases really needed? Could you keep your miscellaneous expenses cut by $50, or even more, when you can shop in stores again?
Asking questions like these will lead to changes in your spending habits and ultimately save you money each month. Performing this exercise at least once every six months will keep you in tune to how you spend money and enable effective budgeting. For help understanding your expenses and building a budget, call our financial advocates at (800) 642-2227. They are eager to help you improve your financial health.