This archive report was first published on 8 May 2020.
As the world grapples with the economic fallout of the coronavirus pandemic, maintaining a stable financial situation is more crucial than ever. In this article, we'll explore the steps you can take to create a personal emergency fund and weather the financial storm.
Published on May 8, 2020, Abojani Investments offers valuable insights on budgeting during a crisis. According to them, an emergency budget prioritizes survival above all else, eliminating unnecessary expenses and solely accounting for basic needs and financial responsibilities.
Here's a step-by-step guide to creating an emergency budget:
Step 1: Assess Your Pre-COVID-19 Budget ¶
Start by listing out all your monthly expenses, including recurring and variable costs, as well as needs and wants. Compare this against your monthly income to get an accurate picture of how you'll need to modify your spending to accommodate your basic needs.
Step 2: Divide Your Expenses ¶
Once you have a comprehensive list of your monthly expenses, divide them into two categories: necessities and unnecessary expenses. Necessities include rent, mortgage, groceries, and other essential bills, while non-essentials include eating out, paid gym memberships, and other discretionary spending.
Step 3: Adjust Your Budget ¶
With an understanding of how your finances are divided, you can make smarter moves by cutting down on unnecessary expenses and removing non-essentials to help you build or grow your emergency fund. Consider lowering some of your fixed expenses as well.
Step 4: Explore Available Reliefs ¶
Take advantage of available reliefs, such as the Bonga for Good program by Safaricom, and consider asking your bank to restructure any loan you had running by March 2, 2020.
Step 5: Reassess Your Financial Goals ¶
In the face of a potential financial emergency, prioritize paying your most vital bills. For most, this means pausing other goals to fully focus on making ends meet until your regular income stream is restored.
